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6 of the best managed ASX companies

Chris Stott who manages the $970 million listed investment company WAM Capital Limited (ASX: WAM) recently penned an article titled ‘5 factors to look for when assessing management’.

In the article Mr Stott addressed five key attributes his team looks for when assessing the qualitative aspects of a company’s management.

Those five key criteria were:

  1. Verbal and non-verbal communication
  2. Track record of success
  3. Alignment of remuneration and incentives
  4. Leadership style
  5. Consistency of ‘story’ over time

While all five of these factors are arguably as important as each other, let’s hone in on two…

Backing the jockey

Obviously some business people and entrepreneurs are better than others at creating value for shareholders. When an investor can identify a manager with a track record of success it can be sensible to back this proven, highly skilled manager.

Mr Stott outlined two examples where this strategy has previously worked.

Firstly, an ex-CEO of REA Group Limited (ASX: REA) went to work for the Asia-focussed real estate business iProperty Group Ltd (ASX: IPP). iProperty has also turned out to be a solid share market performer.

A second example was the when the team which had been successfully running financial services firm FlexiGroup Limited (ASX: FXL) left and joined Eclipx Group Ltd (ASX: ECX). Since listing in early 2015 the share price of Eclipx has increased by over 50%.

Skin in the game

Another important attribute to identify amongst managers is whether they “eat their own cooking.” Incentives, remuneration structures and share ownership all play a critical role in achieving the right motivations from decision makers.

Mr Stott highlighted two firms, Corporate Travel Management Ltd (ASX: CTD) and Technology One Limited (ASX: TNE) where he believed the alignment of remuneration and incentives has been successfully achieved.

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Motley Fool contributor Tim McArthur owns shares in FlexiGroup Ltd. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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