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Thinking Like An Owner

So you have made an investment in a company, you think it’s a good investment and you’re optimistic about having bought a great business at an attractive price. The business is either cheap considering it’s what you currently know about the company, or cheap when you take into account what you think the business could achieve. You’ve ticked all the boxes investing in a company – so what next?

It’s at this point that you need to start to think differently about your investment. Rather than leaving your investment to make money, and passively standing on the sidelines, you need to start to consider yourself an owner of the business. You should be treating management like they are your business partners, looking at the decisions they make and assessing the impact of those decisions on the business for the next 5 – 10 years.

You may have heard me discuss the importance of good management, and there is a good reason why. When you invest alongside management who are also owners of the business, and even better when they have significant skin in the game, you know that they are looking at every decision from the perspective of a shareholder.

Understanding what the business does, and where management is taking the business, helps investors to assess the impact of their decisions over the long term.

By thinking of yourself as an owner of the business, not just an investor, it becomes a lot simpler to spot the good businesses from the bad.

Any information has been prepared for the purpose of providing general information only, without taking account of any particular investor's objectives., financial situation or needs, It is not an offer or invitation for subscription or purchase, or a recommendation of any financial product and it is not to be relied on by investors in making an investment decision. Past performance is not a reliable indicator of future performance. To the extent any general financial product advice is provided in this document, it is provided by Glennon Capital Pty Ltd ACN 137 219 866, AFSL No. 338 567. An investor, before acting on anything construed as advice, should consider the appropriateness of such construction and advice having regard to their objectives, financial situation or needs.

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