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We often talk and think about investing in terms of numbers, business models and facts; but when you really drill down to it, investing is actually all about people. Why do I say that? This is because corporate fundamentals are built upon the people who run the business, people who delegate the work to others; and the rank and file staff who execute the mundane (yet necessary) daily transactions. Without the role of people and human beings, investing would not even exist! However, this post is not to extol the virtues of humans within organizations; in fact it seeks to take a closer look at the very aspect of investing which is almost impossible to quantify – that of the quality of the Management Team, Directors and staff on board. In short, this post is to discuss the human aspect of investing in creating a successful corporate culture, identity and how it adds up to creating enhanced shareholder value.
Interestingly, I once read an investment book which did mention about the importance of assessing Management characteristics (sorry, I can’t remember the title!). But the crux of the book was that investing is more than just the sum of the parts in terms of assessing aspects of the company such as market share, financials, industry analysis and business models, which are the so-called “tangible” aspects of the business and which can be readily scrutinized. Management and people, on the other hand, are a part of the business which adds an extra dimension of quality without being directly measurable or tangible. The converse is also true if a good business is being run by crooks – sooner or later the Company will implode under mis-management and fraud. I think what the book wanted to stress was the kind of people out there which a retail investor might meet and how to size them up in order to enhance our view of a company as a potential investment. Read more...[caption id="attachment_3110" align="alignright" width="150" caption="Photo by Andrew Mason"][/caption]
We often talk and think about investing in terms of numbers, business models and facts; but when you really drill down to it, investing is actually all about people. Why do I say that? This is because corporate fundamentals are built upon the people who run the business, people who delegate the work to others; and the rank and file staff who execute the mundane (yet necessary) daily transactions. Without the role of people and human beings, investing would not even exist! However, this post is not to extol the virtues of humans within organizations; in fact it seeks to take a closer look at the very aspect of investing which is almost impossible to quantify – that of the quality of the Management Team, Directors and staff on board. In short, this post is to discuss the human aspect of investing in creating a successful corporate culture, identity and how it adds up to creating enhanced shareholder value.
Interestingly, I once read an investment book which did mention about the importance of assessing Management characteristics (sorry, I can’t remember the title!). But the crux of the book was that investing is more than just the sum of the parts in terms of assessing aspects of the company such as market share, financials, industry analysis and business models, which are the so-called “tangible” aspects of the business and which can be readily scrutinized. Management and people, on the other hand, are a part of the business which adds an extra dimension of quality without being directly measurable or tangible. The converse is also true if a good business is being run by crooks – sooner or later the Company will implode under mis-management and fraud. I think what the book wanted to stress was the kind of people out there which a retail investor might meet and how to size them up in order to enhance our view of a company as a potential investment. Read more...
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We often talk and think about investing in terms of numbers, business models and facts; but when you really drill down to it, investing is actually all about people. Why do I say that? This is because corporate fundamentals are built upon the people who run the business, people who delegate the work to others; and the rank and file staff who execute the mundane (yet necessary) daily transactions. Without the role of people and human beings, investing would not even exist! However, this post is not to extol the virtues of humans within organizations; in fact it seeks to take a closer look at the very aspect of investing which is almost impossible to quantify – that of the quality of the Management Team, Directors and staff on board. In short, this post is to discuss the human aspect of investing in creating a successful corporate culture, identity and how it adds up to creating enhanced shareholder value.
Interestingly, I once read an investment book which did mention about the importance of assessing Management characteristics (sorry, I can’t remember the title!). But the crux of the book was that investing is more than just the sum of the parts in terms of assessing aspects of the company such as market share, financials, industry analysis and business models, which are the so-called “tangible” aspects of the business and which can be readily scrutinized. Management and people, on the other hand, are a part of the business which adds an extra dimension of quality without being directly measurable or tangible. The converse is also true if a good business is being run by crooks – sooner or later the Company will implode under mis-management and fraud. I think what the book wanted to stress was the kind of people out there which a retail investor might meet and how to size them up in order to enhance our view of a company as a potential investment. Read more...
