As we all know the quality, competency and ethics of the management are more important for a stock to give decent return in the long term.
My request to all valuepickr folks is to collectively come up with set of stocks which are having a good and competent management. This list would serve as a starting point for lay investors like me.
I have come up with a following parameters
1.Corporate Governance
2). Promoter’s stake with pledging
3). Management’s integrity
4). Transparency in disclosures
5). Management’s credentials and competency
6). Investor friendly attitude
Please feel free to add to this list of parameters.
All can share a list of companies with rankings on each parameter in the scale of 1 to 10 (10 being the best)
We have other initiatives where we track growth and prospects of each company.
Suggestions are welcome if you feel this can be done in a better way.
The idea is to have a collective opinion on company management. I was thinking Torrent Pharma is very ethical and honest till I came to know from one of the blogs that they had bought a land in Delhi at exorbitant price.
From this list, we will be able to choose the best quality companies with competent management going through temporary problems and can be a reliable long term wealth creator. I agree that only these aspects will not lead to growth but atleast we can avoid companies like Deccan Chronicle,KFA,DLF,Grindwell Norton etc.
Grindwell Norton is a good business with relatively high entry barrier. It has good balancesheet and cashflows. It was in my radar for long time but recent development made to remove it from my watchlist.Just look at how the minority shareholders of Saint Gobain Sekurit are being treated.Saint Gobain Sekurit planned to get itself delisted but could not do so as share price was higher and minority shareholders were not willing to seel their stakes at the price offered then. Now promoters are planning to merge the same company with Grindwell Norton which is not minority shareholders friendly.
If I have a company with this kind of MNC promoters then even a good company can be a bad investment. I am a long term buy and hold investors. Grindwell is in a good sector and better as a company except for the promoters.
Thanks Bhaskar for sharing the list. It gives an idea for beginners to avoid stocks from certain business group who might have issues with corporate governance. Some companies/groups which I feel are good in corporate governance.
It would be good, if you could either explain your statement or provide a link to an interview about the management of the companies you are giving. I could say that, all the large caps that I have invested in have good governance standards, the only reason being they have been in business for years. Moreover many group companies run from generations have good standards.
So those who are commenting could provide some information, it would help others who are unaware of such companies. Because I guess money has been made even if one does not understand the business completely but still invested because of the faith in management. I can sleep peacefully because I trust the management and have faith in their integrity and ability.
How many know that not very long ago, Godrej inds did a court order based buyback at 18 bucks where if shareholder does not insist on keeping his shares, they can be taken away? So many passive investors lost shares.
Corporate governance premium for Godrej name is a cruel joke. (Shyam Sir’s Tweet)
If I remember right , biggest catch in buy back was that shareholder had to send in writing by simple post to the company if they don’t want to tender their shares.
By knowing efficiency of our postal department god know how many shareholders were forced to give away theirs shares
