Philip Fisher’s 15 points

I am reading a wonderful book – Common Stocks and Uncommon Profits by Philip A. Fisher which I bought in 2006. Well I am glad that I am reading it now as I can appreciate these points now more than ever. Not that an average reader can not comprehend these without the Masters degree that I went through. It just has to do with phase of the life I am in. I am “thinking” again. It also feels good when I read something in these classics and see that being applied by people at my firm. So much for banter. Let’s get down to the points:

1. Does the company have products or services with potential to add to sales for at least several years?
2. Does the management have ability and determination to keep looking for new products and services?
3. How effective are the R&D efforts of the company relative to its size?
4. Does the company have an above-average sales organization?
5. Does the company have  a worthwhile profit margin?
6. What is the company doing to protect and improve the margins?
7. Does the company have outstanding labor and personnel relations?
8. Does the company have outstanding executive relations?
9. Does the company have depth to its management?
10. How good are the company’s cost analysis and accounting controls?
11. What’s the company’s competitive position in relation to its competitors?
12. Does the company have  a short-term or long-term outlook in regard to profits and growth?
13. Does the future growth require additional equity financing in the foreseeable future?
14. Does the management talk freely to investors when times are good but “clam up” when they have bad news?
15. Is the management of unquestionable integrity?

I don’t think these points need elaboration by me. Read Fisher. In any case, an investor would do himself and his clients a great service if he builds his research around these points and only conservatively pick the investments that score high on majority of these.

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