Comments on: How to Invest: Research and Valuation Process

By: Xyvern

Xyvern — Tue, 30 Mar 2010 17:15:48 +0000

Jae,
Thanks, I was wondering about this for a while now.

By: Jae Jun

Jae Jun — Tue, 30 Mar 2010 06:21:50 +0000

@ Xyvern,

Companies aren’t required to file letter to shareholders. Hardly any do. AMZN is more of an exception so for the rest you should go to the company website and read it from there.

By: Xyvern

Xyvern — Tue, 30 Mar 2010 00:34:22 +0000

Jae,
Thanks for the response. Yes I do download the 10K either from SEC or the company’s investor relation. Let me give you an example, I have DIVX 2009 10K in pdf. I look through it but can’t find the “Letter to the Shareholder”. But for Amazon, it’s on the first page of the 10K.

By: Jae Jun

Jae Jun — Mon, 29 Mar 2010 05:43:12 +0000

@ Xyvern,
If the company doesn’t file it with the sec, the easiest way is to go to the investor relations section on their website. Companies always post the pdf of their annual report.

By: Xyvern

Xyvern — Mon, 29 Mar 2010 04:43:37 +0000

I’ve read couple 10K reports but the strange thing was I couldn’t find the letter to shareholders on any of the companies.

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By: Jae Jun

Jae Jun — Fri, 19 Feb 2010 07:30:05 +0000

Carl,

For small cap companies, you’d be surprised as to how easy it is to talk to the CEO or CFO. Just a little badgering and you get through real easily.

By: Carl

Carl — Fri, 19 Feb 2010 06:04:42 +0000

Excellent post from Ernie, but I think the most difficult part of the research is the “Scuttlebutt”. I would image that for an average private investor like myself there will be no chance that I can talk to a senior executive and ask those questions Ernie mentioned on his post.

By: Michael

Michael — Fri, 19 Feb 2010 03:16:50 +0000

I guess one thing you could do is just take the incremental PPE (i.e. the growth capex you calculated using this method) and calculate depreciation assuming a useful life equal to the average useful life of the company’s PPE (not always explicitly stated, but you can get a ballpark estimate from the notes). If you add this to the original maintenance capex calculation, I think you’ll have a better estimate. You could additionally do some adjustments to account for inflating costs etc.