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Qualitative Analysis


ikussain
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Hi guys,

 

I was wondering what is your approach to assessing a company from a qualitative standpoint short of calling the company directly, e.g. its industry, competitors, structural specifics of the business, its management, pricing power, cyclicality.

 

As an example, I was reading a Form 10 issued by Brunswick Corporation in regard of its fitness equipment division spinoff. The entire industry of commercial fitness equipment is estimated to be as small as 3 billions dolls, so there is not much information online regarding the industry specifics. Those researches that I stumbled upon cost north of 4000 USD, which I am obviously not going to pay.

 

 

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Guest cherzeca

due diligence digging.

 

for example, on a lark, I googled your question and came across reference to your report costing $4500.  but also came across a link to a "free sample":  https://www.gminsights.com/request-sample/detail/443

 

now I didn't request this since I dont want it, and it may be a useless summary, but that would be your next step...which hopefully results in another step.  for example, an article linking to the existence of this report set forth all of Brunswick's competitors, so you could read 34 act filings for them, which might open up more avenues.

 

I personally have found that these industry reports are done by consultants/information companies that provide the most value to people who want to do the least work.  it sucks, but if you value your money (and not paying $4500 for some report), you have to value your work

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Hi guys,

 

I was wondering what is your approach to assessing a company from a qualitative standpoint short of calling the company directly, e.g. its industry, competitors, structural specifics of the business, its management, pricing power, cyclicality.

 

As an example, I was reading a Form 10 issued by Brunswick Corporation in regard of its fitness equipment division spinoff. The entire industry of commercial fitness equipment is estimated to be as small as 3 billions dolls, so there is not much information online regarding the industry specifics. Those researches that I stumbled upon cost north of 4000 USD, which I am obviously not going to pay.

 

I know this isn't answering your question, but I would be careful with this particular spinoff unless it sells off severely post-spin.

 

From the Form 10: "In fiscal year 2017, sales to our largest customer, Planet Fitness, made pursuant to an exclusive contract, accounted for approximately 12% of our total sales. In 2018, we were involved in contract negotiations with Planet Fitness. The resulting new contract with Planet Fitness is not exclusive to us, but allows Planet Fitness franchises to purchase from Life Fitness or two of its competitors."

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You could also apply your own chain of logic or reasoning. Sure if you live in a bubble you might not have much actual data but logic - like mathematics requires very little real world data. You can ask high level questions about the nature of steel perhaps, or value added. or distribution. or demand or pricing models...you can then try to see if your no data chain of logic then matches some facts you can ferret out. But you don't have to start with the gym industry. You can look at it from tangents that don't have to do with the industry specifically but impact it, perhaps health trends, social dynamics. You could even not know the answer at all, but if investing is a relative art, then you can ask what other fields give you the same outcome or result. I have sometimes excluded a field not because i knew anything about it but that I found an outcome that matched my goals could be achieved without needing to get into the field I was contemplating.

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One of the best ways imho is to ignore all the IR and go right to the products page and just be a customer. Do they offer a better value than competitors? A good product offering/revenue line is #1. From there you can do the traditional assessment.

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One of the best ways imho is to ignore all the IR and go right to the products page and just be a customer. Do they offer a better value than competitors? A good product offering/revenue line is #1. From there you can do the traditional assessment.

 

This is one of the better advice.

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