I have little experience in this regard but I can say a few things. For a company to be in the core PF, it has got to have a lengthy future. It has to be in existence for many years to come. And depending of the nature of the business it is in, a couple of quarters of under performance does not matter, but for a year I guess AR should be read. After all, if a company is in the core PF, and a year has passed, the AR should be read to understand what has happened in the year, or what has not happened. One can check what was said in the last AR and if that happened or not.
And if the company does conference calls, it helps more. Dr. Hitesh makes it a point of listening to conference calls for his trading bets. So AR and conference calls help in understanding the tone of management in letters and speech. And depending upon the stock performance and the understanding of the business we can invest more or trim.
Numbers are quantitative, there are no two ways about it, but many other things that pertain to the business are subjective, arbitrary, we can be wrong here. And I think the only way to improve this is by gaining experience.
And if you have 30 ARs to study, you can start with your more convinced bet. Also, I think, the more familiar we get with the ARs, the fast we can skip the unnecessary pages, we can focus on the things that are important. And of course, if the company is small or if we have doubts about the management, then we have to read more including the salaries paid, RPTs, loans given to group companies, unlisted subsidiaries etc.
So depending upon on the nature of the business the company is in, our conviction, our allocation, our trust etc, we can choose to check the numbers and skim through AR, or go through it despite it is exhausting.
Subscribe To Our Free Newsletter |