Thanks for sharing the ppt Donald. Clearly shows the amount of work you have done on the VP companies.
Regarding not being able to fully ride all the winners- Over the last 3 years, some temporary times have come where some of these companies have shown signs of slowdown/ concerns on management.
Mayur had 2-3 quarters of no growth & had given guidance of 12% sales growth for FY14/Atul Auto had 3-4 months of 10% or so vehicle growth numbers & valuation has become expensive/Astral has become very expensive/Poly has seen concerns on promoters / Kaveri promoters have shown intention of stake sale.
Having reduced position in same of these companies during these tough times, I feel myself in same boat of those core VP members which have not gone the full distance with these companies.
When the going is good anyone can hold; high conviction and BQ & MQ score helps in tough times!! Congrats to you for holding in those tough times!!
Regarding BQ & MQ comparison, even I find BQ to be more important than MQ. Sun TV is still running despite the Marans but same canât be said about Spicejet
so according to the above model, in case of kaveri seeds would u bet on the horse or the jockey.
second point - the above e.g. of only valuepickr portfolio creates a bias. we need more eg. both successful ones and the ones which faltered due to mismanagement. maybe satyam kingfisher airlines.!
You are right, this Management Quality presentation does create a bias. We have received enough feedback on that :). But as stated in the initiating thread, this is INTENTIONAL.
A. The PPT is NOT aimed as an all-encompassing Management quality Tutorial
B. It is aimed at VP community folks who have grown with these businesses, tracked, discussed and watched these businesses grow from strength to strength - yet, perhaps failed to stay on
C. The intent is to equip us VP Community members learn from the experience and hopefully use the âInsights Modelâ henceforth for evaluating Management and keeping FAITH!!
As is usual at VP, this is also a Work in Progress, and will continue to be refined. Investment decisions cannot and should not be based on this PPT alone; Business Quality is equally important, as is the Valuation at which we buy - which essentially makes all the difference!
Re: Kaveri Seed - if any business figures consistently in the VP Portfolio - that should be a good enough indicator that Team VP found both BQ and MQ to be of top order. Recent overhang has been on the proposed stake sell - the Management interview, as posted in the Kaveri thread has addressed the issues adequately - for informed decision-making by all.
Hi Donald,
Does Management Integrity has certain absolutes like compensation, Board members etc or some other parameters?
For example, In Alkyl Amines - management compensation appears way above the normal and even more than what is prescribed by Companies Act. Should such parameter be a cause of concern or one can avoid these things , if company is doing good in numbers.
Another example, Alembic pharma- one of the board member is ex-bureaucrat having corruption allegation. should it be avoided as Company is doing good and there are no other cause of concerns.
What if Management is good on capital allocation but not-so-good on integrity(based on some parameters), in such a case , how should one judge?
While absolute compensation level may be important. One needs to also see break up compensation into Annual Salary, ESOP, Variable pay etc.
I cant name the company, but one of the largest NBFC into Auto finance, gave variable pay to MD of its subsidiary company in the year in which it recorded Rs.250 cr loss.
There is surely no management integrity into it.
Thankfully Annual Reports nowdays have lot of details around compensation of Key Managerial Personnel.
