Tuesday, August 04, 2020

Real Owner

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.


"Potato Planting" Van Gogh

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