Robert
Vinall (www.rvcapital.ch) describes his approach as “investing like an owner in
businesses run by an engaged and rational owner with the capital of investors
who think like an owner”. I like that definition. Despite how difficult it is
to count, ownership connects us to the future. It isn’t a participation in
profits (or losses). It is custodianship. Beyond individual contribution.
Beyond ego. Beyond benchmarks, competition, and relative performance. Not a
sport, but a purpose. It is about taking capital and putting it to work
productively. Creativity is noisy. We look for outputs. The three key ones in
businesses are cash, earnings, and dividends. The cash a business generates is
the easiest to count in the short term, but hides how well the long term is
being cared for. Earnings add scope for the view of management and standardise numbers
for an attempt at comparison. Dividends are declared. Meaning management’s goal
can be to pay a steadily increasing stream, in spite of the noise. To detach
the natural ups and downs from the point of the business (long term wealth
creation). The longer your time frame, the more likely you are to add real
value. A real sense of ownership is the key.
Tuesday, August 04, 2020
Real Owner
"Potato Planting" Van Gogh
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