The idea for this thread came to me when I was listening to Sami Miettinen’s Neuvottelija (Negotiator) podcast episode where Sauli Vilén was a guest. In it, Sauli mentioned that the Inderes forum plays a very large part and that the forum has very sharp people who are, at their best, truly deeply immersed in the operations of some companies. I completely agree; this place offers absolutely brilliant analysis of many companies (QT, Smart Eye, and Kamux being the best examples from my perspective).
The goal would therefore be to collect various methods in this thread that can be utilized as part of one’s own analysis process. The basis of stock analysis is, after all, analyzing a company’s financial performance and understanding industry dynamics, through which the potential development of the company’s stock price is then examined. Generally, in the long term, the stock price is based on the development of operational fundamentals, and by acquiring an information advantage regarding the development of fundamentals, one can achieve a competitive edge in operating in the market. The question then is, how to gain an information advantage?
I feel that, for example, the technology choices in job advertisements have brought significantly more insight in the case of QT and Smart Eye. On the other hand, the calculations presented in the Kamux thread regarding the number of cars sold online speak their own important language about how inventory levels vary and how much reported sales can be expected for each period. I even once got excited about researching and happened to find out about a rather significant contract Efecte received from Hilma. All of these have in common that they are obtained from open sources.
Do any forum members have other methods or data sources in mind that could be used to enrich analysis?
In the retail sector, it’s fun to visit stores sometimes. I have Tokmanni in my portfolio, and when I shop there, I pay attention to things like how current the selection is, what’s on offer, whether the shelves are full or empty, and what other customers’ shopping carts look like. In other words, is business good and has Mr. Tokmanni made good deals.
Same goes for Musti. I don’t have pets myself, but I sometimes ask my pet parent friends for their thoughts on buying food and supplies. At least so far, the comments I’ve received support the investment case – most people prefer to visit the brick-and-mortar store instead of the online shop due to the expert service and convenient location of the store. Often, it’s just so that the dog can make the purchasing decision for its new toy itself.
On the online side, the functionality of the online store probably affects sales the most, so I sometimes click products into the shopping cart for fun and examine navigation and other usability aspects, and monitor my own irritation threshold.
From a customer experience perspective, this kind of evaluation is, in my opinion, easy, fun, and to some extent useful for complementing the analysis. However, I still try to keep in mind that relying solely on it can severely skew one’s view.
This indeed sounds like a great way to approach these retail players! I myself have often encountered this Peter Lynch-esque examination of stores and product levels as part of my own analysis. However, examining the functionality of an online store is new to me, and I haven’t implemented it in that way before. If one considers the applications of this method, it can be applied to a large number of different companies! For example, from Marimekko’s online store to Kamux and Fodelia. The functionality of digital channels and encouraging purchasing decisions are indeed a very essential part of business nowadays.
Based on my experience, you can sometimes get a little insight into certain companies’ short-term performance in advance if you are familiar with, for example, variables in their cost structure for which some entity regularly publishes data. However, this seems to work best for less-followed and unsexy companies. For a couple of springs/summers, I’ve been tracking, for example, the development of different harvests to get a small edge on Atria and Apetit. For Aspo, I regularly follow, for example, the Baltic Dry Index, which the company itself has highlighted as descriptive for ESL. For some real estate companies, various open geospatial datasets could work for predicting the long-term development of fair values if one knows the geographical distribution of the portfolio’s properties. In these cases, however, one must always maintain a sense of proportion: I approach it like a factor analysis, so at least one variable is somehow clear.
An interesting opening, and especially following brick-and-mortar stores is perhaps one of the easiest, because they’re public spaces. I remember once at my workplace, we went to count the cars in a competitor’s parking lot and compared them to our own company’s customer numbers at certain times. Price information is also really easy to compare, and as a former Mystery Shopper, I definitely noticed where customers were served and where they weren’t.
Twitter is absolutely essential. I’ve found companies’ good-natured IR messages particularly valuable, for example, when they announce the approaching earnings release and so on. But there’s a lot more to sense there too.
Edit: I ended up opening a separate thread for this after all, so if you’re interested in discussing the topics in this post, welcome to the other thread linked below:
I was already about to open a new thread with the title: “Processes behind analysis, company monitoring, and investment decisions”, but then a recommender threw this thread my way. So, let’s try to put the thoughts here, so there’s no need for a new thread. A question for @Verneri_Pulkkinen: if this new direction of discussion takes off, could the title be sharpened a bit towards what I mentioned earlier?
To the point.
What are your processes behind your analysis, stock monitoring, or investment decisions? Or what do you think they should be (I dare to suspect that small investors are not always very systematic in their analysis)?
For years, I’ve been what I assume is a very typical small investor, who casually reads earnings reports, news, forum posts, Twitter tips, and analyses, but whose activity isn’t very systematic. Unfortunately, for many years, I mostly dug into the most clickbait-y stuff and uncertain rumors instead of trying to deeply understand the content of the company’s own materials or those from reliable analysts.
However, in recent years, I’ve tried to sharpen my approach. Perhaps the first step in this direction was deciding to start respecting the company’s own materials. Earnings reports, annual reports, CEO interviews, and investor presentations form the backbone of the analysis. I try to go through these, either by making small separate notes (basic notes, like screenshots + bullet points) or by underlining and commenting on the actual report. Writing is an excellent way to organize thoughts, and often I try to write some kind of summary either here or on Twitter. Just today, I went through Qt Group’s latest announcements on Twitter in this style:
If I’m looking for a new company for my portfolio, I might go in the following order:
Inderes’ comprehensive report
The company’s own website/investor pages
Management interviews, CMDs (Capital Markets Days), or investor presentations, e.g., from the last year or two
Earnings reports from previous quarters as text + the latest annual report and financial statements
Forum discussions and Google searches
After these, I likely have some kind of 3-10 page messy Word note bundle, from which I try to structure one long post or a Twitter thread. Writing forces me to think once again about what I actually know or don’t know at the moment, and whether my analysis is even on a basis that I dare to publish. Often, publishing still yields some good comments from fellow investors.
If I’m following the story of a company already in my portfolio, it might go something like this:
I watch the earnings live stream if one is organized
I read the report and compare it to Inderes’ forecasts
I pick interesting points from the earnings report into my notes
I follow the webcast and, if necessary, ask management about observations from my own notes (this is sometimes awkward for an amateur investor, but you learn to tolerate shame )
While watching the webcast, I write notes (screenshots + bullet points)
I add the numbers to my own Excel spreadsheets (for those companies for which I keep Excel files)
I write a small update on my observations for the Inderes forum or Twitter
So, there’s already some kind of backbone there, but I could still be more systematic and thus save time and effort.
What are your processes like, others? What could I add to mine? And how do analysts handle starting to monitor a new company or monitoring a company already in their portfolio? Would it be possible to inquire how, for example, @Joonas_Korkiakoski or @Atte_Riikola proceed in their daily work; both with monitored companies and companies outside of monitoring?
Edit: This topic has also been discussed in Inderespod. I’ll have to listen to it again sometime, as I can’t for the life of me remember what @Juha_Kinnunen and @Petri_Gostowski chatted about here:
Finally, a poll where you can assess how process-driven your investing is. So, evaluate the truthfulness of the statement in your own case.
Do I have clear processes that I follow in company monitoring, analysis, and making investment decisions?
Regarding LinkedIn (or rather, open positions), valuable inside information often seems to leak concerning content. A clever person can pick up on expansions into new markets (seeking talent in country X or with language skills Y), and sometimes into new technologies or industries (seeking technology Z, e.g., a blockchain or VR expert, or perhaps understanding of renewable fuels, specific chemical processes, etc.).
LinkedIn also provides a good indication of the work atmosphere if you can check how much turnover there is in a company, how long people have generally stayed in their roles, etc. Sometimes, when a large number of new positions open up, the primary consideration is whether new funding/strong growth is behind it, or just a massive exodus of employees.
Public trade registers from various countries can be used to support analysis and research. They often contain detailed information on, for example, subsidiaries of listed companies and their financial statements. Below is an example list of trade registers.
Statistics on short selling can also be used to support equity research. Here are links to the Finnish, Swedish, and Norwegian financial supervisory authority websites where significant short positions are registered.
If one considers the applications of this method, it can be applied to a large number of different companies! For example, from Marimekko’s online store to Kamux and Fodelia. The functionality of digital channels and encouraging purchasing decisions are indeed a very essential part of business nowadays.
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