When most of us -- including professional analysts -- look to research a company, the playbook is obvious. Read the company's annual report, quarterly reports, do some industry research, perform a comparative analysis with peers and so forth. All the above is certainly warranted and valuable. However, there is one valuable source of information that is often ignored -- a book.
To be sure, there is not a book written about every company. But when a good book exists about a company or industry, reading it can give you information and insights that no other source can.
Consider automaker Fiat Chrysler (FCAU). Jennifer Clark's excellent book, Mondo Agnelli: Fiat, Chrysler and the Power of a Dynasty, chronicles the history of Fiat beginning with founder Giovanni Agnelli but does an excellent job illustrating the brilliance of current CEO Sergio Marchionne and how he basically put together a deal for Fiat to acquire Chrysler in a cashless transaction. Fiat today, at $14 a share, is up nicely over the past couple of years, but I would say the company still offers tremendous value.
Recently I picked up a copy of Uncontainable: How Passion, Commitment and Conscious Capitalism Built a Business Where Everyone Thrives by Kip Tindell, CEO of the The Container Store (TCS). To those who don't know (or aren't married), The Container Store is a retailer than sells primarily jars, boxes and other containers. You would think such a company would be mediocre at best, but TCS is far from it. But simply looking at numbers will cause you to dismiss the business.
After pricing its shares at $18 in an IPO two years ago, shares doubled on day one. Since then the shares have steadily declined and today trade for around $10, a notch above the company's all-time low of $9.71. But with fewer than 100 stores, TCS believes the market is ripe for 300 of these things. Despite a lackluster record of profitability, the company has a strong record of revenue growth. More importantly, the business has a very loyal and growing customer base. With shares trading at current levels, pick up a copy of the book if you are interested in the business.
A good journalist or author will go inside a company like no analyst can or will be able to access. A book can show you a company's culture, the true nature of management and other intangibles that add tremendous value to an analysis. If a good book exists on a company you are deeply interested in, not reading it is not an option, in my view.
