Field Research

[LongHaul]

I think there may be some misconceptions about field research that I wanted to clarify for people. Everything is not on the internet.  Let me repeat that - Everything is not on the internet.  There is a ton of information in people's heads that is often super important information that can sometimes only be found by calling or meeting with people and talking with them.

 

I have found in my career that field research can be critical to understanding a business, it's risks and management. 

You don't need any special expertise or to hire a bunch of consultants at high prices.  I have almost never paid anyone and talked to all types of people.  In fact, you may get better information by not paying, as that can bias your sources.  Don't expect 100% of people to talk with you - perhaps 30-40%.  But you just keep calling and must be persistent.  I can initially be shy but I just line up a bunch of contacts and crank through them and try to see who I can get on the line.  No need to have too much to THINK.

 

In your research you will sometimes realize that you don't fully understand a company and need to reach out.  I just want to encourage everyone to reach out to people in the industry and not be shy.  Don't ask for inside information.  But most general information for long term investing isn't even close to that anyway. 

 

You can do this just by calling people who work for the company, competitors, suppliers, customers, etc.   

 

 

 

[merkhet]

I think there may be some misconceptions about field research that I wanted to clarify for people. Everything is not on the internet.  Let me repeat that - Everything is not on the internet.  There is a ton of information in people's heads that is often super important information that can sometimes only be found by calling or meeting with people and talking with them.

 

I have found in my career that field research can be critical to understanding a business, it's risks and management. 

You don't need any special expertise or to hire a bunch of consultants at high prices.  I have almost never paid anyone and talked to all types of people.  In fact, you may get better information by not paying, as that can bias your sources.  Don't expect 100% of people to talk with you - perhaps 30-40%.  But you just keep calling and must be persistent.  I can initially be shy but I just line up a bunch of contacts and crank through them and try to see who I can get on the line.  No need to have too much to THINK.

 

In your research you will sometimes realize that you don't fully understand a company and need to reach out.  I just want to encourage everyone to reach out to people in the industry and not be shy.  Don't ask for inside information.  But most general information for long term investing isn't even close to that anyway. 

 

You can do this just by calling people who work for the company, competitors, suppliers, customers, etc. 

 

+1

[Orchard]

How do you find your sources and their contact information?

[LongHaul]

To find people you just have to put the time in and be creative.  Linkedin, figuring out suppliers, customer, resume searches, articles written by industry people, industry forums, etc.  If you put your energy into it you can figure out almost anything.   

 

John Rambo "I always believed that the mind is the best weapon"

[Brett]

I couldn't agree more - I've gotten more out of a well-timed fifteen minute call than hours worth of reading

[jawn619]

Can you give details in your scuttlebutt approach? I'm curious about if anyone has a systematic way of doing it. My main question is... with so much to do and so little time/effort/attention, how to do leverage your time talking to suppliers,customers, former employees, etc.

[investor1]

Despite its cheesy title and cover, I found The Sleuth Investor to be an excellent guide to field work.

[Uccmal]

Interesting.  In my old job  I used to get alot of interesting scuttlebut, that was unsolicited, and not insider information.  As pertains to Magna International I dealt with lower tier suppliers to Magna, as well as Magna.  What I observed was that Magna operates at the cutting edge of technology across their fabrication, and supplier chains.  They are the Walmart or Amazon of the automotive sector.  They would put the screws to suppliers in various ways.  One supplier of some kind of of of little bolts would get calls in the middle of the night to bring parts from Toronto to Loiusville (bring them, not ship them).  Its tough being a lower tier supplier in alot of industries.

 

I have never invested on any of this knowledge, mostly because Magna is already priced perfectly. 

[Travis Wiedower]

Despite its cheesy title and cover, I found The Sleuth Investor to be an excellent guide to field work.

 

One of my favorite investing books. Some of the stuff is a little out there (borderline illegal?), but it definitely got my mind working on ways to be more creative in my research.

[augustabound]

I may need to read Sleuth again.

All I remember is stalking executives from companies you're interested in.

Waiting in the lobby near coffee time and following them to their favourite coffee house and eavesdropping.

 

Judging by the people who liked the book. I may have missed a lot............... :D

[LongHaul]

Sleuth Investor was a great book.  I highly recommend.