Crayon vs. Complex Companies, Making Income at Will and More... - Views on News from Equitymaster

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The Equitymaster Research Digest

Crayon vs. Complex Companies, Making Income at Will and More...
Oct 16, 2015

Our analysts currently have their noses to the grindstone. Not to say they don't always work hard, but the intensity goes up a few notches this time of the year as they revise their views for all the large caps they cover. It's all part of our annual ResearchPro updates that we undertake as companies release their annual reports.

ResearchPro subscribers know we take a look at our financial models every three to six months. However, the updates this time of the year assume special significance. This is because not only do we enter the full year audited numbers into our models, but we try to foresee what the company will look like three years from now and whether it makes for an attractive investment at the current price. It's an elaborate exercise!

The two types of companies

As a senior member of the team, I check models across a large number of sectors. And I really look forward to this exercise. It gives me a good feel for what the team thinks about different sectors and helps me connect big picture dots.

I divide the companies I check into two broad categories. I call the first category 'the crayon companies', because they are so easy to check and analyse that you could explain them with crayon to a five year old.

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