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84 - Would you buy your employer's stock?

The DIY Investing Podcast

Release Date: 07/19/2020

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More Episodes

Mental Models discussed in this podcast:

  • Scuttlebutt
  • Circle of Competence

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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. 

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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.

You can find out more information by listening to episode 11 of this podcast.

Show Outline

The full show notes for this episode are available at https://www.diyinvesting.org/Episode84

Scuttlebutt Challenge: Your Employer's Stock

  • If your company isn’t public, assess it qualitatively or do this work on your spouse's company or where a friend works.
  • If you work for a non-profit or government, do the same.
  • Email me your write-up during the month of July 2020 and I'll send you a response.

Questions to Ask / Areas to Assess

  • Assess the industry
  • Assess your company’s place in the industry
  • What is the culture of your company like?
  • What is the priority of management? Are they shareholder friendly? Are they employee-friendly? Other concerns?
  • How are capital allocation decisions made?
  • How are CapEx decisions made?
  • Does your company earn high returns on capital?
  • Does it use leverage?
  • In summary: Is it a high-quality business?
  • What are the risks?
  • How would you value your employer’s stock? (Write down an explicit intrinsic value)

Summary:

The company you work for should be the first place you look to begin understanding how to perform scuttlebutt. Investors should analyze their employer's stock as a potential investment candidate. Culture, Quality, and Management are key areas.