AND THE WINNER IS ...
What makes a good chief executive? Next month’s issue of the deal will feature the magazine’s annual CEO of the Year award. Last year’s inaugural winner was Telstra’s David Thodey, and the runners-up were ANZ’s Mike Smith, Virgin Australia’s John Borghetti, Qantas’s Alan Joyce and Graincorp’s Alison Watkins.
We will again be looking for a chief executive with a strong focus on delivering long-term, stable returns to shareholders. The process will involve examining the performance of ASX-listed companies using the Conscious Investor model developed by the Teaminvest shareholder discussion group. This has the advantages of being independent of any broker or investment bank and being based on the principles of US billionaire Warren Buffett. (See Wealth, page 41.)
Buffett shies away from companies with high debt levels and believes that investors must factor in a safety margin when assessing risk. He also believes that not losing money – or spending time avoiding investments in companies that could lose money – is as important as looking for winners.
Buffett’s philosophy, his shareholder letters (berkshirehathaway.com) and his annual meeting, held each May in Omaha, Nebraska, are attracting growing interest from Australian investors, including the members of Teaminvest. Other long-time local Buffett fans include former UBS chief Chris Mackay, who founded
the Magellan Financial Group. Buffett’s investment philosophies are born of his no-nonsense upbringing in the US Midwest and his time at New York’s Columbia University, where he became a follower of Benjamin Graham, author of the famous book
The Intelligent Investor.
Teaminvest uses its own Buffett-style filters when evaluating companies, including an assessment of executive remuneration policies and the ethics of senior management. “Many companies are run for the benefit of the board and the management and not for the benefit of shareholders,” Sydney businessman and Teaminvest co-founder Howard Coleman says.
the deal will add a few filters of its own to sort the candidates for CEO of the Year. Find out who wins in the next issue, out on Friday, September 20.
The oracle of Omaha, Warren Buffett, believes that not losing money is just as important as making it.