Investment Guru’s basic fundamentals for tyro investors

According to Guru 1, look for companies who are good at Return on tangible assets.
According to Guru 2, companies which have great,

• Capital profile: what is its Capital investment—capital investment they need every day in order to grow their earnings.
• Working capital profile: Nestle and Lever has partly been able to get this kind of return on capital employed because they are able to squeeze their suppliers and they are able to sell everything on cash.
• Business superiority: In Bharati’s case it is marketing. From title also it is marketing.
  What Indian investor lands up doing is buying MNC stocks who have the worst corporate governance in this country. And Satyam is nothing.

According to Guru 3,

• It’s the cash flow which matters the most to the company and the investor too.
• Other important thing is capital allocation: many companies generate a large amount of free cash flow but they just blow it up. They buy fixed assets, they buy a building for themselves to live in rather than rent it. They invest in bonds and debentures; they find ways to deal with the cash flow rather than paying dividend.