Turnaround Investment Success with Public Companies

I recently read an article about Monish Pabarai a super successful money manager that I wanted to comment on. Unlike many institutional money managers, monish has operated businesses both successfully and unsuccessfully. I was struck by his quote, “I’m a better investor because I’m a businessman, and I’m a better businessman because I’m an investor. His experiences as a businessman had a direct positive impact on his ability to invest in public companies. I totally concur with this statement.
As I look back on my career investing in the turnarounds of public companies, my successes did not come from being a great analyst. Yes,having the skills of a CPA and CFE are important but those skills just scratch the surface of what is required to pick a public company that will be a successful turnaround. It’s the hours i spent sweating payrolls, analyzing sku gross margins, counseling distraught employees and other activities associated with fixing a company where you learn the nuances that are required for a turnaround success. As Malcolm Gladwelll says becoming an expert requires a minimum of 10,000 hours of experience.
As we enter the second downturn for this zombie economy numerous opportunities will be created among public companies struggling to survive. Many of my readers have these 10,000 hours of experience. I hope that you use these skills to your advantage when analyzing the management teams of public companies you may be considering investing in. Good luck and feel free to contact me with any questions as you pursue your investments