You might as well be naked if you invest in a Company without knowing the Company’s management. Unquestionably, an innovating, motivating management is the most valuable asset a Company can have. They are capable of extraordinary achievement while extracting the best of opportunities. On the other hand, an inept management can deflate the value of a Company while squandering market share, cash and opportunity. You’re not investing, but speculating, if you’re buying a stock with inept management. Knowing the management of a Company is one way to avoid a vulnerable naked investment in the stock market.
How does the management stack up against competitors
Being the biggest in an industry is not always a guarantee a Company will remain the biggest. IBM, Kodak and General Motors were once the biggest in their industry. The inability of their management to recognize and systemic shifts in their industry was a major factor in the demise of their company. FedEx, Harris and Apple are examples of management with the genius to innovate and develop the best from opportunity. They led their companies to a dominant position in their market. Take a look at the competitors for your Company. CNN Money and Google Finance can help you identify the competitors for your Company if you don’t know them. One useful measure of your Company’s management is to compare their performance with the competitor’s performance. Several 0ther useful benchmarks are:
How they provide and market their products and services.
The prices they charge
How they develop customer loyalty and their brand value
Their commitment to research, development and innovation
The caliber of staff they attract
How they use technology
The effectiveness of their media activities
What are other people saying about your Company’s management
Stock market analysts spend their time being familiar with an industry and the companies in the industry. Like the detectives Dave Robicheaux, Brenda Leigh Johnson and Harry Bosch, stock market analysts used a combination of industry contacts and shoe-leather research to investigate individual stocks and industries. Often they are able to piece together interesting and useful insights about the companies they cover and their management. Bloomberg and The Street publish a list of analysts they consider to be better than most. Comparing the Company’s press releases with the analysts’ opinions can help you develop a more balanced view of the Company and its management. You can find the press releases for your Company by going to the Investor Relations page of the Company’s website. Links to the Investor Relations pages for 100 of the most widely held companies can be found here.