KYC: Know Your Company

Know Your Company
These are a few things we need to ask ourselves before we pin down an investment.

Transparency:

Is the company in which you are planning to invest or hold shares communicative with the necessary information on resource raising?
Does the company have an interactive website packed with every conceivable detail, update regularly and easily navigable?
Are changes in address and other missives from you taken note of and rectified in the shortest time possible?
Is there prompt credit of dividends of your saving account and bonus shares into your demat account?

Market Intelligence:

Order wins, tie-ups, accidents at manufacturing facilities, and aggressive takeover bids can affect the stock prices, positively or negatively.
Liquidity of the stock in your portfolio will suffer if it is shifted to the compulsory-delivery category.

Change in Ownership:

Is your company seeking to allot preferential shares to the promoters without any valid reason?
Are promoters selling shares (an indication that something is amiss), or they quietly consolidate holding through open market purchases(a signal that they have confidence in the future, or may want to thwart an unwanted raid).
Have the owners suddenly decided to transfer ownership to a holding company? Are you satisfies that this move was in the interest of the company’s many businesses?
Demerger of divisions, accompanied by the offer of shares in the news company based on valuation, is given a thumbs-up by the market as it brings clarity and focus to a company doing too many things.

Know your intermediary:

Whom will you invest through? Can you access them easily, either physically or through the internet?
Do they maintain a proper record of your transactions and are thorough in after-sales services?
Are they been penalized by the market regulator for any irregularities?


Wrong stock selection is excusable. But not investment in opaque companies.