Map the supply chain behind every holding
Supply chain analysis for investors maps who a company buys from and sells to, and how much each relationship matters. It turns news at one company into a read-through for the others on the same chain: suppliers, customers and competitors.
What a supply chain map shows
A company’s filings name some of its major customers and suppliers. Its customers’ and suppliers’ filings name others. Put together, these relationships form a map: who depends on whom, for what, and how heavily.
For an investor the map answers practical questions. If this customer cuts orders, which suppliers lose revenue? If this supplier stops shipping, which customers face shortages? Which companies two steps away depend on a holding without appearing in its filings?
How to analyse a supply chain
Start from one company and work outward, keeping the evidence for each link.
- List the company’s named customers and suppliers from filings, transcripts and disclosures.
- Add the relationships named by those companies, one step further out.
- Weigh each link: share of revenue, share of supply, how easily it could be replaced.
- Note where links are dated or stale, and look for newer evidence.
- When news lands on one company, follow the links to see who else it reaches.
Why read-throughs are often missed
Attention goes to the company in the headline. Its suppliers and customers can take longer to reflect the same news, especially when the link is not obvious from any single document. In "Economic Links and Predictable Returns" (Journal of Finance, 2008), Lauren Cohen and Andrea Frazzini found that supplier stock prices responded with a delay to news about their major customers.
An example
A large electronics maker announces that it will build fewer units of its flagship product next quarter. The headline is about the electronics maker. The supply chain map shows three component suppliers that each earn a large share of their revenue from that one customer, and a fourth that earns very little.
The read-through is not "electronics suppliers fall". It is specific: three suppliers carry a real exposure, one does not, and the analyst knows which filings support each link.
Illustrative example. The companies are not real, and nothing on this page is investment advice.
How Clargus maps supply chains
Clargus reads filings, earnings calls, news and regulators around the clock and writes each company, product and relationship into its knowledge graph, dated and sourced. Each connection has a strength that grows with evidence and fades as it goes stale. You can start from any company, find its suppliers and customers several steps out, and trace how a change at one of them reaches your holdings.
Used by: Equity analysts, Hedge funds, Risk managers.