Incentives

Gustavo Ballvé on July 1st, 2016

After a very public fraud issue with insurance licensing, Zenefits is taking steps to re-adequate its financing and shareholder base. Yes, it is in exchange for a promise of no legal action, and no, not everyone is happy – but it seems as interesting as it is unusual.

Read more about Unusual steps at Zenefits

Gustavo Ballvé on March 12th, 2015

My friend and PLD classmate Zia Patel of Wolff Olins just published an interesting interview with Dr. Reddy’s Chairman and CEO, GV Prasad. The story leads to a report called “Impossible and Now” that is extremely interesting and really worth the time. It condenses insights on leadership from 43 interviews with CEOs and surveys of over 400 employees at those companies.

Read more about “Impossible and now”

Gustavo Ballvé on January 13th, 2015

Back in March 2014 we published our 4Q13 management report containing a special section discussing Proxy Advisory Firms. It was motivated by further research following a June 2013 post on Buysiders.com called “Proxy Advisory firms: use with caution”. In the original post I highlighted “the dangers of “outsourcing research” – be it in Corporate Governance, people, financials, business models, competition, whatever – and the temptation of trying to systematize/quantify an investigation that is, by nature, subjective and case by case.” In the excerpt inside I addressed this part in detail but also mentioned “the fundamental choices we should make in terms of capital allocation (be it financial or human).” We can choose how we do our research, and we should choose wisely. For us the choice is clear.

Read more about Special post: Proxy Advisory Firms

Gustavo Ballvé on December 30th, 2014

This LEX piece on sell-side research reflects several old, recurring and ever more vital themes I try to address at Buysiders.com: conflict of interests, incentive systems, the power of brands, halo effects and whatnots – and ultimately how hard it is to actually KNOW something when it is so hard to filter out the noise. All this is more evidence that trustworthy, independent analysis is growing in value by the second.

Read more about Old themes and the new year

Gustavo Ballvé on November 6th, 2013

Very interesting post today by The Brooklyn Investor showing, with real-life examples, what great CEOs or investors can do to generate value even when the market is flattish or going down for long periods of time. He’s humble enough to say that this is far from the norm, but that’s precisely the point of, well, pointing out these examples: it is possible and it’s our job as stock pickers to focus substantial portions of our time to finding these great companies run by great people.

Read more about Value generation in flat/down markets

Gustavo Ballvé on September 5th, 2013

Great timing by this article, called “Why Investment Performance Is a Distraction”, highlighted with “Quote of the Day” honors at Abnormal Returns. It’s always great to be reminded to NOT keep our eyes on some performance “goal”, but rather to focus on processes. That said, the article tries to expand the investment-related dangers of setting specific goals to general management situations – and I partially disagree.

Read more about Don’t take your eyes off the… processes!

Gustavo Ballvé on August 6th, 2013

Two years ago the S&P downgraded the credit rating of the United States sovereign debt, triggering a global equities sell-off and motivating me to write a long post called “Don’t panic”. If excessive pessimism brought on by third-party “research” was unwarranted, excessive optimism nowadays is too. There will certainly be a large number of articles saying how bad the S&P screwed up – first one right here – so, again, read them with the necessary pounds of salt. I haven’t done, and won’t do, the research on the current state of the US economy to say anything about it. I’m still qualified enough to say, again, don’t panic – but don’t believe the hype either.

Read more about Don’t panic, but don’t believe the hype either

Gustavo Ballvé on June 7th, 2013

I’ve just read a Stanford paper on the decision-making process of Proxy Advisory firms such as ISS and Glass Lewis. I will write more in-depth about this in the future, but in summary this paper highlights the dangers of “outsourcing research” – be it in Corporate Governance, people, financials, business models, competition, whatever – and the temptation of trying to systematize/quantify an investigation that is, by nature, subjective and case by case. The paper itself falls into to some of these traps.

Read more about Proxy Advisory firms: use with caution

Gustavo Ballvé on May 6th, 2013

An anonymous survey of 365 U.S. sell-side analysts confirmed many insights about that industry’s practices that should trouble the long-term, value-oriented investor (at least the ones who didn’t yet already know this). That said, it is wrong to generalize and say that all sell-side research is flawed and I explain why in the post. Ultimately, any knowledge that has not been directly earned by you, no matter the source, can’t be taken at face value.

Read more about Interviews with sell-side analysts

Gustavo Ballvé on May 3rd, 2013

As the date of the 2013 Berkshire Hathaway annual meeting approaches, here are four news pieces and interesting generalities about Berkshire – including the purchase of the 20% of Iscar the company didn’t own, articles on Doug Bass, the bear who will get to ask tough, unscripted questions at the meeting and more.

Read more about Buffett news ahead of the Annual Meeting

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