Chapter 6 - Management

Question 1

GREAT BUSINESS MODELS, GREAT MANAGEMENT

_____ business models do not exist without _____ management. Great management creates the great business models and also creates the great assumptions, execution, and the rest. It all flows from _____. - p156

Answer 1

GREAT BUSINESS MODELS, GREAT MANAGEMENT

Great business models do not exist without great management. Great management creates the great business models and also creates the great assumptions, execution, and the rest. It all flows from management. - p156

Question 2

What does Fred Kobrick say about those who need a lot of information before they buy a stock?

Answer 2

ANALYSIS PARALYSIS

Those who need unlimited information are often too late and buy after the stock has gone up. Stocks get driven early by those investors who have a compass, focus on just the right information and from their know-how (focusing on BASM). That is where the big money is–if you are patient and hold on. - - p158

Question 3

What to do when you see potentially good management?

Answer 3

Big_Money

AVERAGE UP

Companies that have potentially great management can be bought on small amounts. As you see them operate, you sell some and enlarge positions in the best of them, even if at higher prices. This works for me, and it will work for you. - p158

Question 4

Best management demonstrates _____ that it can envision a great future for the company and articulate a _____ and _____ strategy to get there.

Answer 4

Best management demonstrates immediately that it can envision a great future for the company and articulate a cohesive and logical strategy to get there.

Question 5

Great management has to show that it can _____ the _____, so you watch carefully.

Answer 5

Great management has to show that it can execute the details, so you watch carefully.

Question 6

Great managers make _____ and _____ projections to you, the stockholder, that they can _____ on.

Answer 6

Great managers make promises and projections to you, the stockholder, that they can deliver on.

Question 7

What makes for great management, in Kobrick’s view?

Answer 7

Kobrick’s Specific Criteria
1) Consistency
2) Repeatability
3) Vision
4) Execution excellence
5) Perseverance
6) Admitting mistakes early
7) Aggressively fixes mistakes
8) Shows common sense

Question 8

What are the metrics Kubrick uses to evaluate a company?

Answer 8

1) Gross margin
2) Rate of earnings growth
- is it accelerating/decelerating?
3) Net margin after taxes
4) Profit after taxes divided by total assets (ROC).

Question 9

What metrics does Kubrick use to follow internet companies?

Answer 9

1) Mass
- enough size and presence and customers to be competitive. Around long enough to show that it can acquire new customers at a good pace and at an affordable rate
2) Model
- a business model that is strong and shows the path to growth and profits very clearly
3) Momentum
- a high growth rate, and one that is steady or accelerating
4) Market share
- taking market share from similar companies. In other words, growing faster than competitors, but not by doing things that are unsustainable
5) Management
- good, perhaps great management.

Question 10

What two numbers are the most important to watch carefully?

Answer 10

1) Market share
2) Profit margins

Question 11

Great management provide _____ _____ to shareholders to read.

Answer 11

Great management provide report cards to shareholders to read.