Poll: Do folks want a "weekly analysis club

[nevercontent]

Someone emailed me off boards to suggest that I take the “weekly analysis club” idea I’ve been doing in Rulebreakers and expand it into something for everyone on a (new) public MF board. I’m totally open to that, but I want to find out if there really is genuine interest in it first, and I figure this is a good board to ask on.

Let me just really quickly summarize what would this be: it’s an opportunity to get some practice and have fun analyzing a new randomly-chosen company each week with a group of fellow Fools. Because it’s random, many of these will be companies you’d never have considered on your own. Some of them will be total losers, and it’ll be obvious they’re total losers after 10 seconds of looking at them – but we analyze them anyway, because it’s good practice and I think there’s a lot to learn even from losers (like patterns to look for in companies you might otherwise think could be winners). Some will be companies you know or even already own, and some will be companies you’ve never heard of before in your life. We do a new one each week, so we don’t get bogged down, and also so that if you’re too busy one week for whatever reason it’s easy to jump back in the following week.

It doesn’t matter what skill level you’re at, or how much time you have to dedicate. Everyone just does the best they can: we’re all learning together.

So anyway, the point isn’t so much looking for new investment ideas (though that may happen), but to get better at analyzing companies together, one week at a time. And obviously, unlike what I’m doing over in Rulebreakers, these would not be taken from the list of Rulebreaker recs.

So is this something you’d really like to do if I started it up?

Thanks!
Neil

• Yes, I would definitely participate and analyze!
• I would probably follow along, but wouldn’t necessarily analyze
• This doesn’t really interest me.

[XMFKBecks]

Hi Neil, I think what you are doing is amazing, but when I tried to participate in CELG, I mean I participated but my homework wasn’t as good as I would have liked it to be… I struggled with it.

I think I would like to pick my own companies to analyze and I would like to share in an area where there is encouragement and feedback and where people build on the ideas over time.

So for example, in my port, I would love to look at AMBA and learn more about it. That would be totally useful. I would also love to look at Disney and Snap-On. But I don’t need to look at tons of stocks, or I barely have time to.

I would love to read a special board or community that you set up for your reports!
Karen

[XMFKBecks]

Maybe there would be bigger participation if members and watchers suggest a basket of stocks to randomize from?? Or is that not so good?

[nevercontent]

Hi Karen,

I think I would like to pick my own companies to analyze and I would like to share in an area where there is encouragement and feedback and where people build on the ideas over time.

I think this makes total sense. But nothing is stopping you from doing that right now AMBA is followed here on Saul’s board, and I’m sure you’d get a ton of encouragement and feedback if you did some analysis and posted it here. And of course you could do the same on any service that is recommending AMBA.

Here is what I will say about my own experience doing this weekly analysis of random companies, and of course I’m just one data point: the first week was really hard, and it consumed almost all of my free time. But I learned a ton: it was a Chinese company that Saul actually owned and liked at one time. Analyzing it was a great lesson in why Saul avoids Chinese companies – and it’s one thing to just adopt that as a rule of thumb, but another to dig in, uncover the issues first-hand (like CEO self-enrichment), and get to really understand why.

The second company was also one that Saul owned and liked at one time (not Chinese), but has really struggled, and that was also very educational. It was fascinating reading through years’ worth of conference calls, watching this company trying to turn things around and shift its business (and management’s and analysts’ attitudes towards the whole thing as time went on), and to study the results. And it provided even more understanding of why Saul looks to exit these companies when they show signs of a struggling business. We see examples on this board (UBNT is a good recent one), but it’s hard to tease out long-term problems from short-term problems when we’re confronting them in the present. But looking back at a company that went on to struggle for 5 years trying to do this transition – and honestly still hasn’t really pulled itself upright – served as a really good lesson of how your investment capital can completely stagnate in a business that is struggling, and how an ever-optimistic management always thinks things are about to get better.

The third company was also really interesting to me. Saul never owned this one as far as I can tell But they were a smaller company that was really successful in a niche, but had a really hard time expanding outside of that niche. And that also serves as a very important lesson, especially when investing in younger companies that seem to be growing really well: will they be able to maintain that once they begin to outgrow their niche and start competing on a wider stage? And how much of this company’s growth problems were due to poor execution/management that got a little too arrogant versus a business model that just didn’t work well outside of its niche? Now that company is retreating back into its niche, doubling down on it. That should be interesting to follow too and see how it works out for them. But again, it’s another lesson in why it makes sense to take very seriously the early signs of a struggling business – even one that seemed to be doing so well before.

The fourth company was Celgene, and that was a completely different beast for me. For all the other companies, I could analyze the business and form my own conclusions about where they might go. But I didn’t have the knowledge to do that with Celgene’s drugs and pipeline, so it became much more of a numbers game and trying to assess the confidence of those numbers (especially future ones, since the stock is either expensive or cheap depending on how much you believe in those). It honestly was frustrating for me, as I think I posted here at one point, but it was also a new and completely different experience from an analysis standpoint – and I think that was good for me. It took me out of my comfort zone and forced me to pay more attention to the financials, and I think that was healthy.

By the fifth week, I was already feeling like I was far more efficient, and I cruised through the fifth company (relatively speaking). I felt like I was beginning to get the hang of it, and at that point I also began going through companies discussed on this board and elsewhere that interested me. I was beginning to find it much easier to get through those as well. So after 4-5 weeks, I could already see improvement, and I’m hoping that will continue.

Anyway, you’ve expressed a desire to analyze AMBA and some other companies in your portfolio, but it sounds like you’re not doing it. And I’m going to guess it’s because it’s a big task right now given where you’re at – and believe me, I get that! I felt exactly the same way when I embarked on this (and the first couple of weeks were rough). But the practice and experience I’ve gotten in just 4-5 weeks has already made it much easier for me work through companies that interest me, and the proof is in the pudding: I’ve been doing it. So for me, analyzing random companies has led to me analyzing the companies that interest me as I’ve gotten much better at analyzing companies in general. And I’m thinking that will just become more true as I continue to get better at it over time.

So that’s my experience. Your mileage may vary, of course

Neil