What corporate executives can learn from leading value investors

Abstract

Despite differences of opinion regarding what to include as a “top risk” today, many executives agree that 2021 and beyond will likely be a period of uncommonly broad-based risks. Given the breadth of potential exposures, an alternative way to strategically approach both the challenges and opportunities generated from the global risk landscape is in order. The principles of value investing—based on the lessons learned from prominent practitioners—present just such an approach to corporate strategy and management. Our strategic research into these principles have been distilled into six core managerial considerations. In theory, the prescriptions of successful value investing appear straightforward, but in practice it takes an active shift in mindset to consistently and effectively apply them over time, especially in a corporate context. To do so requires that operational skillsets are augmented with those of both an astute investor and a discerning banker while balancing one’s attention between conventional and unconventional sources of information. This will enable the required patience and grit to “go against the herd” when it is appropriate, but likely very unpopular, to so do, and to focus firmly on longer-term compounded returns instead of quarterly, or even annual, earnings.

Keywords: Corporate Management, Corporate Strategy, Information Advantage, Value Investing, Value Realization

JEL Classification: G30, L10, L20, M10, M21