Quick post: short interview with Kapser Horsted, CEO at Henkel, the german consumer and industrial products company. While you can just click on the link and enjoy, we’ve highlighted two excerpts inside. He’s frank and most of his quotes are quite direct and of the “no-hubris” type.
Mr. Druckenmiller has over 30 years’ experience, his Duquesne Capital manages $12 billion and since 1986 never had a down year (although it is down 5% YTD). He worked with George Soros (while still managing Duquesne!) and was there for the famous British pound trade. So why quit? Interestingly, he’s “frustrated by his failure in the past three years to match returns that had averaged 30 percent annually since 1986.” Why, in his opinion, did it happen? “Managing more than $10 billion seems to challenge my long-term standard for investment performance.” A fund manager’s mandate is all about investment performance and not AUM growth – the opposite is not just wrong, it can also be self-defeating.
Interesting way to improve funding costs, while also pleasing the banks involved. Oi, the Brazilian telecom giant, also happens to own a lot of real estate – for instance the spots in which they have antennas. It’s transferring 263 properties to an SPC, for which Oi will pay rent. At the same time the SPC raises money to pay for the property by selling these rent receivables as CRIs, the portuguese acronym for “certificates of real-estate receivables”. The flip side for banks is that they get to invest their savings accounts regulatory requirements in a “better-quality” CRI. For Oi, through the cost of this debt and the tax benefit of paying rent, they get to secure a lower cost of funding than that achieved in their recent (May ’10) bonds issue.
The 1st one regards AB-InBev and the fact that it’s still hard for “foreigners” to fully grasp it. Yesterday’s LEX column on the company has flattering but less than enlightened comments and puts way too much weight on the P/E ratio. The 2nd one is about Netflix, and this NYT story sheds some (more) light on the company. It’s about creative destruction stimulated by the company itself. It doesn’t guarantee Netflix will win as the technology shifts continually challenge its business model, but it gives the company a fighting chance. Again, such a shifting business model is probably not the best playground for investors, but Netflix is still worth tracking for all the other reasons.
Thought-provoking presentation on (buzzword alert!) “information shadows”, “the sensor web”, cloud computing, data collection/ processing/ visualization, local marketing + micropayments, P2P credit-card payments, social network risk evaluation… and how all this is coming together to create new products and services that feed on the cloud and/or organize it. It’s still impossible to tell just how practical this is and who will make money from this, but it’s nice food for thought. Also a comment on the skill of networking.
The WSJ had an interview in late June with Carlos Brito about his plans for Anheuser-Busch Inbev. The video inside is focused on the corporate culture aspect, and it’s always refreshing to watch. That said, we wonder if the video registers for foreign investors as much as it registers for investors who have been exposed for so many years to the effects that Brahma’s/ AmBev’s/ InBev’s and now ABI’s culture really has over time.
Strategy & Business published a review for The Curse of The Mogul, which we’ve read recently. It’s a must-read for several reasons: media, capital allocation, competitive strategy and leadership. Not that we agree with Greenwald 100%. Chapter 2, on competitive strategy, is especially interesting because it assesses the competitive strategy framework from a specific industry’s standpoint (always better than ‘generic speeches’) and it was useful for thinking about other industries as well.
“Irony”: High-level corporate strategy consultants need to review their business models to survive. The Financial Times article may be just a sign of worldwide corporate spending cuts, so don’t read too much into it, but the fact remains that the downturn is driving consolidation in what is already a relatively concentrated market (useful chart in the story).
McKinsey Quarterly recently had a series on strategic decision making called “Seeing Through Biases in Strategic Decisions”, of which we highlight two articles and link to one by Harvard Business Review. Taken together, it’s great food for thought when you try to apply this line of thinking to investing and even marketing and advertising.
It seems obvious but Dan Pink makes it interesting in this 2009 TED talk: extrinsic incentives work great for certain situations but poorly for others of higher complexity. His other point, that there’s a “mismatch between what science knows and what business does”, is also important… but trying to bridge this gap can lead to information overload if managers try to cover all the “buzzwords” for fear of missing out on the latest (supposedly) performance-enhancing method.
