Be Nosy and Make More Money

Ever hear of "scuttlebutt"? It's a kind of inside scoop you can gather on a company, and doing so is a strategy advocated by renowned investor Phil Fisher (author of Common Stocks, Uncommon Profits, one of the investing world's most respected books). Scuttlebutt can help you zero in on great companies, finding ones that have a good shot at dominating others.

To pursue the scuttlebutt on a company, you might talk with many of its employees, customers, suppliers, and others who have unique views on the business. You can do much of this on-site, simply chatting up workers and customers, and I'd like to offer you a little help with that.

The folks at Gallup, the public opinion company, put together a dozen questions to gauge employee engagement several years ago. The idea was that the answers would help a company know workers’ level of involvement with and commitment to the company, as that affects its performance. I noticed that the questions would also be good to ask workers in a scuttlebutt-collecting session, too. Here are a few of them, paraphrased:

• Are your co-workers interested in doing a good job?
• Are you able to do your best every day? Do you have the resources you need to do so?
• Do you get acknowledged often enough for doing a good job?
• Do you feel that your boss or others at work care about you as a person?

These are powerful windows into the condition of the company. If, after speaking with a few employees, you get the sense that they don't feel valued and feel stymied in their attempts to do a good job, that doesn't bode well for the company.

Thumbs up
You might also want to look at lists of best places to work, or most admired companies, to get some ideas of companies to assess more closely. Here are some of the "100 Best Companies to Work For," per Fortune magazine in 2009, and how they've fared in recent years:

Sources: Fortune, Motley Fool CAPS, Yahoo! Finance.

Blogs and boards
You can also gather some scuttlebutt online, at various websites where employees or customers of companies gather to vent (or, more rarely, to sing praises). Be careful, though: This can certainly alert you to issues and controversies that a company faces, but it doesn't mean that most employees or customers are aware of them and that they're holding the company back. Use them to give you leads on topics to ask random employees and customers about. Some examples:

• At a website devoted to "gossip" about Starbucks (NASDAQ:SBUX), you'll find employees from across the nation discussing how well various new offerings are selling, as well as criticizing various company policies. For instance, in answer to a question a couple of weeks ago on how the store's Christmas Blend sales were going, one person answered, "[I]t was just an unbelievable one-day-only deal (essentially selling at the employee discount). Thankfully, we have not yet seen the degree of desperate, across-the-board 20% or 25% markdowns that we featured the last few years. Maybe we've finally learned some inventory management!"
• At the Brands in Public website, you can check out lots of comments on many major companies. On the Home Depot (NYSE:HD) page, for example, I found the company responding to various individuals' complaints, as well as highlighting some promotions.
• And don't forget your friends at The Motley Fool. Our Motley Fool CAPS community sports comments from thousands of participants about the stock of thousands of companies. And in our discussion boards, you'll find ongoing discussions about thousands of companies, too. On the United Parcel Service (NYSE:UPS) board, I recently ran across former and current employees discussing the company's prospects. That's scuttlebutt that you don't even have to leave home for!

As you look for the market's biggest opportunities, consider looking at more than just a bunch of numbers. Try talking to some stakeholders in the company for an inside view.