intelligent investor summary pdf

Hello friends, in today’s article we see chapter 3 of the security analysis book. this chapter depends on sources of information. in these sources include the Annual reports of the company also. so let’s see which type of source of information available.

Previous Chapter 2: Problems of stocks Analysis

So where we get the information about the company, before that you have to know which type of information we need to analyze the company.

So the author says, ” Analysts required three types of information”

What is Information Required:-Annual Reports of the company: security analysis

I) Terms of Issue

II) Data of Company

III) Data of Industry

so whose try to buy securities what is his terms and what condition they are buying the security? this all question come in this. (Annual Reports of the company)

so let’s starts with the terms of the issue

I) Terms of Issue:- (Annual Reports of the company)

Regarding Bonds, for this, you have to read the Bond indenture ( Bond Indenture is the type of contract and on that, all each and every terms and condition is written.)

Regarding Stocks, Consult the Charter ( In this charter the articles of incorporation present together with by-law)

Those documents are available with the SEC and proper stocks exchange like NYSE

II) Data on Company:

in these, we see the different types of sources that give the information about the company

so let’s see one by one

1) monthly Statement:

In this, some companies show the monthly statement, some not show, so those show, let’s see what the logic behind that of publishing the monthly statement.

we have some problems, If some company performance is improved then they show the monthly statements and those company performance going bad then they close the monthly statement means they discontinuous with these monthly statements reports.

So very few companies only publish the monthly statement

2) Quarterly Statement:

The quarterly statement you can get easily on the stock exchange, In India, you can get on the BSE and NSE stocks exchange websites. (Annual Reports of the company)

So each and every company issues the Quarterly statements, but some businesses like the Sugar business, chemical industry, fertilizers, and agriculture. so this type of company issue the moving figure of 12 months.

Because in four months earning is going high, and in next four-month, the earning comes to zero so if you read this quarterly statements then you get confused with this earnings so for this they issue the moving average figure of 12 months. The Quarterly statement is issued every 3 months later.

3) Semi-Annual Reports:

in this, the semi-annual reports are not the standard procedure to issue every company.

But some company publish the semi-annual reports, in this also have to detail knowledge of half fiscal year.

4) Annual Reports of Company:

Annual reports, so this report is mandatory and you get the more knowledge about the company in this reports.

So in this reports also present the remarks of President of company and vicechairman of the company about how the company does well in past and how to do well in future also means, the outlook of future of the company.

In 1940, some companies only show income statements and some companies show the balance sheet, and some companies show both.

so those show the income statement they don’t show the sales figure of the company in the income statement.

In the balance sheet, tangible and intangible assets are put together and nothing is separate in that time to distinguish. (Annual Reports of the company)

So they don’t show the sales figure because they say, competitors know about their sales figure and their competitor harm the company or business.

But nowadays, this type of problem does not remain.

5) Periodic reports to Public Agencies:

The Railroad and Public Utility companies send the reports to the central and state commission.

So in this reports the data is very much detailed as much as they don’t give the detail to the shareholders also.

So those are commission they publish the report regularly and data discloses.

So The author gives some examples of Companies’ commissions that publish the reports on it.

Cram Auto Service, This company give the weekly figure of motor car companies

Vilatant and Gray, This company gives the reports of sugar companies and how much production happens in crop year. (Annual Reports of the company)

The Oil and Gas General, This company show the reports on how much oil and gas is produced.

The Welvag, this company give the detail reports on how much equipment is ordered by companies.

The Dow Jon’s Company, This company give the reports on how much production of steel in weekly basis.

6) Listing Application:

Those are stocks exchange and those are securities exchange, in that so many things are disclosed when the company is going listed.

Or This is not disclosed detailed to the investors and this listing is happening irregularly.

But nowadays this information gets easily.

7) Registration Statement And Prospectuses:

The Registration Statement is bulky and those are the prospectuses they also more than 100 pages.

so this material has some value, you can see them.

8) Miscellaneous Official Reports:

This government division includes like US coal Commission.

This division gives the reports on the coal company.

so this type of division discloses the data that the own company never disclose data before.

Because the company discloses the data. (Annual Reports of the company)

Just like trade commission, that include natural gas pipeline or whatever come in that commission.

9) Statistical and Financial Publications:

An agency like Standard and poor, Moodys

So they issue reports on the company and whatever the data in this they are accurate, but we can’t fully rely on that we have to see the Annual reports of the company.

10) Request for Direct Information from Company:

In this, you can take the direct information from the company.

In this, you have to visit companies website and see their about pages and call them and ask what information you want. (Annual Reports of the company)
So Benjamin Graham says, ” you are the owner of the company, this never forgot. So whatever the big officer are there, you are the employer of them. so act like that”

The authors say, ” If you force the company legally to know about information, sometimes it’s gone expensive or you have to face the Courts.”

But you can ask him about the information that other companies are giving and why not this company is not giving, then you can ask this, so most of the time you get the information.

so lastly we have to see the Which type of industry is

III) Data on Industry:

so what you need to know about the industry, following are some points that help to clarify the which type of industry is.

1. Histroy Of Industry: IN this you can see the how much old are industry, like now tech industry, this industry is 20 years old, like that you know the history of that and also know the DoT Com bubble. This type of history you have to find.
2. Current State of Industry: At this point, you have to see what now the industry is doing and what the current status. (Annual Reports of the company)
3. The prospective state of Industry: At this point, you can see what the perspective of the industry means what is the outlook of the future of this industry, how well do in the future.
4. Problems of the industry: In this, you have to see the current problem and also the future coming problems in the industry.
5. Data regarding output, consumption, stocks unfilled order, etc.

so above all types of questions answer, you have to know.

so this is good points to known about industry and you can take the good decision because you know the basics of the industry.

This is all about the Security analysis book, chapter 3 sources of Information.