In today's digital age, accessing valuable investment information is easier than ever. Analysts, influencers, and bloggers share their trades and insights, allowing investors to make informed decisions. While it's still challenging to know what your neighbor is buying or selling, it's straightforward to see what billionaires, large institutions, and company insiders are doing. The SEC requires institutional investment managers with at least $100 million in AUM (Assets Under Management) to file a quarterly Form 13F, disclosing their equity holdings and providing insights into the smart money's moves in the markets.
Billionaires' involvement in a stock often boosts investor confidence, as many see successful investors as knowledgeable, skilled, and resourceful. Their actions can influence market sentiment, as no one makes moves intending to lose money. After all, if a wealthy investor has taken a long position in a stock, they must have done their due diligence and seen something positive in the long term.
Billionaires and institutional investors often engage in due diligence processes that involve meeting with CEOs and upper management before making significant investments. These discussions serve several purposes:
- Assessment of Leadership: Meeting with CEOs and management allows investors to assess the leadership team's competence, experience, and vision for the company. This personal interaction provides insights into the management's ability to execute strategic plans.
- Understanding the Company's Strategy: Investors want to understand the company's strategy, business model, and plans for future growth. Moreover, a site visit allows investors to experience and evaluate the products, services, and assets first-hand, improving one's conviction in the investment.
- Assessment of Corporate Governance: A face-to-face meeting allows for the assessment of a company's corporate governance practices, especially around decision-making, transparency of financial reporting, and the overall governance structure.
- Building Relationships: Establishing a relationship with the company's leadership can be valuable. It may provide investors with ongoing insights into the company's operations and future plans. A positive relationship also can influence the flow of information and potentially impact decision making on investments.
These elements are not typically accessible to average individual investors, but we can piggyback on the homework done by affluent investors. Let's look at Dewhurst Group Plc (LON:DWHT), a company that has recently announced an increased dividend for its shareholders.
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