Sunday, March 24, 2013

Role of Management in Long Term Investing

In our investing experience so far,
in certain cases we have lost money because we didn't pay too much attention to the role which management plays in creating or destroying value.
We used to focus more on inherent cheapness and business quality. Also, since we used to end up looking more at midcaps and small caps in our pursuit for multibaggers, the issues of corporate governance used to surface more.
So in this presentation which was made at an investor forum recently, we decided to focus on the aforesaid topic and stress upon the fact that even though the business may continue to make tons of money, it is the management which will determine whether it will flow to you as a shareholder or not.

One thing which we would like to mention is that in the pursuit of high corporate governance standards, we found a lot of the small and midcap managements wanting and having some skeletons in the closet and it has been difficult to classify them as black or white as they are more like shades of grey with different degrees of darkness.

In this regard, the words of fund manager Chuck Ackre (covered in the ppt) offer some light
Ascertaining management integrity is “the tough question and the answer which often takes us years to discover.” One short cut Akre uses is to favor “owner operators,” which refers to managements that own a lot of company stock. The thinking is that if management’s financial interests are aligned with shareholders, they will do right by shareholders regardless of integrity. 
With this we would like to end our soliloquy and present you our presentation below.
We look forward to your comments and suggestions ...

Role of management in long term investments from perfectresearch


The author (Mr. Ashish Kila) would like to thank his entire team, for their extensive help in preparation of the above note.

  • Nothing in this article is, or should be construed as, investment advice.
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Anonymous said...

Hi Ashish,
Thanks for all the examples shared in slides, it was great learning going thru them.

tiru said...

Hey - brilliant stuff Ashish. Thanks for this. A good perspective.

Ayush Mittal said...

Fantastic presentation, Ashish!

Unknown said...

Simply superb...Keep it up!!

Sunil said...

Very good work. Congrats. Look forward to seeing more of it

HNI Silver Calls said...

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