The Management Checklist


 

Now, if you feel that a lot of the points on your “Basic Checklist” are being ticked off and you feel satisfied, you should move on to the next part of the Scrutiny which is “The Management Checklist”.

This is a very necessary part as this identifies and decides whether the people running the company are Trustworthy and Truthful.

The first check should be whether the Board of Directors (BOD) running the company is Family Based or Professional Based. Professional Based Management would include Independent Directors from Various Fields. In the case of Midcaps/Small caps/Micro-caps, most companies will have a Family Based Management as the companies are small. Still it would be better to check on the same. This would also include reading on the Education/Qualification/Experience of each and every member on the Top Level Management (TLM)/BOD team and if it is relevant to the business they are running. It would also be helpful to check for any recent Management Interviews that would be available on YouTube to see if you get a sense of comfort while listening to them.

It’s mandatory to check for any Black Dots on the company or any of the members of the BOD/TLM. This can be done by just a Google Search. All you need to do it add the words SEBI/Fraud/Criminal Activities to their names. You can also check discussion of general public on Valupickr which would help in getting a better understand of the company as well (part of your Basic Checklist).

A check on their shareholding pattern is also necessary. Have any huge stake sales been made recently by the Promoters/Directors/FIIs/DIIs. Stake Sales would be negative for the company and Stake Buys would be positive. They could also be drawing a high amount of salary from the company. This also needs to be checked via the Annual Report.

A track record should be kept if the TLM/BOD are giving out any future specific data in conference calls/management interviews and if that is being followed or not in the future conference calls or management interview being held. This would help in understanding the Integrity of the TLM/BOD. This would help in getting a Better Sense of Comfort.

The Management Checklist in Short:

·       What is the kind of Management? Family or Professional?

·       Have there been any recent Stake Sales by Promoters/FIIs/DIIs?

·       Are there High No. of Associates/Joint Ventures?

·       Have the Company or Promoters or Directors been associated with any frauds or criminal activities?

·       Does the Management/Promoters draw a high % of salary from the company?

·       Are Qualifications/Experience of Promoters/Directors relevant to the Company they are running? 

Once you feel like you can Trust the Management to run the Company with Integrity, the next part of the Checklist would be “The Valuation”.

An MBA, Passed CFA Level 1. Stock Market Investor. Director at http://E-global.in. Like Researching Listed Companies. Music Lover. Gym Goer. Like Travelling.

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