A practitioner's analysis of buying statistically cheap companies

[theashworld]

yes, it’s a work in progress for me as well and mostly my losses are because of promoter integrity. I think one of the best resource in this matter is

Forensics and the art of triangulation

I have been passionate about unearthing inferences from the obvious that are in plainsight for a really long time. Like sherlock holmes or newton, everything is in plain sight - it’s just a lot of us refuse to connect the dots to infer the obvious. Some of these are so obvious when someone states them in hindsight that you kick yourself on why you could not get it earlier. In a raging bull market, a lot of this might sound like preaching celibacy in a harem but I have found out that eventually,…

and indeed, all posts by @varadharajanr are enlightening. Do check out his valuable video as well Indian Investing Conclave

The other two key things to look out for are

1. Cash flow as a proportion of PBT (over multiple years)
2. Taxes paid as a proportion of profits (“Nobody pays real taxes on fake profits”).

In general, I can also argue the other way though - at what point and on what basis can you say that a particular promoter is not fraud? Remember, the fraud ones are masters of delusion, it’s non-trivial to see through it. I am happy to receive suggestions in this regard and improve my learnings further.