A few years ago, I was at a company that eventually went bankrupt. Prior to that, the CEO repeatedly used EBITAD as the measure on how 'well' the company was doing, and insisted that before amortization and depreciation, the company was showing a profit!!!! It then went bankrupt not once, but twice, then shut down. Thanks, Phil, as this indicator alone is worth it's weight in gold!
But then what happens if the person doing the scoring becomes corrupt? Or what happens if people stop thinking and instead just "vote with their money" based on an arbitrary scoring system?
Hi Phil, Management is the most challenging part of the 4 M's I think. Moat can be tricky, but I have typically put companies with unknown moats in the too hard pile. So far, my best impressions of management come from actually listening to them speak in the earnings calls. I find that after doing all my research and really understanding the company, I am more able to pick up on personality traits through earnings discussions. If I feel like I'm talking to the financing guy at the used car lot, I move on immediately. I also like to look up information on sites like 'rate my boss' or 'rate my employer.' I'm a big believer that culture comes from the top and if there is consistent negative commentary from employees, I do my best to take note! I would be really interested in the opinions of others here! If you (all who are reading this) have any direct resources or tactics that you have used in analyzing management, I would be thrilled and extremely grateful for your insight and help!
Cory Milne You can read the internal auditors report for any other factual findings or if any opinions are disclaimed. Also reading the past history of the CEO and understanding signals of possible stock price manipulations might help.
You can roost of these from looking at the co.'s balance sheet. When I check for good management, I read through glass door ratings, google customer reviews, and I watch interviews with management on youtube etc.
it is always good to listen to your videos you can make investing look not as complicated as other make it out to be . Have been to your seminars and they are great keep up the good work
Is this a good sign of management to have a company cut completly their dividend during this pandemic or it would be better to reduce it? What do you think? By the way I love your audiobook Rule #1.
Valuable. I like reading "related party transactions" in proxy & 10k. Reading shareholder letters prior to previous contractions is also a good barometer of management transparency and accountability.
you're channel is a straight 10. It's awesome! keep up the great work. I recommend you're book and you're youtube channel to all my friends. Great Work sir!
Thanks for the insights on the topic of management integrity. A CEO acquaintance of mine to;ld me he invests in the company he manages plus the businesses of CEO's he personally knows because he has come to know their character.
Been following you for a while, Phil. This for me was one of your best videos yet. Very helpful ideas and concepts for the beginner like me. Keep em coming. Sure do appreciate it.
10 out of 10 to you sir...very very spot on and useful info...thanks a million for sharing it with us who have been shooting in the dark until now...a really wake up call 👍👍👍
Thanks for sharing Phil, honest and compacted advice! i appreciate it! hope to go to one of your conferences soon, will like to have mi Rule #1 book signed and learn more. Regards!
I need learn how to read through management talk and properly analyze a 10-k and a 10-Q. Also I think International Reporting Standards(IFRS) may be more strict than US GAAP so id like to look at good management in a foreign company that has possible higher financial reporting regulations any suggestions?
Hi Phil, Thank you for all the value you provide. Management is always subjective and a bit tricky on interpreting their messaging to investors and market. A question on this, when you analyse a business and consider Management, how should you rate the fact that insider trading is mostly and significantly SELL and not buy. For me it gives feeling of cashing in and maybe not too much believe in further growth. The margin of safety is there. What are your thoughts on this? Thanks
A toxic narcissistic woman in a workplace is the most unaccountable person in the world in my experience. They can get away with anything. Meanwhile the staff are monitored and accountable at all times
This is what all us little guys can do: In every proxyvote, vote 1) All nominees - against; 2) Auditor - against; 3) Executive compensation - against; 4) Individual Shareholder proposals and resolutions - for
Where do I find the ROIC of a company? Or do I have to manually calculate it? (Not a huge deal, but would be easier if a website already calculated it🙃)
Video Summary: Phil Town 5 signs a business has a bad management: reading a CEO letter and looking at share holder ( aka 10 K). Also listen to their quarterly earning report. Analysts ask Qs of the CEO. You can tell if they passionate to give report or just fulfilling their obligations. If you can't under stand what is going with company reading quarterly report or CEO annual letter, could happen because management is trying to mislead you. Dont invest money in such company. CEO needs to have at least integrity, if no talent. 1. Are their paychecks going up with size of the company? With acquisitions are they paying themselves more. ROIC is key number to look if that ROIC I going down, debt going up CEO paying going up, This is bad CEO. 2.If a CEO has net worth of 4 mn and not buying stock in company, bad sign. Same fro Boards of directors. 3. A bad CEO sells a Company's stock and says his stock is undervalued. Lets say CEO got a secondary offering, He sells a stock at 75 cent, when the existing price is 1 USD. They are getting current share holders at loss. 4. CEOs letter is sound smog like a pitch. Good CEO letter is what WB writes. 5. CEO focusing on EBITDA on quarterly report, as if it same as earnings, is baloney. Many times depreciation does not cover real appreciation. A good CEO talks about Free cash Flow and earnings of Business, not EBITDA.
It's not always a bad sign. You must look at things like debt to asset ratio and debt to income ratios. Phil has free calculators on his site that help make reaching these conclusions easily. Another big one is if the free cash flow has been positive for many years and the management has remained the same. If the management has changed and they are thinking about taking on too much debt that could be a very bad sign.
Nick Pinto : ok, here's how to do it; 1st: send several 100 emails (even 1000's) to random people telling them they've won the lottery 2nd: in the emails that respond, tell those good folks they will get a sample or portion of the proceeds and that they should deposit the check in their bank acct. and to then for tax purposes, send back to you some of that money via pay pal, green dot, or some other form of a prepaid card where you get the pin and acct #. 3rd: once the proceeds of this scam...ooops I mean plan, start showing up, you will have the beginning of your own personal business. 4th: repeat the above steps as needed until you become a millionare. Cheers
"Look for a business so simple even an idiot can run it" .. these are the words of Warren Buffet. You should quote him not make it sound like these are your own words Phil :) .. but still great tips
Lol if it's around long enough an idiot will run it lmao... Accurate My CEO is alllllllllllll about the EBITDA and we're in a capital intensive industry requiring high gearing (were at least 1.1:1 at best but probably closer to 1.8) ... Also privately held... His background is finance (former CFO), and our new CFO comes from a company that got ran into the ground and bought out for pennies on the dollar... Ironically we're down 30+% YOY in revenue and 40+ in profit. Just announced we're restructuring and they're potentially selling off my site for pennies on the dollar (do you see a trend?). Our capex ≈ 20% of revenue (or 284% of profit for the year lmao) but that's all on new facilities that has nothing to do with my location. Been around since WW2 and they've been scavenging parts since before I was born....
Phil Town is probably the kindest and most honest looking person from the investing field.. Great videos and a lot of helpfull info 👍
A few years ago, I was at a company that eventually went bankrupt. Prior to that, the CEO repeatedly used EBITAD as the measure on how 'well' the company was doing, and insisted that before amortization and depreciation, the company was showing a profit!!!! It then went bankrupt not once, but twice, then shut down. Thanks, Phil, as this indicator alone is worth it's weight in gold!
Just picked up rule#1. Next on my reading list after I finish The Intelligent Investor
We need a public score card of CEOs and their practices.
Fabulous idea!!!!
Glassdoor has CEO ratings but I reckon that doesn't get to the heart of what we're looking for.
Also politicians
But then what happens if the person doing the scoring becomes corrupt? Or what happens if people stop thinking and instead just "vote with their money" based on an arbitrary scoring system?
Hi Phil,
Management is the most challenging part of the 4 M's I think. Moat can be tricky, but I have typically put companies with unknown moats in the too hard pile. So far, my best impressions of management come from actually listening to them speak in the earnings calls. I find that after doing all my research and really understanding the company, I am more able to pick up on personality traits through earnings discussions. If I feel like I'm talking to the financing guy at the used car lot, I move on immediately.
I also like to look up information on sites like 'rate my boss' or 'rate my employer.' I'm a big believer that culture comes from the top and if there is consistent negative commentary from employees, I do my best to take note!
I would be really interested in the opinions of others here! If you (all who are reading this) have any direct resources or tactics that you have used in analyzing management, I would be thrilled and extremely grateful for your insight and help!
Cory Milne You can read the internal auditors report for any other factual findings or if any opinions are disclaimed. Also reading the past history of the CEO and understanding signals of possible stock price manipulations might help.
You can roost of these from looking at the co.'s balance sheet. When I check for good management, I read through glass door ratings, google customer reviews, and I watch interviews with management on youtube etc.
If only I had seen this video earlier. Yet, better late than never. Thanks a ton Phil ❤️
I have never invested real money. Your movies makes me really motivated to start investing. You are giving some great tips. I really like your tone.
The Footballer?
This has to be the only channel on youtube that teaches real investment fundamentals without trying to upsell you on their portfolio. Subscribed!
Binge watching all your vids. It's awesome!
it is always good to listen to your videos you can make investing look not as complicated as other make it out to be . Have been to your seminars and they are great keep up the good work
I’ve been a subscriber for a year, this is my first time seeing this video. Great, it’s just great, keep making great videos Phil!
Is this a good sign of management to have a company cut completly their dividend during this pandemic or it would be better to reduce it? What do you think? By the way I love your audiobook Rule #1.
The only video I really felt made a diff to me in my analysis , thank you !
How is the RETURN ON INVESTMENT CAPITOL, is it going down?
Is DEBT INCREASING?
Is ROI going down?
The CEO have stake on the company?
I would have never looked for these things without this video, thanks!
Talent & integrity, so scarce !
Even though I'm not an investor, as someone who wants to find reputable employers, these items help know what to research.
Thank you for what you do Phil. I wouldn't be investing right now if it wasnt for you!
Valuable. I like reading "related party transactions" in proxy & 10k. Reading shareholder letters prior to previous contractions is also a good barometer of management transparency and accountability.
That's crazy I was just reading this chapter in his book.
you're channel is a straight 10. It's awesome! keep up the great work. I recommend you're book and you're youtube channel to all my friends. Great Work sir!
Thanks for the insights on the topic of management integrity. A CEO acquaintance of mine to;ld me he invests in the company he manages plus the businesses of CEO's he personally knows because he has come to know their character.
Love your videos. They area not click bait videos like most videos online. Downloaded your book on Audible and now I have ordered a hard copy aswell.
I feel empowered listening to your tutorials. Thanks
Yes and if we all invested in companies that look after the planet we would also change stuff for the long-run.
Been following you for a while, Phil. This for me was one of your best videos yet. Very helpful ideas and concepts for the beginner like me. Keep em coming. Sure do appreciate it.
Excellent excellent video Phil - keep up the great work - I think the 'idiot running the company' quote is usually attributed to Warren Buffet.
just finished reading the InvestED, ordered Rule #1 from Amazo, looking forward to learning more...thanks!
10 out of 10 to you sir...very very spot on and useful info...thanks a million for sharing it with us who have been shooting in the dark until now...a really wake up call 👍👍👍
Thanks alot Phil....a very kind man indeed....nicely explained and soft spoken.
Thanks for sharing Phil, honest and compacted advice! i appreciate it! hope to go to one of your conferences soon, will like to have mi Rule #1 book signed and learn more. Regards!
Uber has bad management!!! I love your cute little intro Phil! 😄👍🏾🙌🏾
I watch for investing advice. I watch when I need cheering up. Such a nice man. Just don't mention bad management to him.
You're videos are great... and they just make sense. Awesome!
Thanks for this very invaluable video Phil!
Thank you very much. I really like your philosophy in managing business
Please make a video on corporate governance. The steps to identify a good corporate governance
Excellent video. Thanks Phil
Wow. This was concise and excellent.
Thank you so much for this video! Such great advice, should re-post this one I'm really glad it showed up on my feed.
Thank you for watching, Justin!
oh man the public offerings, diluting current shareholders stocks is such a frequent problem...
I need learn how to read through management talk and properly analyze a 10-k and a 10-Q. Also I think International Reporting Standards(IFRS) may be more strict than US GAAP so id like to look at good management in a foreign company that has possible higher financial reporting regulations any suggestions?
Usually, the regular hourly employees know the most about a company’s performance.
not to be a suck up but.......great character .........like you , Phil Town .
Awesome video! Thank you!
Thanks! Sir I am learning a lot from you...
Where can I find out how much net worth a CEO is invested in his company?
Ask him
I can't find shareholder letters for some of my chosen companies... Do a lot of CEOs just choose not to do these?
Thank you.
Hi Phil,
Thank you for all the value you provide. Management is always subjective and a bit tricky on interpreting their messaging to investors and market. A question on this, when you analyse a business and consider Management, how should you rate the fact that insider trading is mostly and significantly SELL and not buy. For me it gives feeling of cashing in and maybe not too much believe in further growth. The margin of safety is there. What are your thoughts on this?
Thanks
Insider selling is not great, but can happen for reasons other than the stock being overvalued. However insider buying says one thing: Undervalued
how about EBITDA in telecom companies?, I heard that in these kind of companies CAPEX and EBITDA are very crucial, are you agree or no? please help!
A toxic narcissistic woman in a workplace is the most unaccountable person in the world in my experience. They can get away with anything. Meanwhile the staff are monitored and accountable at all times
This is what all us little guys can do:
In every proxyvote, vote
1) All nominees - against;
2) Auditor - against;
3) Executive compensation - against;
4) Individual Shareholder proposals and resolutions - for
Excellent video. Have your audio book, ordering the paper copy too lol
I check Glassdoor. 😄
Where do I find the ROIC of a company? Or do I have to manually calculate it? (Not a huge deal, but would be easier if a website already calculated it🙃)
try quickfs
isnt it illegal for CEO's and members of the board to invest in their own company?
Video Summary: Phil Town
5 signs a business has a bad management: reading a CEO letter and looking at share holder ( aka 10 K). Also listen to their quarterly earning report. Analysts ask Qs of the CEO.
You can tell if they passionate to give report or just fulfilling their obligations.
If you can't under stand what is going with company reading quarterly report or CEO annual letter, could happen because management is trying to mislead you. Dont invest money in such company.
CEO needs to have at least integrity, if no talent.
1. Are their paychecks going up with size of the company? With acquisitions are they paying themselves more. ROIC is key number to look if that ROIC I going down, debt going up CEO paying going up, This is bad CEO.
2.If a CEO has net worth of 4 mn and not buying stock in company, bad sign. Same fro Boards of directors.
3. A bad CEO sells a Company's stock and says his stock is undervalued. Lets say CEO got a secondary offering, He sells a stock at 75 cent, when the existing price is 1 USD. They are getting current share holders at loss.
4. CEOs letter is sound smog like a pitch. Good CEO letter is what WB writes.
5. CEO focusing on EBITDA on quarterly report, as if it same as earnings, is baloney. Many times depreciation does not cover real appreciation. A good CEO talks about Free cash Flow and earnings of Business, not EBITDA.
I don't understand the first tip. Could anyone explain it better for me? Thanks
Why aren't you start your own company? I'd like to invest whole my money to you Mr. Town🥂🤣
Interesting
Hi Phil, what if the company is acquiring debt for potential business expansion..is that a bad sign?
It's not always a bad sign. You must look at things like debt to asset ratio and debt to income ratios. Phil has free calculators on his site that help make reaching these conclusions easily. Another big one is if the free cash flow has been positive for many years and the management has remained the same. If the management has changed and they are thinking about taking on too much debt that could be a very bad sign.
I asked my wife and she told me she as no way to look for a CEO. I guess she is just fine with me!
Hey, I'm from India... I want to start online business... I just want to get started... How should I do it?
I would try asking for help on utube videos. the comment sections are pretty good for quality help.
Nick Pinto lol
Nick Pinto :
ok, here's how to do it;
1st: send several 100 emails (even 1000's) to random people telling them they've won the lottery
2nd: in the emails that respond, tell those good folks they will get a sample or portion of the proceeds and that they should deposit the check in their bank acct. and to then for tax purposes, send back to you some of that money via pay pal, green dot, or some other form of a prepaid card where you get the pin and acct #.
3rd: once the proceeds of this scam...ooops I mean plan, start showing up, you will have the beginning of your own personal business.
4th: repeat the above steps as needed until you become a millionare. Cheers
"Look for a business so simple even an idiot can run it" .. these are the words of Warren Buffet. You should quote him not make it sound like these are your own words Phil :) .. but still great tips
Lol if it's around long enough an idiot will run it lmao... Accurate
My CEO is alllllllllllll about the EBITDA and we're in a capital intensive industry requiring high gearing (were at least 1.1:1 at best but probably closer to 1.8) ... Also privately held... His background is finance (former CFO), and our new CFO comes from a company that got ran into the ground and bought out for pennies on the dollar... Ironically we're down 30+% YOY in revenue and 40+ in profit. Just announced we're restructuring and they're potentially selling off my site for pennies on the dollar (do you see a trend?). Our capex ≈ 20% of revenue (or 284% of profit for the year lmao) but that's all on new facilities that has nothing to do with my location. Been around since WW2 and they've been scavenging parts since before I was born....
I believe our president needs to see this.
why are there so many crooks ?
as the Bible says........... ''a fool and his money are soon parted '' .
As of my writing, 4 CEO’s disliked this video...
He was looking good until I saw that Apple logo then my pretentious meter red lined.