Forum Archive Index - June 2001

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Peter, quoting from your post:
> 
><snip>Non-financial measures do matter<snip>
>
><snip>Baycorp, The Warehouse and Waste Management<snip> 
>
><snip> 
>I believe what sets these companies apart from the rest is their 
>quality of management. The quality (and stability) of management and 
>the execution of the company strategy has had a great influence on 
>the performance of these companies - performance that has led to the 
>superior returns to shareholders over a long period of time.
><snip>
>
><snip> 
>I also believe that these companies understand that non-financial
>measures are very important and it has been the managing of these
>key non-financial measures that has led to their superior financial
>returns.
><snip>
>
><snip>  
>A proactive management team will have a vision of the future. That
>team will execute a good corporate strategy, make tough decisions,
>quickly seize opportunities, allocate resources well, attract
>talented people (and retain them), drive brand values etc.
> 
>Is this belief of mine backed up by research? The likes of Ernst &
>Young, L E K Consulting and Bain & Co have done a lot of research
>which supports my belief. 
><snip>
>
><snip> 
>Therefore when considering investment opportunities a lot can be
>gained from assessing the quality of management and how successfully
>that management team has guided the company in the past. 
><snip> 
>
>
Interesting perspective Peter.   As an investor, and if I wanted to 
take advantage of this point of view, how can we use this 
information?

For example, one strategy might be:

1/ Select companies that are perceived as well run.
2/ Check to see that their senior staff had been stable for a few 
years.
3/ Check the company has followed through on the company strategy as 
outlined in previous annual reports.
4/ Invest.

Of course, as you pointed out, you would do this in conjunction with 
other kinds of fundamental analysis as well, but is that, in a 
nutshell, what you are proposing? 

One final question.   When you talk of 'management' are you talking 
about 'executive managers', 'non-executive directors' or both?
SNOOPY


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