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"...competent and astute executives most certainly would NOT involve themselves in "inherently poor quality businesses..."

With respect, that's a somewhat flawed assertion.

I can point out to many cases of what would be considered widely to well-credentialised, highly-astute and competent executives sitting at the helm and in the boardrooms of some of Australia's crappiest-quality listed companies.

For example, Boral's Mike Kane is widely-considered a world-class manager and yet he's running of one of the market's most challenging businesses, which is a perennial financial disappointer over its business cycle.

And many more cases of high-quality managers being involved with either sub-par (or outright crappy) businesses spring to mind, such as:

Greg Kilmeister (ALS)
Paul O'Malley (Bluescope)
Julian Segal and Simon Hepworth (Caltex)
Jeremy Sutcliff, Rob Sindell and Greg Barnes (CSR)
Grant Anthony and Kevin Fletcher (Downer)
Greg Pritchard (Energy Developments)
Neville Power (Fortescue)
Ralph Waters and Gene Tilbrook (Fletcher Building)
Peter Crowley (GWA Group)
David Robb (Iluka)
James Fazzino (Incitec Pivot)
Chris Kelaher and David Coulter (IOOF Holdings)
Bernie Brookes (Myer)
Jeff Weber and Peter Raynor (Mermaid Marine)
Rob Millner (New Hope Coal)
David Gyngell (Nine Entertainment Group)
Peter Botton (Oilsearch)
Grant King (Origin Energy)
Stuart Hutton (Orora)
Leigh Clifford & Alan Joyce (Qantas)
David Knox (Santos)
Mick McMahon (Skilled Group)
Mike Connaghan (STW Communications)
Peter Birtles (Supercheap Group)
Rob Cooke (Tatts Group)
Graham Hunt and Vince Nicoletti (Transfield)
Paul Flynn (Whitehaven Coal)


Conversely, I can cite many cases where the opposite can be seen, i.e. high-quality businesses succeeding and flourishing despite pretty ineffective boards and management.

Without incriminating myself, I think the major banks in Australia have, over the years, had some very ordinary executives (some still do), as have companies like AMP and many other companies in the financial services sector, as well as companies such as AMC, BHP, RIO and WPL.

And yet those businesses have survived through all manner of management blunders, some of them significant.

My lessons in the Business Quality versus Management was learnt first-hand via an extended professional stint in private equity – notably, at the venture capital end - where I met and saw many highly competent, energetic, smart managers who had superior insights, but who failed because of limitations in their business models.

Anyone can look like a rock star running a pre-eminent enterprise, but while the broader investing community in the publicly listed doesn’t see it, the road is littered with the carcasses of incredibly smart people who came unstuck because their business models ultimately lacked robustness.

So, I’ve observed directly that it is the quality business franchise that makes management look good, and not the other way around.


In terms of my comparing MSB to WOW, for the life of me I can’t understand why that is labelled “unfair”.

Direct comparisons of their respective businesses is indeed a meaningless exercise, but that’s not the comparison I make.

The comparison I make takes the form of investment alternatives, and in this context the two stocks are eminently comparable given they are two out of a broad range of possibilities.

Both are listed securities in which we, as the public, can elect to purchase shares.

In the context of investing to maximise one’s profit – which I assume is the framework of the debate on this sort of forum – as capital providers we can take our hard-earned capital and we can deploy it among an array of alternatives.

As just one set of those alternatives, we can either click the button on “BUY MSB” or we can click on “BUY WOW”.

For “which share could I/should I buy today?” is the precise choice dilemma facing all investors all of the time, assuming they seek to maximise their profit position.

The comparison is, definitionally, a self-made one

Just my own opinion.
Adam