No Limits Ladies.com

Richard Parker over at The Trump Blog talks about how poorly run businesses can be the best ones to buy. Businesses that survive with horrible management teams can be snapped up at a crazy discount and then turned around by great management.

This has impact on all three areas of investing.

First in the entrepreneurial space which Parker addresses. Of course the assumption here is that you are part of a great management team. Completely fresh and inexperienced people need not apply.

Second in the stock market. For those fundamental investors out there (like I am), the management team means everything. We are all creatures of habit. Just because your title consists of letters like C.E.O. or C.F.O. doesn’t mean this fact changes. People are usually known for a few strategies.

For example: I was working for a company and the board brought in a new C.E.O. This C.E.O. had a history of successfully restructuring companies and cutting jobs. As an investor, I would investigate buying. As an employee, I polished up my resume and dusted off the contact list.

Third in real estate. Regular readers know that I’m not a real estate bunny but I have to think that this would hold in that area too. An apartment building poorly managed yet still full of tenants could bring in even more profits if better managed.