A company is made by its personnel
Between several similar firms , often the CEO will be the person who makes the difference. Financière de l’Echiquier’s Collective management, therefore, take great care in getting to know managing directors, and there is no better way of achieving this than meeting them in person.
Assessing a management team means knowing its history, its successes and its failures while weighing the feasibility of the message given and forecasts made. It means constantly measuring the difference between what is forecast and what is delivered. It also means understanding management’s motivation concerning a stockmarket project.
This sometimes subjective analysis helps assess the management team’s real motivation, to understand the corporate culture and also to measure the extent to which shareholders are taken into account.
The aim is to avoid opportunist projects and to identify managers capable of going one step further in a strategic vision undertaken over the long term.
In order to share and extend their experience over time, Financière de l’Echiquier’s managers have created a set of good practices to implement when meeting a corporate leader. The “interview guide” is therefore a vital work tool, which lists the questions to which the meeting should provide answers in order to build a reliable investment case over time.
A fair value exists for every listed company
Associating players with very different performance timeframes (very short term for day traders and long term for pension fund managers) is perturbing for observers who assimilate stockmarket variations with the behaviour of casino games…
However, every company has an objective value that is directly dependent on the capital it employs to exercise its business and the profitability levels thereby generated. Stock prices constantly fluctuate around this value depending on information captured by the market.
Knowing how to establish this “value of things” is a means of remaining constant in investment choices when faced with market mood swings.