One of the first things that investors like Michael T Haas look at when considering buying a business or its stock is financial information. This information consists of financial statements, balance sheets, and other documentation. Most companies create the documentation according to the same accounting standards, which makes reviewing it relatively easy and straightforward.
In addition to this information, most investors also want to get a feel for businesses’ management styles and market positions. There is no single commonly accepted source of information that has this data. Also, much of it is very subjective.
Just like when dealing with people, first impressions can be very important when dealing with businesses. Today, websites can provide a lot of information about businesses. A website can tell much more about a company than just provide numbers in statements and reports. Paying attention to how well a website is organized and how it presents information can tell you a lot about how the company sees itself. Some websites give very little detail and seem to be more of a monument to management and their bios than anything else. Other businesses may hire fancy marketing agencies that create beautiful websites with very little content. All of this speaks volumes about a business.
Annual reports can also help investors see how companies view themselves. A report may be focused on market trends, customer profiles, and specific facts, or it may have endless pictures of executives touring business facilities.
Most big businesses have public relations departments that work with media and spread news about the company. Some of the news may relate to new products, some to annual meetings, quarterly results, and partnership updates.
Looking at a number of press releases for a certain period can also give you a great feel for a business and see how open, honest, and upfront it is. Ideally, you want to invest in businesses that talk about both good and bad things, make a lot of progress, but at the same time are not afraid to admit their mistakes and shortcomings. You should be worried if all you see are generic sentences that have zero meaning in them. If a company doesn’t say anything specific for some period of time, it probably doesn’t have a lot of specific things happening.
Obviously, you don’t want to rely just on the information that comes from the business itself. Journalists and experts analyze businesses all the time. If you are dealing with a big company, you can probably find a number of stories and updates about the company just by typing its name into a search engine.
Things that journalists say should be taken into account; however, they are not gospel. An opinion of a journalist is just that, another opinion.
Intelligent investors like Michael T Haas also evaluate businesses from the customer perception perspective. They are looking for businesses that have happy customers, great products, and advertising campaigns that deliver results.