One big lesson learnt this year is that while people see good management is important, it is not an economic moat by itself. The ability to create a management culture that provides continuity is a competitive advantage [read here].
But a bigger lesson is the importance of identifying management with great capital allocation skills. The skill to value acquisition and assets under management, divest and acquire at right prices, choose between leveraging debts or rights issue at the right time.
For holding companies, REITs, business trusts and management based business, they have not much advantage other than whether they are good capital allocators.
I would like you all to think on that last point.
Geoff Gannon have an interesting article on capital allocation discounts for holding companies. This can be applied to many holding companies or funds like K1 Ventures, Hotung, Global Investments Limited, Keppel Corp…