Again a super article... Understood most of the article except this particular section titled "Most important, a sense of internally consistency".Can you give a few examples of what you are trying to convey here? Are you referring to situations where good business characteristics are reflected in high ROE, low working capital, etc, or something else...?
Great piece! Based on what I see "corporate culture" is also an important aspect which is entirely qualitative and percolates from the top. It could be a driver of the long-term track record too, but culture can shift over time. What is your view and approach to assessing this?
I've found it hard as an outsider (a) gauge culture, (b) isolate it's effect on business performance. So long as there's a sense of continuity (same promoter, longstanding management, internally promoted senior managers, same domain), I'd have to assume that an effective culture (that enabled the company to deliver a good track record) will persist. We get some color on culture while talking to industry insiders, but feedback's too subjectie and anecdotal for me to do anything with it.
In your blog of Investing Axioms the first one is 'People don't change', drawing that axiom on this one and applying makes a lot of easy filtration in terms of judging a person's character. However easier said than done, like you correctly mentioned various things play like luck and many other variables which also need to be given fair chance before forming a judgement on someone.
Sometimes the situations might be different and hence the person behaves or is forced to behave in a particular way. The strong characters wont throw the towel so easily and once a cheater always a cheater are principles which are easy to adopt in life for judging people.
a) These amazing set of operators who might have been in the company for several decades, would have left a process. Don't you think over a period of time the process established becomes bigger than the operator himself.
b) You have also mentioned that, "Management that has been singularly focused and avoided M&A deserves bonus" - I was reading this interesting piece on serial acquirers - http://www.scottlp.com/letters.html#Acquirers. Aren't there capital allocators who have successfully and consistently done it.
Excellent article.
Great article. Reminds me of the saying "Time is a friend of great business and the enemy of bad ones." I am going to re-read this many times.
Again a super article... Understood most of the article except this particular section titled "Most important, a sense of internally consistency".Can you give a few examples of what you are trying to convey here? Are you referring to situations where good business characteristics are reflected in high ROE, low working capital, etc, or something else...?
Watch out for this sort of inconsistency ... https://buggyhuman.substack.com/p/spotting-crooks
Great piece! Based on what I see "corporate culture" is also an important aspect which is entirely qualitative and percolates from the top. It could be a driver of the long-term track record too, but culture can shift over time. What is your view and approach to assessing this?
I've found it hard as an outsider (a) gauge culture, (b) isolate it's effect on business performance. So long as there's a sense of continuity (same promoter, longstanding management, internally promoted senior managers, same domain), I'd have to assume that an effective culture (that enabled the company to deliver a good track record) will persist. We get some color on culture while talking to industry insiders, but feedback's too subjectie and anecdotal for me to do anything with it.
In your blog of Investing Axioms the first one is 'People don't change', drawing that axiom on this one and applying makes a lot of easy filtration in terms of judging a person's character. However easier said than done, like you correctly mentioned various things play like luck and many other variables which also need to be given fair chance before forming a judgement on someone.
Sometimes the situations might be different and hence the person behaves or is forced to behave in a particular way. The strong characters wont throw the towel so easily and once a cheater always a cheater are principles which are easy to adopt in life for judging people.
Interesting piece, I have couple of questions.
a) These amazing set of operators who might have been in the company for several decades, would have left a process. Don't you think over a period of time the process established becomes bigger than the operator himself.
b) You have also mentioned that, "Management that has been singularly focused and avoided M&A deserves bonus" - I was reading this interesting piece on serial acquirers - http://www.scottlp.com/letters.html#Acquirers. Aren't there capital allocators who have successfully and consistently done it.
Thanks in advance.