Interesting topic. It's worth mentioning that a great investment mind like Walter Schloss completely excluded talking to management.
Personally, I have two groups of CEOs who are a big no-no for me:
1. Those who, upon waking up every morning, are more concerned with how they look in the mirror and when they can drink their soy lattes than with running the company.
2. Experts in their field who don't understand the capital market.
Thanks for commenting. I like both your examples. I have seen both in microcaps. I think the second point is sometimes seductive but the opportunity gets missed by strong operators who don't engage with investors.
Such a good topic, thanks for addressing it. As a small investor, I like to talk to management but don’t get to do it in a constructive way very often. I’ve never had a management meeting where I felt like it really changed the outcome much one way or another. I like to do it when I can and it’s available, but I don’t put much stock in my ability to do it well enough to move the needle on my investing process.
I'm not sure if this is a "for" or "against" point, but I find that meeting with management often helps to contextualize the share price and so the potential opportunity.
Most professional investors use management meetings as an important input to their investment process. For some, it's the decisive input. So getting the "pitch" or "story" from management can help to contextualize how the market is thinking about a company.
Maybe there is additional colour being provided in management meetings that is scaring or exciting investors and explains recent movements in the stock. This can give you comfort that you're not missing something, but it could also distract you into reacting to short-term noise. Perhaps the CEO is really impressive in meetings and so the stock consistently trades at a premium.
I once met the CEO of gold company who answered a call in the middle of the meeting. "What is the return on the new project," he asked. "90%!?" He hung up the phone apologized and explained that was someone from the finance department providing the latest IRR estimate for their new gold mine. I sold the stock right after the meeting and the company subsequently went to zero.
I have an example of a company that had a bunch of hype around it due to the CEO being way over qualified for the role at a microcap company (he came from private equity). He was able to sell the business as better than it was due to his charisma. It helped most (including me) overlook the business challenges and share structure. It's down like 80%.
Interesting topic. It's worth mentioning that a great investment mind like Walter Schloss completely excluded talking to management.
Personally, I have two groups of CEOs who are a big no-no for me:
1. Those who, upon waking up every morning, are more concerned with how they look in the mirror and when they can drink their soy lattes than with running the company.
2. Experts in their field who don't understand the capital market.
Thanks for commenting. I like both your examples. I have seen both in microcaps. I think the second point is sometimes seductive but the opportunity gets missed by strong operators who don't engage with investors.
Such a good topic, thanks for addressing it. As a small investor, I like to talk to management but don’t get to do it in a constructive way very often. I’ve never had a management meeting where I felt like it really changed the outcome much one way or another. I like to do it when I can and it’s available, but I don’t put much stock in my ability to do it well enough to move the needle on my investing process.
Thanks for sharing. You sound pretty down to earth and able to manage your emotions. I am jealous. lol.
I'm not sure if this is a "for" or "against" point, but I find that meeting with management often helps to contextualize the share price and so the potential opportunity.
Most professional investors use management meetings as an important input to their investment process. For some, it's the decisive input. So getting the "pitch" or "story" from management can help to contextualize how the market is thinking about a company.
Maybe there is additional colour being provided in management meetings that is scaring or exciting investors and explains recent movements in the stock. This can give you comfort that you're not missing something, but it could also distract you into reacting to short-term noise. Perhaps the CEO is really impressive in meetings and so the stock consistently trades at a premium.
I once met the CEO of gold company who answered a call in the middle of the meeting. "What is the return on the new project," he asked. "90%!?" He hung up the phone apologized and explained that was someone from the finance department providing the latest IRR estimate for their new gold mine. I sold the stock right after the meeting and the company subsequently went to zero.
Thanks for commenting. These are all good points.
I have an example of a company that had a bunch of hype around it due to the CEO being way over qualified for the role at a microcap company (he came from private equity). He was able to sell the business as better than it was due to his charisma. It helped most (including me) overlook the business challenges and share structure. It's down like 80%.