Management Criteria

A few key management criteria that I've personally found work quite well in hashtag#microcap investing. The difficulty might be in how you assess these aspects of management. The way I do it is to spend time with the CEO & team of any company that I'm going invest in for more than a trade.

1️⃣ Wealthy Management - invest in CEO's and management that have had success and aren't broke. Look for management that can write cheques into their own deal and DON'T NEED to sell their own shares to fund their life. Be careful to make sure they still have the desire and the ego to win.

2️⃣ Popularity - spend personal time with the CEO, do they have a good tight knit group of friends? Do their friendships go way back? Are they a social organizer or the leader of their wolf pack? Why is this important? A microcap CEO needs to be able to cultivate long-term relationships and loyal shareholders that want to see them win.

3️⃣ Faithful - Are they married? Are they faithful to their spouse? Do they take unnecessary personal risks? Do they expose newly met people to this behaviour? Why is this important? It shows their character and integrity in how they likely run their business.

4️⃣ Alcohol & Substance Abuse - There's a popular mantra among capital markets participants: "Out with the boys and in with the men." Yes, a bit dated, but it simply means that an executive should remain balanced and stay in control of themselves so they can take care of their responsibilities. Hangovers are not ideal for handling a day of hurdles and obstacles. I've certainly been guilty of this one myself but I've been much more successful since cutting back on the alcohol and found that the more successful the CEO, the less of a degenerate drinker they are.

5️⃣ Personal Fitness - Are they physically fit? Do they prioritize working out and staying in shape? Physical fitness improves confidence, which is critical to leadership and resilience. Physical fitness improves the readiness and ability to perform at all other necessary tasks.

6️⃣ Personality - One of the more important ones that I've found has a high correlation to the success of a stock. I've found that to be a successful pubco CEO, one has to be the perfect combination of a savage psychopath and unoffendable sociopath. If there are 24 hours in a day, you should be wondering how does this CEO have all this time for me? How do they get it all done? How can they connect with so many different people and not give 2 f*cks about the hate? 4 of the more successful CEO's that I've invested in multiple times share the same unique personality traits - the ability to build quick and deep relationships while not taking anything personally.

7️⃣ Chemistry - Finally, there's the chemistry of the senior team...it should be top notch. You want to see a team that works well together and doesn't cross over into each others lanes.

8️⃣ Execution - Do you do what they say they're going to do? Do they underpromise and overdeliver? This is probably the most important of them all! If they constantly disappoint and fail to execute, they likely won't be good long term at driving exceptional value.

These are some of my more important criteria. As always, execution is more important than the idea so the jockeys matter.

✌️ and happy investing ;)

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