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We take great pride in our firm's intellectual capital.

Sharing current views and opinions showcases the thought leadership we bring to our clients.

Current Views

June 10, 2011: The Managing of Management

Of all the factors we consider in analyzing possible portfolio additions, the quality of management is certainly near the top in importance but also ranks equally high in the difficulty of properly measuring it. Traditionally, outside observers essentially equated good management with good financial results, and much like professional sports teams, when the record deteriorates, the cry from Wall Street and fans alike is to throw out the “bum”, be they CEO or Coach. However, as with most things in life, the truth is rarely that clear.

We attempt to look at a variety of indicators when judging management’s success, of course including financial accomplishments, but also many other markers including:

  • Parallel alignment of management ownership and public shareholders;
  • Relative level of inside ownership;
  • Incentive compensation plans tied to key financial metrics;
  • Communication skills with all constituencies;
  • Accessibility of key management personnel;
  • Transparency of financial reporting;
  • Consistency of financial reporting;
  • Management bench strength and development of succession plans;
  • Logic of current strategy and experience in executing;
  • Industry and especially company tenure of management;
  • Formulation of crisis strategies ahead of the curve;
  • Results across complete economic cycles

While this is by no means an exhaustive list, it does illustrate the complexity of the subject and the difficult task of making an objective assessment in what is really a subjective framework. And perhaps most important of all, we try to inject our years of experience and exposure to hundreds of management structures and our intuitive ability to fill out a report card on current management. While we very seldom would commit clients’ and our capital to an inferior management, there are those rare situations where the dynamics of the industry are so overwhelmingly positive that even the poorest of executives would have a hard time “messing it up”. However, we enter those investments with much caution and a constant vigilance, since the potential to move the company in the wrong direction by a less competent management is a clear risk. Given a choice, we would gladly swap some small level of potential industry growth for a management which meets our criteria and has instilled confidence in its ability to succeed in all environments.

Submitted by: Robert L. Meyer, CFA - Managing Director and Portfolio Manager



This information is intended solely to report on investment strategies and opportunities identified by Roosevelt. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. References to specific securities and their issuers are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. Please contact us at 646-452-6700 if there is any change in your financial situation, needs, goals or objectives, or if you wish to initiate any restrictions on the management of the account or modify existing restrictions, or if you would like to request a copy of our Code of Ethics. Our current disclosure statement is set forth on our Form ADV Part II, available for your review upon request, and on our website, www.rooseveltinvestments.com.

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The Roosevelt Investment Group, Inc. is an independent investment management firm that is not affiliated with any parent organization. The Roosevelt Investment Group, Inc. manages domestic equity, international equity, domestic fixed income, global fixed income, and balanced assets for primarily U.S. clients. The Roosevelt Investment Group, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission and notice filed in all 50 states.

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