Those interested in managerial ownership and firm value may be interested in a study by Morck, Shleifer, Vishny. The abstract is below, but in summary, firm value increases as management ownership, and therefore alignment, increases from 0% to 5%. As ownership increases form 5% to 25% management entrenchment reduces firm value. Finally above 25% the alignment effect reasserts and firm value increases. It would be interesting to see any difference in how ownership was achieved, i.e. founders vs option thieves.

The convergence-of-interest hypothesis suggests that a firm’s market valuation should rise …

ROE is an excellent ratio, it’s one of the first financial ratios you should put in your tool-belt. The next step is to understand the three business levers that underpin ROE; profitability, asset turnover and leverage.

Look at companies as businesses with opportunities and risks and try to understand why their solvency, liquidity, profitability, valuation and activity ratios are as they are. To do that you need the story.

“my opinion was that the market was more likely to go up…, but that it was preferable to short it…, because, in the event of its going down, it could go down a lot.”

Skillful individual investors exploit market inefficiencies to earn abnormal profits.

The random walk theory does not look right and current index valuations have a strong predictive ability for future long term returns.

This excellent article exemplifies a style of fusion investing, the fusion of business momentum and value.

Three great points; another reason to concentrate on EV instead of market cap, cash is more a risk than an asset and show us the money. Stop hording our cash! Graham recommending putting the dividend payout to a vote each year and management having to justify any capital expenditures. I implemented capital investment management in, gosh at least a dozen companies, and truth be told not one really had a tight grasp of or even a good process for managing their major expenditures.