I don't know enough about Exor to comment, but the problem with family run businesses such as these is that the family is already wealthy and they use the business as a trust fund to pay themselves an income to cover lavish living expenses. So payment of dividends comes before all other capital allocation, even if that means having to increase borrowing to pay those dividends (which is just plain foolish)
That means that the family's interests are not aligned with outside investors seeking to accumulate wealth in the first place.
European majority family owned businesses are a far cry from those in the US like Berkshire Hathaway.
For Investor, the dividend goes to fund the Wallenberg foundations in support of education & research. My gut feeling of John Elkann & Co at Exor, is that these are excellent operators. Whether or not they drink some champagne from time to time doesn’t bother me, as long as they create enormous value over time. (Do not own Exor myself)
A counterpoint to your argument could be that family operators, are both more long-term oriented, but also more risk-averse in nature. Their track record of value creation should speak for itself (Exor & Investor NAV ~20% L10y CAGR).
Berkshire is amazing, but I wouldn’t place Investor as “far cry” from them. Investor’s portfolio is stacked with quality, and increasingly so. Their wholly owned businesses are thriving, and are excellent reinvestment engines.
I don't know enough about Exor to comment, but the problem with family run businesses such as these is that the family is already wealthy and they use the business as a trust fund to pay themselves an income to cover lavish living expenses. So payment of dividends comes before all other capital allocation, even if that means having to increase borrowing to pay those dividends (which is just plain foolish)
That means that the family's interests are not aligned with outside investors seeking to accumulate wealth in the first place.
European majority family owned businesses are a far cry from those in the US like Berkshire Hathaway.
I welcome your comments and thoughts.
Your point is probably true in many instances.
For Investor, the dividend goes to fund the Wallenberg foundations in support of education & research. My gut feeling of John Elkann & Co at Exor, is that these are excellent operators. Whether or not they drink some champagne from time to time doesn’t bother me, as long as they create enormous value over time. (Do not own Exor myself)
A counterpoint to your argument could be that family operators, are both more long-term oriented, but also more risk-averse in nature. Their track record of value creation should speak for itself (Exor & Investor NAV ~20% L10y CAGR).
Berkshire is amazing, but I wouldn’t place Investor as “far cry” from them. Investor’s portfolio is stacked with quality, and increasingly so. Their wholly owned businesses are thriving, and are excellent reinvestment engines.