Fundamental Analysis - Why to consider Management ?

WHILE SELECTING STOCKS, WHY WE SHOULD GIVE IMPORTANCE TO MANAGEMENT? 


Even a small mischievous activity can ruin the totally invested amount by the investors. Neither the background unknown nor the entrusted promoters, Managements, the Indian investors faced losses of several millions being unable to calculate. 


In the book “The Intelligent Investor” Benjamin Graham enunciates about investment like this, 
An investment must provide safety to Capital and at the same time should create necessary income. Not coming under this limit is called Gambling. 


Our investment (Capital) when it may be secured ? The important criteria after analysis with no doubt will definitely be Qualified Management. You are telling about Qualified Management ! But I am only a small investor. So how can I find out whether a management is qualified or not ? 


Generally, qualified management companies stock prices may be high when compared to their Competitors ! Some minimum filters are presented below for analyzing about managements Quality :- 


a) Company and its team involved in that specified field ? Either 20 – 25 years ? or Even more ? Greater will be much better ! 

b) Until this period the said company has deceit the Depositors, Document holders, and stock investors ?

c) Either the Promoters or Management involved in Bribe or Scam connected news ?

d) Either the Organization, Promoters, Management, Government, Allied Organizations, or General public faced any ------------------?

e) The Promoters involved in (with the help of some speculators buying and selling ) varying the stock prices ?

f) Obeying the Laws or even more a step ahead prudently functioning Management ?

g) Considering the Employees and giving Importance, as a mark of respect to act loyal, are all the facilities Provided ?

h) Is the Management considering customers as Assets in doing service ?

i) Considering the Executing business as Almighty, and functioning as Efficiently ?

j) Either the actions declared and Executed by the Management differ?

k) Either the service nor the benefits offered to the share holders are better ?

Like the above filters, many criteria’s can be included in Analyzing about a Managements standard. This is not the End. It is only a start. Moreover the facts considering as important by yourself can also be included. In total before investing in stocks, the companies management standard can be considered better must be borne in mind. 

Fundamental Analysis: Qualitative Factors - The Industry

Each industry has differences in terms of its customer base, market share among firms, industry-wide growth, competition, regulation and business cycles. Learning about how the industry works will give an investor a deeper understanding of a company's financial health. 


Customers

Some companies serve only a handful of customers, while others serve millions. In general, it's a red flag (a negative) if a business relies on a small number of customers for a large portion of its sales because the loss of each customer could dramatically affect revenues. For example, think of a military supplier who has 100% of its sales with the U.S. government. One change in government policy could potentially wipe out all of its sales. For this reason, companies will always disclose in their 10-K if any one customer accounts for a majority of revenues.

Market Share

Understanding a company's present market share can tell volumes about the company's business. The fact that a company possesses an 85% market share tells you that it is the largest player in its market by far. Furthermore, this could also suggest that the company possesses some sort of "economic moat," in other words, a competitive barrier serving to protect its current and futureearnings, along with its market share. Market share is important because of economies of scale. When the firm is bigger than the rest of its rivals, it is in a better position to absorb the high fixed costs of a capital-intensive industry.