By Investment Master Class

“Never wrestle with a pig because if you do you’ll both get dirty, but the pig will enjoy it” Charlie Munger

“Study the company’s management, the leaders, their track records, and their goals”  Roy Neuberger

Management is one of the most important factors in the evaluation of a leading company and it has a great effect upon the market price of secondary companies”  Benjamin Graham 1955



“The first thing is, is the management decent and honest?” Julian Robertson

“It’s hard to overemphasize the importance of who is CEO of a company”  Warren Buffett

“We do not wish to join with managers who lack admirable qualities, no matter how attractive the prospects of their business.  We’ve never succeeded in making a good deal with a bad person” Warren Buffett

“I never want to pay above intrinsic value for stock – with very rare exceptions where someone like Warren Buffett is in charge.  There are people – very few – worth paying up a bit to get in with for a longer term advantage.” Charlie Munger

“Quality of, and incentives for, management are also very important. We look at management ownership to see whether their interests are aligned with the shareholders‘ interests and we look for their compensation levels to be reasonable.” Leon Cooperman

“My research [on management] always starts with the proxy, which I’ll read even before the 10-K. I want to know where the incentives are and can often qualify or disqualify a company for further research based on what the proxy tells me on that front. I have no interest in golden parachutes or egregious stock-option programs. If more than 10 pages of the proxy is devoted to executive comp, it’s probably not a company I’m interested in.” Frank Martin

“Of course, we have made mistakes when assessing management teams. But, in our view, trying to spot a great manager remains a game very much worth playing” Marathon Asset Management

“Good management gives you upside options for free.” Mohnish Pabrai

“Choosing great management teams is a key ingredient to hitting a high batting average” Steve Major

“In making both control purchases and stock purchases, we try to buy not only good businesses, but ones run by high-grade, talented and likeable managers” Warren Buffett

“In my books, I’ve always placed the emphasis on the importance of the management team in selecting companies… and yet, I didn’t do it enough”  Philip A. Fisher

“When you asked me about characteristics I look for in stocks, I mentioned quality of management is the most important” Lee Ainslie

“Our biggest mistakes have always involved overestimating management” Bruce Berkowitz

“Most important is the character and brains of management.  Poor management can ruin even a good proposition.  The quality of management is particularly important in appraising the prospects of future growth.  Is the management inventive and resourceful with a determination to keep itself young in a business way? Or does it have a sit and die attitude?”  Bernard Baruch

“Marathon puts enormous weight on the assessment of management” Marathon Asset Management

“The quality of management affects the bond coupon only rarely – chiefly when management is so inept or dishonest that payment of interest is suspended.  In contrast, the ability of management can dramatically affect the equity ‘coupons’.”  Warren Buffett

“I really do believe in one premise – that management teams, in terms of their impact on value creation, is systemically underappreciated, both to the good and the bad.”  Andrew Halvorsen

“Franchises can tolerate mis-management. Inept managers may diminish a franchise’s profitability, but they cannot inflict
mortal damage… a business, unlike a franchise, can be killed by poor management.” Warren Buffett

“We tended to buy the stock of companies that had franchises and good management”  Roy Neuberger

Mismanagement also can bring no end of trouble to otherwise fine businesses” Frank Martin

“The single most important variable for us when we’re looking at companies, is assessing management” Josh Resnick

“You need both great management and a great asset. Having one or the other is a bad recipe” Richard Perry

“From our perspective, an ideal management team is one with a clear strategic vision, a thoughtful and pro-active approach to capital allocation, and a strong alignment with shareholders” Dan Loeb

“I like to talk to management, assess their abilities and personalities, and understand their way of thinking so that we are on the same page. I am always friendly, and my intention is to look them in the eye and get a good sense of their character. This may seem an old fashioned way of judging people, but it’s very effective” Thomas Khan

“I do talk to management of many companies. I like to figure out their human values, the culture they nurture and their long-term goals.” Francois Rochon

“If there is a serious question of the lack of a strong management sense of trusteeship for stockholders, the investor should never seriously consider participating in such an enterprise” Phil Fisher

“It comes down to doing business with people you trust.  We pay careful attention to all management communications.  Does the CEO write the shareholder letter himself or herself?  Do they tell you where they’ve been right and where they’ve been wrong? Do they talk about what’s difficult about the business?  Do they articulate how they allocate free cash flow, and do so in an owner mentality? Are the key benchmarks consistent? We worry about companies that one year focus you on adjusted net operating EPS, then the next year on EBITDA margin and the next year on something else” Adam Weiss

“Benjamin Graham, in the Intelligent Investor, said you evaluate management twice in the decision making process.  Once through face-to-face interrogation.  You ask them questions and they respond and you make a judgement about the quality of their responses.  In addition, the quality of management also manifests itself in the numbers: in ROE (absolute and relative to competitors), return on total capital, growth rate, industry position, trend of market share, and profit margins”  Leon Cooperman

“More and more I think it is going to be important to study the paper trail of existing management. You have to understand how a manager behaves and how that manager has behaved in past situations. In general, you have to understand the history of that person’s behaviour to get an idea of what the future is going to look like” Bruce Berkowitz

“When we evaluate a management team, we’re much more focussed on analysing past decisions and actions than simply reviewing their responses to our questions” Lee Ainslie

“I spend most of my time reading everything the company has said: How has the business done relative to what was planned? Has management consistently done what it said it was going to do? ” Chris Mittleman

“The best judgement we can make about management competence does not depend on what people say, but what the record shows” Warren Buffett

“There’s no excuse for cutting corners when it comes to vetting management’s track record, verifying what they say is correct, and tracking if what they do is what they say they’re going to do” David Herro

“.. what you’re better off doing [than interviewing management] is sitting in a room and reading the last 10 years of what they said what happened, and then form your own conclusion of where you think the business is going to go in the

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