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Shareholder Letter Revelations: Can You Trust the Leadership?

Judging a firm's leaders is an important step in analyzing a stock for investment. But it's a murky area that offers no solid statistics to review. And most investors don't get the chance to actually meet a company's CEO and other officers in order to get a feel for how the firm is run.

The one window into a CEO's perspective and goals is the shareholder letter contained in the annual report. But upon reading one, you might find that you can't understand what the CEO is trying to say. Often, shareholder letters are riddled with jargon and glossy prose that convey no information. Six of the most popular CEO letter clich├ęs:

  • Talented people,
  • Global presence,
  • Market knowledge,
  • Financial strength,
  • Leverage competitive advantages, and
  • Create significant value for our shareholders.

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