Quality of Management

Quality of Management

Talk about an overlooked investment decision-making variable. Nothing is more overlooked by investors than the Quality of Management.

Define “quality” how you will. At present, Quality of Management seems to be an afterthought amongst many investors. Even peddlers of financial knowledge such as the CFA Institute (remind me what practical value the CFA institute provides?), have relegated Quality of Management to a footnote (second bullet in section 4.1.6 HERE).

Quality of Management KPIs include: Revenue growth (absolute and relative to peers); Profitability (absolute and relative); Capital allocation strategy; ROIC and a whole host of other variables that may be weighted differently by industry (Product Development/R&D input vs. output is critical in the Software industry for example).

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CEORater YouTube clip of Liberty Media founder John Malone discussing Quality of Management: