What corporate executives can learn from leading value investors

Abstract

PurposeThe principles of value investing present an alternative way to strategically approach the challenges and opportunities generated from the global risk landscape.Design/methodology/approachThe principles of value investing – based on the lessons learned from highly successful practitioners – can be distilled into six core managerial considerations.FindingsIn theory, the prescriptions of value investing appear straightforward, but executives need to augment their skillsets with those of both an astute investor and discerning banker, balance their attention between conventional and non-traditional sources of information, and exhibit the patience and grit to go against the herd and focus on longer-term compounded returns.Practical implicationsThe concept of “rationality” is a way of monitoring executive behavior to ensure that stated goals, objectives and strategies reconcile to business actions over time.Originality/valueInsights for corporate leaders, investors, M&A teams and activists. These six principles will likely be increasingly valuable during the challenging times ahead: Adding cost-effective resource allocation to the strategy tool kit. Conservative financing. Balancing non-traditional and traditional information. Clarity about the complexity of risk. Humility in times of uncertainty. Focusing on compounded returns.