Try speaking to friends in companies who use your targets product – ask them why they use it, how they like it, and what sets it apart from its competitors. Also App Annie rankings are always useful when researching app-based companies (sometimes high traffic numbers or increase in rankings can give you a sense of what next quarter’s earnings will be like).įollowing founders/employees on social media can derive unique insights (see examples above). Web/App traffic – there are plenty of sites that show you how web traffic has been, where it’s coming from, and where it’s going. Why do they use it? What purpose does it serve? Could they live without it?įollow fan groups on social media – it gives you great sense of what customers like about the company or like better about their competitors. Use the product or at least talk extensively to people who have. We have found that carrying out scuttlebutt is easier with B2C companies than B2B companies, but here are processes that can be carried out regardless of company type. Below we take you through ways of doing this research and finding this information which is not readily given to us by the companies. This information is out there, for anyone to discover it just takes effort and insight. Some might argue that this is bordering on insider information, but nothing could be further from the truth. Investing is more of an emotional than intellectual exercise, and it becomes very hard to stay on an even keel and to make rational, unbiased judgments if you’re making them based on someone else’s information.” John Harris of Ruane, Cunniff & Goldfarb put this best when he said “There is an advantage to gathering your own information and making decisions based on facts that you have gathered yourself. They give you conviction to take action in a way that a ‘hot tip’ or a ‘buy’ report just cannot. Now these might sound a bit silly, but each of these data points gives a unique insight about the company that can weigh heavily on a buy or sell decision. When researching the buy-now-pay-later space, we interviewed (via our network) several current and potential retailers who told us that the product had been a raving success and had already seen their basket sizes increase by 30-40%.Ī European investor we follow who when researching a QSR chain insists on speaking to the manager of any of the chain’s location he is in to get a sense of the company culture. What do we mean? Here are some examples from our circle.Ī US based fund-manager we know along with his intern contacted dozens of car-dealership on LinkedIn to find out if they were using a particular service, and then when they found an overwhelming majority were, they invested in the company that provided that service.Ī Singapore-based investor we know noticed that a husband-wife couple who ran a public company were having relationship issues when they stopped posting about each other on Instagram. However, these days, a lot of scuttlebutt research can be done right from home with the power of networks and social media. In Phil Fisher’s day, we could almost understand why most investors would do this, because scuttlebutt required a lot of travel, knocking on doors, and doing a lot of heavy lifting. We’re constantly shocked by how many people make large investing decisions just based on the company’s 10K (which is nowadays mostly written by lawyers) or worse, just by an analyst report. The key word here is “edge” because if you’re basing your investment decision just on the information that everyone else can access (such as regulatory filings), you really don’t have much of a competitive advantage in the investing arena. It’s all the information you gather for yourself from customers, suppliers, employees, that give you an edge when trying to understand a company. It’s pretty much any research you do on a company (whether you’re investing in stocks or bonds) that’s not actually presented by the company in Annual reports, quarterly updates, or analyst write-ups. The concept of using scuttlebutt is very simple. The chapter about the topic (which means rumour or gossip) in his book “Common Stocks and Uncommon Profits” is just a few pages long, but it has had am huge impact on many thankful investors.

Phil Fisher is known for a number of things, but perhaps the most famous concept he is known for is the concept of ‘Scuttlebutt’.

Scuttlebutt 10 below