When investing in emerging companies, it’s the quality of the management team that matters above all else, says Jonathan Pearce, Portfolio Manager at the CVC Emerging Companies Fund. A great management team can turn an underperforming company around, but conversely, a bad management team can destroy a successful company.
“Rightly or wrongly, if we don’t like management when we meet them – we don’t get a good feeling about them, or we do some checks and we’re uncomfortable with their history, we will walk away from an investment.”
High quality, long-standing, and dedicated teams are the key to building a real business for the long term. In this video, he shares a current example; an ASX-listed turnaround story trading on a single-digit earnings multiple.
Learn more about Emerging Company investing
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Hi Jonathon, how do you feel about the management and growth potential for ARQ Group, Mayne Pharma and also Paragon Care ? Do you see these as emerging companies ? Regards Paul
Paul, thanks for your interest. ARQ, MYX and PGC are all good examples of companies at varying levels of maturity but not ones we would typically classify as Emerging Companies. The CVC Emerging Companies Fund typically seeks to invest in companies like the ones you have chosen at an earlier stage where earnings growing consistently on a double-digit basis and seeking to expand with the introduction of new capital. Cleanspace Respirators (https://cleanspacetechnology.com/) is a good example of a company that fits the criteria of what we are seeking in the new fund. Regards, Jonathan