📘 Dead Companies Walking

Dead Companies Walking: How A Hedge Fund Manager Finds …

Unlike most investors, who live in fear of failure, Sco…

GoodreadsScott Fearon

Not bad stories from a seasoned investor.

• He always met with the executives of the companies he invested in or shorted. Altogether, he spoke with 1,400 executives over 30 years.
• He was one of the first to start shorting companies and waiting for their bankruptcy, doubling his investments over a few years.
• Over his career, he saw plenty of companies go bankrupt and concluded that people are very afraid of failure, and this prevents them from seeing reality as it is. Executives often assess the situation with excessive optimism during a crisis, and this ends up costing the business its survival.

A few quotes:

Most executives are very smart people. In thirty years of visiting corporate headquarters, I don’t think I’ve ever met a single dumb person who had risen to helm a publicly traded company. But very few leaders, despite their intelligence, are willing to face hard facts and revise their thinking. That’s one of the main reasons more businesses fail than succeed.

…

That chat reinforced something else I was beginning to learn: people in management positions, even very senior management positions, are often completely wrong about the fortunes of their own companies. More important, in making these misjudgments, they almost always err on the side of excessive optimism. They think their businesses are in much better shape than they actually are.

…

most choose more hopeful, less draconian tactics. But in my experience, half measures almost always hasten rather than delay the end.