84 - Would you buy your employer's stock?
The DIY Investing Podcast · Trey Henninger: Private Investor, Portfolio Manager, Business Strategist, and Value Investing Expert
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Show Notes
- Scuttlebutt
- Circle of Competence
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Show OutlineThe full show notes for this episode are available at https://www.diyinvesting.org/Episode84
Scuttlebutt Challenge: Your Employer's Stock- If your company isn't public, assess it qualitatively or do this work on your spouse's company or where a friend works.
- If you work for a non-profit or government, do the same.
- Email me your write-up during the month of July 2020 and I'll send you a response.
- Assess the industry
- Assess your company's place in the industry
- What is the culture of your company like?
- What is the priority of management? Are they shareholder friendly? Are they employee-friendly? Other concerns?
- How are capital allocation decisions made?
- How are CapEx decisions made?
- Does your company earn high returns on capital?
- Does it use leverage?
- In summary: Is it a high-quality business?
- What are the risks?
- How would you value your employer's stock? (Write down an explicit intrinsic value)
The company you work for should be the first place you look to begin understanding how to perform scuttlebutt. Investors should analyze their employer's stock as a potential investment candidate. Culture, Quality, and Management are key areas.