What sort of things do you look for when researching companies?
I invest in individual equities and tend to focus on companies operating in markets which I understand. Luckily I work in mergers and acquisitions so I get access to pretty good quality information which also helps.
I use a strategy of initially picking companies in end markets with good fundamentals which is suppose is pretty obvious. Then I obviously look at individual companies for their growth potential, as well as competitive market position (is there one other big dominant player or is the company able to improve its position based on what it is doing?) and the regulations in force in its sector and the likelihood of change to these (positive or negative).
I also look at companies which are trading below the average price-earnings (P/E) ratio for their sector. I try to find out whether there is a reason for this and if the companies it taking steps to remedy any issues which it has had. On the flip side, I also look at companies trading at well above the market average P/E to see if there are any safe havens with good dividend yields.
I do also check out the credentials of the management team...looking at issues like how long have they been running the company, what is their background, have they previously grown similar businesses, do they look for growth through acquisitions and what has the dividend profile been since they have been running the company.
Working in M&A, I also have a natural tendency to look at companies as potential takeover targets and this does actually end up being my usual preference. If I can see M&A activity in the sector and there is the likelihood of more, then I will definitely go searching for a potential bid target. Also, if there seems to be hedge fund activity around an interesting company then this may suggest that they may be building their positions in expectation of a bid coming in.
Overall, with M&A being a key driver for me, I tend to be invested in companies for the medium-term unless I can see a very quick win because of a bid situation arising.
As examples of this, some my equities at present are LSE:BG, NYSE:CAM, NYSE:DRQ, NYSE:FTI, AIM:GAS, LSE:HTG, LSE:KENZ, NYSE:RRC and LSE:SMDR...so a heavy oil and gas focus at the moment.