Part 4 — Practical Checklist
Step 1. Enter item code at konnect-ai.net → Check CEI/CGI scores → Determine Zone
Step 2. Trends are more important than scores. Check quarterly changes for at least three quarters.
Step 3. Intensive surveillance items for companies in Area B:
• Number of CB issuances in the last 3 years
• Is the main acquirer of CB the same entity?
• Quarterly trend of raised funds conversion rate
• Are any of the executives previously employed in managed stocks or publicly traded companies?
Step 4. Crosstab:
• Area D + poor executive history → highest risk
• Area B + repeat CB acquirer is the same corporation → structural interest play confirmed
In conclusion
Financial statements don't lie. But it doesn't even tell the whole truth.
The 10-year average stock price performance of companies (Area A) that excel in both CEI and CGI exceeds KOSPI by 5.6% points per year. Among companies in Zone D, the proportion of companies that went into management or went bankrupt within 3 years was 78% of all companies.
Before thinking about which company to invest in, first check whether the company is in Zone A or Zone D.
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