I am not so definitive (yet) on relative importance of Management Quality and Business Quality. What I do know is that they are joined at the hip - both are very important - and sometimes you have the liberty of choosing the best of BQ with best of MQ and at cheap Valuations too!
From then on, its a simple job of Holding On!
Remember the motivation for this MQ & BQ (planned) presentation series is only one thing. All the data was there for everyone. The Business & Management Insights were available from the Stock Stories and Management Q&A - for everyone. There are at least some 20-25 folks who work very hard and closely with each other, and discuss things threadbare in their own ways. Yet most folks, including VP Core Team folks had (even now have) differing opinions on respective business - BQ & MQ!!
Obviously that is going to be there - that is what makes a Market :). But, as someone said before, the proof of the pudding is in the eating!! There is a 40x bagger, a 25x bagger and several 10x-15x baggers in VP Portfolio over 4 years. Most of the businesses are growing strongly, and have many years of growth before them, some of them huge runways in front - with few variables in the Business, and very competent Jockeys at the helm. Yet, only 2-3 folks can be counted among these folks above, who have had the sense and the discipline, to stay the course, stick to a defined process, not jump off the winning horse - so to say. Almost none of the horses actually showed any signs of slowing down, so where was the need to jump off?
The super returns from these businesses only means one thing to me - Over 4-5 years****the financial community awareness of the “Quality of Business and the Management” - has emerged, right? So THERE IS actually a method to the madness.
Those who haven’t been able to stay the course - I dare say (excusing personal needs) did so because they did not share the same superior Insights into Business & Management Quality, and therefore lacked the CONVICTION necessary - to reason that even after the 4-5x in pocket - the value of the business is growing stronger by the day - as is the financial communities awareness of the same.
If some have been able to stay the course, they must have had some strong patterns or impressions in their head that allowed them to play contrarian - that allowed them to keep the FAITH - based on relative superiority of their Insights (over others’) -but derived from essentially the same data-sets )- the ART side of Investing .
Request everyone to keep an open mind and appreciate the differing viewpoints that are emerging - but FOCUS on how to sharpen the Insights )- by harnessing the collective experience of so many smart investors around us. I am sure by continuing to add to this discussion we will unearth a few more patterns that should be part of our essential mental models - while looking at Management Quality.
Will devote some Energy now to thinking and presenting on Business Quality BQ - a much harder ask e.g. How do we definitively show that Astral is a superior business than Mayur :)? Some VP Core Team members may be disagreeing straight away - but if we put all the cards on the table, it’s a simple ask - explainable in 2 paras - even my Wife and Ramdeo Agarwal would agree instantly!
That’s the beauty of abstracted Insights or Mental Models. I hope we can again stick our necks out and deliver on the promise of elucidating a very promising thing - Business Quality Insights