https://www.linkedin.com/in/in-bok-s-1911014/ (In-bok Song) joined https://www.seafarerfunds.com/ (Seafarer Capital Partners) in 2016. She is a lead portfolio manager of the Seafarer Overseas Growth and Income Fund and is the firm’s director of research and chief data scientist, responsible for the firm’s research processes and systems, new research methodology initiatives, and oversight of training for analyst staff. Prior to joining Seafarer, she was an associate portfolio manager at https://www.thornburg.com/ (Thornburg Investment Management), where she focused on emerging markets. Previously, In-bok was a co-manager of the Matthews Pacific Tiger Fund at http://micm-llc.com/default.fs (Matthews International Capital Management). She began her career in emerging markets as an analyst with T.Stone Corp, a private equity firm in http://www.useoul.edu/ (Seoul, South Korea). In-bok holds bachelor’s and master’s degrees in material science and engineering from Seoul National University. She also holds a master’s in international management from the https://www.kcl.ac.uk/ (King’s College London), and a master’s in management science and engineering with a concentration in finance from https://www.stanford.edu/ (Stanford University).

“I had a point at which I think my learning curve was very steep, and then it plateaued … I don’t think it means that one knows everything, just that another learning curve is coming.”

- In-bok Song

Worst investment ever

Have an anchor point. But collect data, collect information, and that will give you a good anchor point. But a good analyst does research and more research, and thinks hard about the validity of that anchor.

A strong company can die slowly. Investors and analysts need to be really careful. Trying to understand what is going on is important. In a short time frame, a company can appear to be struggling, but you can be fooled by some sound fundamentals, such as a good manufacturing base or a very good brand and a good customer base. So it may not seem to be dying. What can be happening however is that the rate of their decline is so slow that you can’t see it.

The value of the franchise is related to why a company may die slowly. That and its organizational structure. The good investor needs to understand the organizational structure. In most cases when a company’s share price falls, investors know the problem. The company comes out with a plan, and the investor believes it for perhaps a month. Some companies will turn around and some companies won’t. If a company doesn’t turn around, they tend to have an organizational problem.

Ask questions and you can detect any chinks in the organizational structure. Ask how people are structured, how much each function is co-operating with the other. Sometimes we don’t ask these questions. In-bok says she didn’t at the beginning of her career. Also ask management: “What is your organizational structure? Are employees happy? What are your plans for hiring?” Management may not give you the financial numbers, but they might answer questions such as these. And these things are very important.

Andrew’s takeaways Do your research. It is often easier said than done.

Get to understand the management team. In most companies, the team is a mess, and they’re fighting with each other or not always working together, which is human nature. So the question really is: “How is it structured? How is the leader bringing all the best of these things together? Usually analysts don’t look at such things because we like to look at numbers. But, In-bok has shown very well that there are times an analyst think they’re using valid numbers when in fact, they can be almost fiction.

So be careful of overconfidence. Success can bring confidence, and we can carry that confidence into other areas. In the world of finance, just when you get confident about something, things change.

Even the big corporation can liquidate slowly and steadily...