Take a closer look..11 Jul 2019 20:19
There is a lot of guff talked about WB, how he does not have a quotron,
never speaks to management, is hands off and will do a $m deal in 5 minutes. Well, most of that is partly true but he has the best lines of communication to every avenue of business & CEO in the US.
He most likely knows more about US companies than do the CEOs themselves. How do you explain the astonishing 53 year performance of Berkshire compounded at up 20.5% per share mrkt value and up 19% per share book value over the years? Did he just get lucky in his choice of investments and companies to buy? How come he only had 2 negative years, 2001 & 2008 and then only marginally?
So where does he start?The first question he asks is who's in charge?
That's where he looks first.
¦Trustworthy management ¦married to good businesses who ¦work for shareholders, ¦ are not spendthrifts, ¦treat holders as partners and not patsies and ¦engage in honest accounting and do not ¦load themselves up with nil cost options are the type of management he wants. If you want options, fine take them in lieu of salary. ¦How does that grab you?
I ask this because I have failed miserably in my evaluation of Co management taking way too much on trust, especially the glowing CV's of senior managers and the board. I usually gave them a pass without a second glance, as I did right here at Genel.
I figured with TH ex BP boss if he couldn't run a piddly outfit like G well best forget it. He ran it from his yacht on the Solent right up the bloody creek, is what he did! Entrusting my money to him was a big mistake as it turned out. Perhaps he was unlucky. I shudda seen the warning signs for instance no recent CP report on oil in place and then the $bn write down.
Since then I have been a lot more savvy in checking managers credentials, (especially previous appointments & performance). Speaking to them on the phone, attending AGMs and asking other invstrs their views and checking like for like.
That will give you a start. Forget asking brokers they will never give you a straight answer and unless your a seriously big client you can 'Do' one. It's shoe work that gets the job done and analysing Co reports. Remember a CEO making the nos Q on Q might be 'making up' the nos Q on Q!
I'm sure you guys check all this stuff but if your anything like me you probably thought well he's the ex boss of BP, so gotta be ok innit?
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