Читать книгу The Little Book of Investing Like the Pros - Joshua Rosenbaum - Страница 20

In Step III, it's time to perform a much deeper dive on those opportunities that survived the culling process. More thorough business and financial research is needed following the early stage vetting. In other words, this is the key due diligence phase.

On the business front, we demonstrate how to judge whether a company is high quality, or can become high quality. This involves examining its core strengths as well as the risks that could potentially derail your investment thesis. Much of this work is qualitative, requiring sound judgment and insight. Experience and familiarity with specific business models and sectors is particularly helpful here. Your personal interests and perspectives may also come in handy.

On the financial front, the company's core financial statements need to be thoroughly scrubbed to determine its track record, health, and prospects. A large portion of this analysis is simply making observations about key financial items and seeking defensible answers. You must be acutely aware of any key weaknesses related to growth, margins, FCF, or balance sheet. We also show you how to develop a financial projection model, which serves as the basis for your valuation work in Step IV.

If you can't gain comfort with the business and financial case, then the investment is probably not going to work for you. And that's okay. You don't want to invest in a business you don't understand or believe in. And, you don't want to invest in a company with a weak financial profile that is unlikely to dramatically improve.