Couple of days back during my radio interview with Michelle Martin, I shared one of my favourite investing books - Philip A. Fisher’s Common Stock and Uncommon Profits. It was first published in 1958.

And if there's one big lesson I took away from Philip Fisher's book... it's Scuttlebutt.

You see, Philip Fisher ran his own investment firm in 1931 and employed deep research of a company's management, products and finding out how the company can continue to keep growing. Scuttlebutt is a way to gather first-hand information by talking to a company's management, even customers, competitors and suppliers, above just reading its financial statements.

I call this uncovering a business' "hidden truth".

And yes, Warren Buffett frequently read this too. In fact, Warren Buffett's investing approach is often referred to being 15% Fisher, 85% Graham".

Reading this book helped me avoid bond defaults over the years, made less mistakes along the way after speaking with sketchy CEOS/founders before.

I've also uncovered great investing gems that had huge potential for profits with this technique.

One of them was actually going down to Food Empire's office to speak with management - when shares were trading just 19 cents (almost wanted to sell at the bottom, but instead decided to double down after speaking with them)! I picked up signs they were very prudent during tough times - squeezing collection terms and delaying suppliers. This improved cash flow. And that was during the peak of the Russia/Crimea crisis many years ago. I made a good profit from the trade.

Not too bad. Not too bad.

Now, there's a way to approach Scuttlebutt, and it's found in a 15-Point checklist in the book itself, which I've done a summary:

15 Points to Look for in a Common Stock:

1. Does the company have products or services with sufficient market potential to make possible a sizable increase in sales for at least several years?

• This means, you want to look for industries with growing demand.
• Identify companies with scalable products or services.

2. Does the management have a determination to continue to develop products or processes that will further increase sales potentials after the current product lines have been exploited?

• Assess innovation pipelines.
• Look for signs of reinvestment in R&D.

3. How effective are the company’s research and development efforts in relation to its size?

• High R&D spending relative to revenue can indicate a strong focus on innovation.
• Compare R&D efficiency against peers.

4. Does the company have an above-average sales organization?

• Look for companies with strong brand recognition.
• Assess sales team performance and reach

5. Does the company have a worthwhile profit margin?

• Compare profit margins with industry averages.
• Strong margins indicate pricing power and efficiency.

6. What is the company doing to maintain or improve profit margins?

• Examine cost controls and pricing strategies.
• Look for efficiency improvements.

7. Does the company have outstanding labor and personnel relations?

• Positive employee engagement often correlates with better performance.
• Check for high retention rates and good workplace reviews.

8. Does the company have outstanding executive relations?

• Evaluate leadership’s track record.
• Strong communication within the C-suite is crucial for long-term success.

9. Does the company have depth to its management?

• Companies with capable middle management are better prepared for transitions.
• Avoid businesses reliant on a single leader.

10. How good are the company’s cost analysis and accounting controls?

• Effective cost management supports profit margins.
• Check for clean and transparent financial reporting.

11. Are there other aspects of the business, peculiar to the industry, that give the company an edge over competitors?

• Look for competitive moats.
• Examples include patents, brand loyalty, or exclusive contracts.

12. Does the company have a short-range or long-range outlook on profits?

• Long-term outlooks often indicate sustainability.
• Avoid companies focused solely on quarterly results

13. Will growth require significant equity financing that dilutes existing shareholders?

• Check for a history of frequent equity issuances.
• Strong businesses grow without constant shareholder dilution.

14. Does the management talk freely to investors when things are going well but 'clam up' during difficulties?

• Transparent communication builds trust.
• Avoid companies with poor investor relations.

15. Does the company have a management of unquestionable integrity?

• Integrity ensures alignment with shareholder interests.
• Look for ethical practices and compliance.

Common Stocks and Uncommon Profits is also one of my Top 13 Investing Books to Read for Beginners.​​

Hope this helps you, though I still highly recommend you to read the entire Philip A. Fisher's Common Stock and Uncommon Profits - trust me, it's worth it.

Willie Keng, CFA

Founder, dividendtitan.com

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