Investec's Mundy: Shareholders must appreciate smooth journeys are not always preferable

The path to success can be 'messy'

We recently met with the management of one of our poorest investments. The company is now what can perhaps euphemistically be called a 'recovery' stock and poor trading has necessitated a change in strategy.

The management explained, as they tend to in these situations, the nettle had now been grasped, changes were afoot, lessons learnt and consequently they were cautiously optimistic for the future. The clichés were flying across the table, but one point that interested us was whether the management were following the optimal path to execute a turnaround. We enquired if they would behave any differently if the company was not listed on the stockmarket. They admitted that under different ownership they would very likely act with greater urgency.  Their argument, although not verbalised...