127 - Scuttlebutt on Overlooked Companies

Mental Models discussed in this podcast: Scuttlebutt Quality Investing Capital Stack Dark Stocks Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode127 Scuttlebutt on Overlooked Companies - Areas of Focus Capital Stack: Clean is better. Ideally only common stock. No lending to insiders or other self dealing. Has management issued themselves options in the past? Were the prices reasonable? How much of the company does this represent? "Overdue or delayed payment to insiders." Red flag. This basically menas the company is in default putting your equity at risk. Can't even really mount a proxy fight because the management could force the company into bankruptcy. Filings: Current or pink limited on filings with the SEC I want to see financials. (They don't have to be audited) Some sort of management commentary is nice. (Shows shareholder friendliness) Business Model: Change New products New management Growth of some kind Asset Base: Ideally assts to cover the market cap (providing a margin of safety) Earnings Power: Profitable (every year for 10 years, no more than one loss in 10 years)   Summary: Overlooked companies are often cheap. Therefore, scuttlebutt on overlooked companies needs to focus on filtering for the quality of the business. High-quality and cheap makes for a great stock. Look for abnormal signs of positive potential.