The Management Team: How to Analyze It, Top 3 and Recommended Books (Value Investing FM) – Investment Academy – Learn value investing from scratch

In this new episode of Value Investing FM, Adrián and Paco discuss an essential issue when investing, the analysis of the management team. We will start with the 9 steps we follow to assess a management team, continuing through our top-3 favorite CEOs, and ending with recommended books on management analysis.

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Listen to the program: The Management Team: How to Analyze It, Top 3 and Recommended Books

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Here you have the episode Summary of the Year 2018: Lessons, Projects, Readings and Awards:

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How to Analyze a Management Team in 9 steps

People

  • Who is on the board of directors?
  • What experience do you have in the sector and the company?
  • Are there politicians on the board of directors?

The strategy

  • Do the company and the management team have a clear and coherent objective and strategy?
  • Do they have a short or long-term vision?
  • Are managers focused on creating long-term shareholder value?
  • Have they been able to maintain or increase the competitive advantages of the company?

Objectives fulfillment

  • Has the board of directors met your past expectations? (See presentations from previous years)

Capital allocation

  • Have they allocated the capital correctly? (Investments, acquisitions, dividends, share buybacks ...)
  • Dividend yield? Pay-out? Is the dividend sustainable? What is the dividend policy?

KPIs

  • What KPIs (Key Performance Indicators) does the company use? Are they the most suitable?
  • How have the KPIs evolved?

Communication

  • What is the tone used by the board of directors? (Aggressive, confident, prudent, neutral ...)

Errors

  • Does the company admit its mistakes or try to justify them?
  • What mistakes have they made in the past and how have they been fixed?

Remuneración

  • What is the salary and compensation method of the board of directors? (Importance of incentives)
  • Relative weight of executive compensation? (Capitalization, Income, EBITDA, Net Earnings ...)

Honesty

  • Is there any factor that could make us doubt the capacity, honesty or alignment with the shareholders of the management team?

Management Team: Top 3 CEOs

Paco's Top 3

  • Mark Leonard (Constellation Software)
  • Bob Kierlin (Fastenal)
  • Ken Inverson (Nucor Steel)

Adrian's Top 3

  • The Lundin Family (Lundin Group)
  • Michael O´Leary (RyanAir)
  • Fredrik Wester (Paradox Interactive)

Books and readings on management team analysis

Recommended links