Factors that are put down to a CEO’s skills may actually just be the result of randomness or luck.
How much importance should fund managers place on meeting corporate management teams? Actually, let’s start with a different question – how much importance do fund managers place on meeting corporate management teams? Or, to put it another way, what proportion of returns do professional investors believe is down to the skill of the CEO and their team versus other factors?
Obviously the answer will vary from fund manager to fund manager – some may well reply zero but others might put the proportion at, say, 75% or 80%. Our own educated guess, here on The Value Perspective, would put the average fund manager answer in the region of 50% – and certainly nowhere near the 4% or 5% a recent study has argued is closer to reality (and, as it happens, to our own view).
