Corporatestrategy
When we mention good capital allocators, one imagines managers that deploy capital well – who invest shrewdly in existing and new businesses, and when the returns on those investments seem poor, return capital in the best possible way. Thermo Fisher’s management has been a case study in excellence in all these regards. What isn’t intuitive is that capital allocation involves divestitures as well – and the latest from Thermo suggests that they also do a great job when it comes to selling assets.
In Part 1 of the Sand Castles, Concrete Walls text we used the “Maginot Line”, the French fortification system bypassed by the German army in the Second World War, to discuss three important questions regarding the decision taking process for investments: the identification of sustainable competitive advantages (“economic moat”), the sense of security embedded in our convictions and risk perception (our “behavioral Maginot Lines”), and finally, the partial antidote for our ignorance – the requirement of a “margin of safety” (quantitative and qualitative). In this Part 2 we reflect on the concept of an “economic moat”, the metaphor immortalized by Buffett to designate a “sustainable competitive advantage” – one of the sacred cows both for the strategy/competition theories and for classical methods for valuing companies.
FastCompany.com has an article in its February ’11 issue about Youtube. Sure, it’s an interesting read for those interested in Youtube and Google, or in media, advertising and online services in general. But there were other good takeaways or at least building blocks that we list in the post.
Great article sent by a reader, who by the way has now sent two great suggestion this year. Malcolm Gladwell wrote about entrepreneurs and how they’re supposedly much more risk-averse than usually assumed. While one can make the usual complaints about Gladwell’s articles (few, carefully selected samples to reach the desired conclusion), the most interesting takeaway is the quest for opportunities with asymmetrical success probabilities.
In our Q4 2010 report, out later today, we will publish the second part of the “Sand Castles, Concrete Walls” text we began publishing in the Q3’10 report. Today we’re publishing part 1 on Buysiders.com. In Part 1 we revisit the idea of an “economic moat”, using as a backdrop the Maginot Line – France’s ingenious fortification system which, bypassed by the German army at the beginning of the Second World War, became a synonym for a “white elephant”. More important than reflecting on subjects that interest us as investors is to make use of the Maginot metaphor to rethink the sense of security that guides our actions as shareholders or executives, especially in times of calm.
Long interview with two of IP’s partners, Cristiano Fonseca Filho and Fred Trigueiro. Quite informal, the interview goes through IP’s pioneering history in the Brazilian capital market and shows how we apply some of the most important aspects of our culture in the day to day: Ethics, Discipline and Patience, Independence… We’ve obtained permission from Exame to translate and publish the interview and here it is.
A long interview with two IP partners (in Portuguese – we’re having it translated and will post it here), Cristiano Fonseca Filho and Fred Trigueiro. The talk was very informal and spanned IP’s pioneering story in the Brazilian financial market. It gives insight into how we apply some of the most important aspects of our [...]
The Economist had a “special report” on smart systems recently and it resonates with a previous post on Buysiders.com. Figuring out the business models most likely to emerge is interesting, trying to cherry-pick “winners and losers” is tempting, but the hard part is separating the hype from what really matters to investors. We’ll definitely hear more (and post more) on this subject.
Richard Branson turned 60 on July 18th but now he’s posting a series of videos in which he answers 60 questions sent by the staff at Virgin. Nice timekiller, but since he mentioned The Elders in Part 1, we’ve linked to this very interesting and high-profile NGO. The names of the Elders themselves are HUGE, including Nelson Mandela, Desmond Tutu, Kofi Annan, Fernando Henrique Cardoso, Aung San Suu Kyi and Jimmy Carter. The “supporters” list is also an impressive roster of foundations and NGOs. Here’s hoping the organization’s achievements can be just as impacting.
Strategy and Business is the magazine/ content strategy and branding arm of Booz Allen (Booz Co. nowadays) and has been around for 15 years. Their editors chose the 50 “best” articles in this period. Some we’ve already read and really are worth it, and most are probably interesting. Get them while you can, but just remember the old “there’s only 24 hours in a day” warning.
