Podcast
Questions and Answers
What is one reason why governance is a crucial consideration in investing?
What is one reason why governance is a crucial consideration in investing?
- It reflects management's past performance.
- It is irrelevant in emerging markets.
- It impacts the valuation and target price significantly. (correct)
- It only focuses on five-year forecasts.
How does experience in the asset class emphasize the importance of governance in investing?
How does experience in the asset class emphasize the importance of governance in investing?
- By emphasizing the need for a high standard of governance in emerging markets. (correct)
- By showing the potential downside from the target price of up to 60%.
- By highlighting the need for a low standard of governance in emerging markets.
- By suggesting the need for selection and exclusion lists.
What is the approach to investing in a flawed governance universe?
What is the approach to investing in a flawed governance universe?
- Developing a one-year financial forecast.
- Creating selection and exclusion lists.
- Using nine different criteria to score companies. (correct)
- Focusing on companies with low improvement potential.
How can a low governance score impact a company's valuation?
How can a low governance score impact a company's valuation?
What does relying on consistent reporting and transparency during the investment process help achieve?
What does relying on consistent reporting and transparency during the investment process help achieve?
What does governance reflect in investing?
What does governance reflect in investing?
How does a low governance score impact a company's target price?
How does a low governance score impact a company's target price?
What impact do selection and exclusion lists have on investing in a flawed governance universe?
What impact do selection and exclusion lists have on investing in a flawed governance universe?
How are companies scored on governance in investing?
How are companies scored on governance in investing?
Why is a high standard of governance important in emerging markets for investing?
Why is a high standard of governance important in emerging markets for investing?
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Study Notes
- Governance is a crucial consideration in investing as it reflects management's forward-looking ability, reliability, and transparency.
- The investment process involves developing a five-year financial forecast, relying on management, consistent reporting, and transparency.
- Experience in this asset class highlights the importance of governance in investing, emphasizing the need for a high standard of governance in emerging markets.
- The approach to investing in a flawed governance universe involves avoiding selection and exclusion lists, focusing on companies that show improvement potential.
- Nine different criteria are used to score companies on governance, impacting the valuation and target price significantly.
- Even if some companies trade at low levels currently, a low governance score can lead to a downside from the target price of up to 60%.
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