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  • Management | Doddsville - Part 2
    4 33 pm Last week Centro director Andrew Scott was fined 30 000 for breaching the Corporations Act Nathan Bell explains why this was outrageous By Nathan Bell TII Also posted in Nathan Bell Comments 12 Good management or just good luck July 26 2011 10 09 am Everyone talks about the importance of management but is it really all it s cracked up to be By James Greenhalgh TII Also posted in James Greenhalgh Tagged Harvey Norman management Perpetual QBE Insurance Comments 8 Investing lessons from Paris Hilton July 19 2011 8 11 pm Nathan Bell s surprised to discover that in between jelly shots and shopping Paris has picked up a thing or two about business strategy By Nathan Bell TII Also posted in Nathan Bell Strategy Comments 8 The latest management fad July 8 2011 1 33 pm Nathan Bell discusses the latest management fad Customer centricity By Nathan Bell TII Also posted in Nathan Bell Comments 18 Cellestis takeover Other motives at work April 7 2011 11 16 am When it comes to takeovers management and shareholders can have different objectives Cellestis looks like the latest example By James Greenhalgh TII Also posted in James Greenhalgh Stocks Tagged Cellestis Qiagen Radford takeover Comments 6 Older posts Newer posts Intelligent Investor Analysts Nathan Bell research director works alongside Gareth Brown James Greenhalgh Gaurav Sodhi and Jason Prowd This blog is where they share their thoughts and gather feedback about their ASX research at Intelligent Investor Search Connect with us Recent Posts The origins of Passport Capital 15 568 days to the end of oil The worst deal I ve ever seen Doddsville podcast 20 December 2012 Best books of 2012 Recent Comments James Carlisle II commented on 15 568 days to the end of oil Samson commented

    Original URL path: http://blog.intelligentinvestor.com.au/doddsville/category/management-2/page/2/ (2013-02-03)
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  • Lessons in Tesco travails for Woolworths? | Doddsville
    years which means not so good for the poms And the government is on an austerity drive All this makes for lousy economics of everything on the home front and Tesco will be taking a clobbering So I suspect will all the others As for the proper competition comment I m not really sure what that means Certainly my experience a couple of years back was that in the London area there are many small supermarkets Sainsbury Waitrose as well as Tesco and a few others All were small had a poor range and I didn t think the prices of anything were all that wonderful The joys of a large captive market might allow many players all offering a mediocre selection I don t call that proper competition Reply Troy Prideaux Reply January 23rd 2012 at 8 38 am The UK is also in a fairly serious recession the pound exchange rate to A anyhow is the best for us that I have seen it in over 30 years which means not so good for the poms If you believe this http ablog typepad com keytrendsinglobalisation 2012 01 the incredible shrinking uk economy html It s in downright free fall Reply Mars said Posted January 17 2012 at 4 08 pm Just a question JG You say Coles management appears to be satisfied with a much lower operating margin than Woolworths which could spell trouble for the latter Are you implying that there could be a price war brewing and hence Woolies margins will have to come down to match those of Coles On the other hand is it possible that Coles lower margins are due to lower revenue less customers rather than lower prices which means their operating cost to revenue is higher Is it possible then that a lower margin at Coles can co exist with a higher margin at Woolies I guess what I m asking is that if Woolies historical competitive advantage has been the virtuous cycle that comes from being the biggest player lower wholesale prices leading to lower retail prices leading to more customers leading to lower operating cost margin then doesn t it follow that they can re activate this advantage Though no doubt without the benefit of an incompetent rival the margin going forward may be less than it used to be Reply James Greenhalgh TII Reply January 18th 2012 at 2 16 pm Hi Mars There is some advantage in being the biggest but I m not sure it might make enough of a difference in the case where Coles is competing much more aggressively We know Coles is pursuing cost gains from suppliers and appears to be reinvesting this in prices selectively This marketing war also seems to be attracting customers so Coles is potentially getting its own virtuous circle going whereby it extracts better terms and then reinvests the savings in prices My suspicion is that Woolies will have trouble continuing to extract better terms because it s already quite efficient in that area compared to Coles So the problem is that if Coles is happy with lower margins it can keep reinvesting its efficiency gains into lower prices This then could attract customers away from Woolies there is some evidence of this given weaker same store sales The end result is that Woolies could be almost forced to cut prices ie margins to remain competitive with Coles In the end Woolies will win if it turns really nasty ie there s a vicious price war because it has the higher margins in the first place But lower margins are painful to everyone including the market leader This doesn t mean Woolies margins need to come down to match Coles They only need to be 1 lower on a sustainable basis for it to be quite painful for Woolworths shareholders The dynamics in any market are complex so it s hard to know what will happen But Tesco s situation shows that price cuts are potentially risky and can backfire Reply Mars Reply January 18th 2012 at 2 41 pm I fully agree with what your saying James But I think we are mainly talking about short term pain Indeed some earlier comments on a previous post earlier last year I think by some subscibers about Woolies share price never again dropping below 25 are probably naive Nevertheless one would have to say and an exisiting or prospective shareholder would have to derive a good deal of comfort from that in the long run a price war if that s what it came to would have to play into the hands of Woolies existing competetive position as you say assuming that economies of scale are largely where it derives it s competetive advantage If the bleeding starts Coles will hurt most A cosey duopoly has no reason to commit suicide and so assuming existing competetive positions are maintained the likely outcome would have to be that a margin equiliibrium favouring Woolies would ultimately be settled on I know this is not guaranteed but would logic not say that it s the likely outcome In this sense a long term outcome where Coles and Woolies have equall margins perhaps somewhere in between their current margins would have to be a fairly though not very pessimistic scenario Would you agree Reply James Greenhalgh TII Reply January 19th 2012 at 8 56 am Agreed Mars You re absolutely right that the duopoly nature of the market probably makes higher margins sustainable in Australia But nevertheless higher margins attract competition which probably explains why Aldi a company known for focusing on the long term at the expense of the short term has been targeting Australia for some years now Mike said Posted January 20 2012 at 1 09 pm The profit warning stated underlying profit before tax and earnings per share for 2011 2012 will be broadly in line with market consensus forecasts and trading profit growth to be around the low

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  • Tesco | Doddsville
    Passport Capital 15 568 days to the end of oil The worst deal I ve ever seen Doddsville podcast 20 December 2012 Best books of 2012 Recent Comments James Carlisle II commented on 15 568 days to the end of oil Samson commented on Harvey Norman crisis approaching David commented on 15 568 days to the end of oil James Carlisle II commented on 15 568 days to the end of oil Nick Earls commented on 15 568 days to the end of oil Links Bristlemouth Gravy Train How To Invest Intelligent Investor Value Fund Walnut Report Authors Select Category Banking 3 Currency 5 Debt 9 Doddsville Podcast 36 Featured 4 Gareth Brown 48 Gaurav Sodhi 67 Greg Hoffman 27 International investing 10 James Carlisle 3 James Greenhalgh 56 Jason Prowd 18 John Addis 3 Lists 3 Macro environment 16 Management 21 Nathan Bell 43 Opinion 42 Portfolio management 7 Property 1 psychology 8 Resources 21 retail 11 Review 2 Stocks 58 Strategy 9 Telecommunications 1 Tim Searles 1 Twitter Wrap 25 Uncategorized 11 Value investing theory 7 Wayne Jones guest contributor 1 About Nathan Bell research director works alongside Gareth Brown James Greenhalgh and Gaurav Sodhi This blog is

    Original URL path: http://blog.intelligentinvestor.com.au/doddsville/tag/tesco/ (2013-02-03)
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  • The seven habits of spectacularly unsuccessful executives | Doddsville
    t autocratic in the conventional sense But I m not convinced that Jobs success is really justification for a Jobs like management style Taken to its logical conclusion a manager that possessed all of the above traits would in most situations be a spectacular failure doomed to become a victim of hubris And the reverse of that argument is equally true and illuminating A manager that possessed none of these traits would I suggest be more successful Imagine for a moment a manager that knows their position requires constant monitoring knows they don t know everything so asks for help builds a team around them that challenges their ideas never underestimates the risks competition they face and is always looking for new and better ways to manage their business Of course neither extreme is reality Managers are likely to be a mix of both It is however a useful way of framing and thinking about how different management styles could affect a company s performance I m probably not doing justice to Finkelstein s ideas in the article he goes into more detail about the subtleties of his argument and is well worth the quick read Reply NeilC Reply January 4th 2012 at 11 27 pm Jason Finkelstein postulates that unsuccessful executives possess at least 5 and in some cases all 7 of these traits The people you have quoted are successful because they exhibit only a few of them Reply John Addis TII said Posted January 4 2012 at 1 48 pm Having just finished the Walter Isaaacson bio of Steve Jobs I have to take issue with his inclusion based on 4 First it s hard to argue Jobs was a failure He basically invented the PC market at his first and chaotic stint with Apple was 80 shareholder and CEO of Pixar which created a whole new category of animation subsequently sold to Disney for billions and at his second time at Apple totally transformed the music industry the smartphone sector and popularised tablet computing In many respects he was a total psycho control freak see 2 but that was very clearly part of what made him successful and why his products were so far ahead of the competition Bill Gates never took a crap OS personally Jobs did He hated anything less than perfection because it reflected poorly on him the ultimate perfectionist Part of that process for Jobs was to build an argumentative creative and strong willed team around him He wanted people to challenge him and showed himself capable of being convinced by a better argument although he frequently claimed it as his own when he did change his mind as Isaacson s book makes clear on many occasions Despite his many obvious faults he wasn t autocratic in the conventional sense But he did craft his public appearances to perfection and regularly berated journos that weren t on the bus So in my opinion he s out on 4 but in on 5 Reply Karl Withakay said Posted January 4 2012 at 2 10 pm Graeme I don t think you understand the point of this exercise it wasn t intended to belittle the names mentioned but instead point out their foibles and bad habits Spectacularly SUCCESSFUL That s why we all know their names Just to name a few again I ll mention Sol Trujillo I agree with you the only good thing he did was the NEXT G which was great for customers not shareholders Eddie Groves John Cheston Peter Brown Michael King Robert and John Kirby Paul Little Phil Green Ken Lay Chuck Prince I could go on and on until the cows come home the list is so long this is what happens when investors are asleep at the wheel when it comes to management and dodgy remuneration and CEO s putting their own interests first and why I m glad that contributor Graeme doesn t make investment decisions for me if he thinks because you have a strong public profile name makes a successful CEO James Packer showed the traits of a good executive when he said he didn t care what the other shareholders thought of the company s remuneration policies the Board was a good board and the company was producing good profits He wouldn t see them tossed out over passing fad bullsh rubbish Well done James I think it s important to note that the against votes came from institutional investors which received advice against the company s new long term incentive strategy I was merely pointing out it is his way or the highway point 4 because history has shown time and time again it works out bad for shareholders with that attitude Reply Mars said Posted January 4 2012 at 2 45 pm Graham Cant your comments resonate with me With regards to the executives listed in most cases I ll bet you good money that if the companiers in question were not experiencing current difficulty we would be talking about their attributes as being causes of they re great success Independence generally what I consider one the greatest attributes of a good CEO is here being declared a character foible Being aligned too completely with the company give me that any day compared with the rubbish that comes out of corporate governance guidelines I m not sure if what we are seeing here is recency bias or narrative fallacy or the like but I m pretty sure it s largely B S Reply Mark W said Posted January 4 2012 at 5 12 pm Flight Centre s Graham Turner shows attributes of 2 attempted privatisation 99 Bikes JV involving son yet salary well below market 4 high senior mgmt turnover leaving no obvious successor despite several failed attempts and 7 slow to embrace online yet has expanded beyond core Flight Centre brand in Australia alone Reply Frank Ferrara said Posted January 5 2012 at 12 48 pm I was a surprised

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  • Failure | Doddsville
    of Passport Capital 15 568 days to the end of oil The worst deal I ve ever seen Doddsville podcast 20 December 2012 Best books of 2012 Recent Comments James Carlisle II commented on 15 568 days to the end of oil Samson commented on Harvey Norman crisis approaching David commented on 15 568 days to the end of oil James Carlisle II commented on 15 568 days to the end of oil Nick Earls commented on 15 568 days to the end of oil Links Bristlemouth Gravy Train How To Invest Intelligent Investor Value Fund Walnut Report Authors Select Category Banking 3 Currency 5 Debt 9 Doddsville Podcast 36 Featured 4 Gareth Brown 48 Gaurav Sodhi 67 Greg Hoffman 27 International investing 10 James Carlisle 3 James Greenhalgh 56 Jason Prowd 18 John Addis 3 Lists 3 Macro environment 16 Management 21 Nathan Bell 43 Opinion 42 Portfolio management 7 Property 1 psychology 8 Resources 21 retail 11 Review 2 Stocks 58 Strategy 9 Telecommunications 1 Tim Searles 1 Twitter Wrap 25 Uncategorized 11 Value investing theory 7 Wayne Jones guest contributor 1 About Nathan Bell research director works alongside Gareth Brown James Greenhalgh and Gaurav Sodhi This blog

    Original URL path: http://blog.intelligentinvestor.com.au/doddsville/tag/failure/ (2013-02-03)
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  • Remuneration: Wrong incentives, wrong result? | Doddsville
    here with the RSS feed for this post Post a comment or leave a trackback Trackback URL Doddsville podcast 8 December Previous Entry Best books of 2011 Next Entry 9 Responses Add Yours Discussion Geoff said Posted December 14 2011 at 10 38 am James in my experience EBITDA is a much used metric in the startup phase of capital intensive businesses Telcos specifically There may be no EBIT profit for some years I do agree with you that it s far harder to justify its relevance in mature profitable businesses Reply Geoff Booth said Posted December 14 2011 at 11 53 am Good work James I would like to share a recent article from the SMH that raises another irritation and one that certainly raised my ire This was Michael West s article on the payment of hidden dividend franked payments on unvested shares to UGL PPT executives Weekend Business SMH Page 2 10 11 December 2011 I have two concerns re excessive executive payment 1 Such payment perpetuates the myth of an exclusive alpha group of individuals that can bring about great wealth to the masses and as such must be rewarded well beyond the realms of reasonableness medieval England 2 This myth coupled with the current method of executive remuneration both of which are raising the gap between the average wage earner and executives is yet another threat to the overall cohesiveness of a civil society Do not sell yourself short James My view is that analysts many of whom are tertiary qualified are in a very good position to bring these issues executive remuneration to the fore to those of us struggling to seek true value in more global terms from our investments Dr Geoff Reply David K said Posted December 14 2011 at 12 23 pm I don t often agree with Gerry Harvey but I do agree with his sentiments about executive salaries He has previously espoused that no man is worth paying a million dollar wage that figure may have been lower I don t recall the actual number To me executive greed and for that matter board acquiescence to it is one of the main reasons I avoid a lot of potential companies I don t mind generous salaries for owner managers or someone who has some serious skin in the game but for the wage slave CEO s and there Ilk mostly they don t care if they milk the shareholders with their snouts pressed deep in the trough Reply Mike said Posted December 14 2011 at 12 58 pm One of the prime responsibilities of the CEO is allocation of capital and really they should be measured against the Return on capital they achieve and the growth in return on capital Using measures like earnings per share growth or net profit growth or EBITDA growth allows CEOs to achieve growth without provision for the amount of risk they take on Maybe CEOs should be banned from short term incentives and

    Original URL path: http://blog.intelligentinvestor.com.au/doddsville/remuneration-wrong-incentives-wrong-result/ (2013-02-03)
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  • Incentives | Doddsville
    in James Greenhalgh Also tagged floats management myer private equity Comments 0 Chinese teach bankers the road to success January 14 2010 4 54 pm China today may be viewed as a growing economic power but for most of its modern history life in China has been poor brutish and short It was only in 1979 that the economic juggernaut we know today took its first steps What happened on that date that was so important The Chinese Communist Party decentralised rural land making it possible for individuals to own the output from land they work on By Gaurav Sodhi TII Posted in Gaurav Sodhi Also tagged free riding risk reward socialised losses Comments 9 Intelligent Investor Analysts Nathan Bell research director works alongside Gareth Brown James Greenhalgh Gaurav Sodhi and Jason Prowd This blog is where they share their thoughts and gather feedback about their ASX research at Intelligent Investor Search Connect with us Recent Posts The origins of Passport Capital 15 568 days to the end of oil The worst deal I ve ever seen Doddsville podcast 20 December 2012 Best books of 2012 Recent Comments James Carlisle II commented on 15 568 days to the end of oil Samson commented on Harvey Norman crisis approaching David commented on 15 568 days to the end of oil James Carlisle II commented on 15 568 days to the end of oil Nick Earls commented on 15 568 days to the end of oil Links Bristlemouth Gravy Train How To Invest Intelligent Investor Value Fund Walnut Report Authors Select Category Banking 3 Currency 5 Debt 9 Doddsville Podcast 36 Featured 4 Gareth Brown 48 Gaurav Sodhi 67 Greg Hoffman 27 International investing 10 James Carlisle 3 James Greenhalgh 56 Jason Prowd 18 John Addis 3 Lists 3 Macro environment 16

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  • Wesfarmers | Doddsville
    Woolworths and the other specialty stores that have profited from Coles disarray will need to watch their backs Based on what we ve seen and heard so far Ian McLeod Coles managing director is an excellent retailer Whilst I had no proof that these changes would work then the evidence that they are is mounting Coles comparable or same store sales growth for its food and liquor business has now outperformed Woolworths for four quarters in a row Most recently Coles produced same store sales growth of 4 2 in the fourth quarter of financial year 2010 compared to Woolworths 1 8 By James Greenhalgh TII Posted in James Greenhalgh Also tagged coles metcash supermarket Woolworths Comments 31 Tea biscuits and argy bargy December 22 2009 11 42 am I converted to the religion of annual meeting attendance late Earlier in my investing career eyeballing management wasn t a big priority it s still a secondary consideration but that s a topic for another time By James Greenhalgh TII Posted in James Greenhalgh Also tagged AGMs Annual meetings Harvey Norman shareholders Sonic Healthcare Treasury Group Comments 14 Intelligent Investor Analysts Nathan Bell research director works alongside Gareth Brown James Greenhalgh Gaurav Sodhi and Jason Prowd This blog is where they share their thoughts and gather feedback about their ASX research at Intelligent Investor Search Connect with us Recent Posts The origins of Passport Capital 15 568 days to the end of oil The worst deal I ve ever seen Doddsville podcast 20 December 2012 Best books of 2012 Recent Comments James Carlisle II commented on 15 568 days to the end of oil Samson commented on Harvey Norman crisis approaching David commented on 15 568 days to the end of oil James Carlisle II commented on 15 568 days to

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