Management

“Good ideas and good products are a dime a dozen. Good execution and good management — in a word, good people — are rare.”

“The biggest problem in starting high-tech businesses is the shortage of superior managers. There is too much money chasing too few good managers.”

“Most portfolio managers still pursue the elusive goal of “better than the market” performance. However, one should not dismiss the general premise because of its uncomfortable conclusions.”

“Current earnings, future prospects, management, marketability are all factors more or less independent of assets which contribute their share to the intrinsic value.”

“Perhaps nothing is more indicative of the quality of a company’s management than its accounting methods.”

“Real investment risk is measured not by the percent that a stock may decline in price in relation to the general market in a given period, but by the danger of a loss of quality and earning power through economic changes or deterioration in management.”

“If all that can be promised is an average result, how can managers expect to be paid large fees for providing that average result?”

“There are two principal mistakes that nearly all amateurs in the stock market make. The first is to have an inexact knowledge of the securities in which one is dealing, to know too little about a company’s management, its earnings, and prospects for future growth. The second mistake is to trade beyond one’s financial resources, to try to run up a fortune on a shoestring.”

“Active managers are paid to add value over what can be earned at low cost from passive investing, and failure to do that is failure”

“What these companies do is try to put the best spin or face on their situation. Rarely will managements tell you how bad things are.”

“The biggest problem that people have isn’t selecting the right money managers. It’s the way they change managers all the time in response to fluctuations of short-term performance.”

“Managers should start out with the belief that if they are trying to actively manage money and outperform the market, the odds are against them.”

“Passive management does not give investors the return of the index; it gives them the return of the index less costs. So, the longer they have their money passively managed, the greater their underperformance will be relative to the index.”

“Contrary to their oft-articulated goal of outperforming the market averages, investment managers are not beating the market: The market is beating them.”

“I think the management should tell it like it is at all times and not be a big promoter of its own stock.”

“Perhaps the most important rule in management is “Get the incentives right.””

“Averaged out, betting on the quality of a business is better than betting on the quality of management. In other words, if you have to choose one, bet on the business momentum, not the brilliance of the manager.”

“Money managers are not stupid. They realize that sticking one’s neck out and producing short-term under performance that differs from an index that is used as the benchmark is risky.”

“If a money manager cannot explain in plain English what their investment principles are, they probably don’t have any. And if they cannot explain their process for finding and researching an investment idea, they probably don’t have that either.”

“The mutual fund industry is not an investment management industry. It’s a marketing industry.”

“Casino gambling with a system where you have the edge is a wonderful teacher for elementary money management.”

“Our attitude toward cash generation and asset management came out of our own thought process. It is not copied. After we acquired a number of businesses we reflected on aspects of business. Our own conclusion was that the key was cash flow.”

“I’ve heard it said that an economist is a portfolio manager who never marks to market.”

“On average, the average large-stock fund manager produces average returns before fees and below-average returns after fees. So compared with after-fee returns, an index fund is superior.”

“Incentives matter more than intelligence.”

“Bad incentives create bad outcomes — every time.”

“We look at the management of corporations that tend to overstate or massage profits as promoters. And that is a kind word.”

“When you get to these frenzied markets, it drives managements or portions of managements to hanky-panky.”

“One of the things I have learned over the years is how important management is in building or subtracting from value.”

“Having a mutual fund management company is like having a toll booth on the George Washington bridge all for yourself.”

“We partner with managers who behave like owners.”

“Risk management means protecting oneself from the adverse and unexpected decisions others may make and, in the process, making better decisions than they do.”

“Neither the corporate executive nor the investment manager can allow himself to be lulled into the belief that any company, regardless of its record of achievement, must necessarily provide satisfactory rates of growth.”

“In the end, risk management is about consequences.”

“Managers do not create large alphas by being conventional. They do so by taking the risk of being wrong and alone.”

“The trick in risk management is in recognizing that normal is not a state of nature, but a state of transition and that trend is not destiny.”

“Good incentives beat good intentions.”

“If it’s a choice between investing in a good company in a great industry, or a great company in a lousy industry, I’ll take the great company in the lousy industry any day. Good management, a strong balance sheet, and a sensible plan of action will overcome many obstacles, but when you’ve got weak management, a weak balance sheet, and a misguided plan of action, the greatest industry in the world won’t bail you out.”

“A lot of mutual fund managers don’t know what they own. The odds are the best they have ever been for the individual.”

“The real problem is not finding a good fund manager, it’s finding the right time horizon for your investing and what your temperament is for volatility.”

“If the balance sheet figures look right, I come to the next and hardest part — appraising management.”

“If a company has a sound balance sheet with minimal long-term debt, good growth prospects and responsible management, then the stock should be interesting.”

“If managers can’t think of anything else to do with their money they should pay dividends. If they have good places to invest it, that’s much better.”

“If some of the most astute people in Wall Street have frequently guessed wrong in trying to profit by stock market movements, it may not be too much to assume that the attempt itself has represented a misconception of the proper function of management.”

“Despite the advantages of size, wealth, a good name and a long tradition, a large enterprise will cease to be profitable if the men at the head get hardening of the arteries or atrophy of the brain tissue or if their heirs prove unequal to inherited responsibilities. Momentum alone will not carry a business forward under such circumstances. Some younger and more aggressive group will assume the leadership of the industry.”

“In a public service corporation, bad management may curtail profits or produce losses, good management may turn a weak corporation into a strong one.”

“To consider stocks by groups rather than by individual companies is further to ignore the vital factor of management.”

“I have stressed management, but even so, I haven’t stressed it enough. It is the most important ingredient.”

“Buy slowly stocks of companies that will capitalize on the problems of scarcity and social need. Companies with excellent management.”

“I want companies that welcome dissent, rather than stifle it, that don’t penalize people who criticize what management is doing.”

“To beat the market is not easy. In addition to a good investment manager, the investor needs perspective, patience, and courage — qualities that do not abound in today’s intensely competitive world.”

“A good record doesn’t necessarily prove good management. Outside economic factors such as the business cycle can make any company look good for a while.”

“Good management has an extraordinary way of making money for you, and bad management, no matter how favorable the environment, has a way of missing opportunities.”

“The market gets obsessed with quarterly results when there are surprises, when management is surprised. And management, as you well know, usually is.”

“People think they’re hiring a manager to make them money. But probably, they’re hiring a manager to keep them out of trouble and maybe fight their own instincts sometimes.”

“The laws of probabilities tell us that almost anyone can achieve phenomenal success over any given measurement period. It is the task of those evaluating a money manager to ascertain how much of past success is due to luck and how much to skill.”

“In my experience, large increases in assets under management adversely affect returns.”

“I think it would be an interesting change for integrity if managers of funds were required to have more of their own money in them.”

“Mutual fund managers, desperate to put cash to work don’t buy what is cheap but what is working since what is cheap by definition hasn’t been working.”

“Every great money manager I’ve ever met, all they want to talk about is their mistakes. There’s a great humility there.”

“No edge survives poor bankroll management.”

“It’s a personal quirk of mine that when the CEO shows up on magazine covers as a celebrity, I’m automatically hesitant to invest in the stock.”

“Successful investing requires the management of your own ego and temperament and usually that of your clients as well.”

“As an investor in businesses, which generate enormous cash flows, my single most important issue to get right is what management will do with cash flow through reinvestment. Do they care about the owner, or do they care about themselves?”

“When a manager with a reputation for brilliance tackles a business with a reputation for bad economics, the reputation of the business remains intact.”