Biography Over Balance Sheets: The Importance of Corporate Leadership

Company success is about more than numbers on a spreadsheet. In the end, it comes down to leadership.

Great companies are typically founded by great visionaries, innovative thinkers who are able to conceive of brilliant new ideas and match them to an existing market — or create a brand new one.

But the leadership of successful companies doesn’t happen just at the pinnacle. To keep the momentum building, the best businesses have strong leaders throughout the management team, as well as on the board of directors.

Getting to know who these people are is a key to smart investing. The best investors place their bets on talent. They know that a struggling business with extraordinary leaders is a much more promising investment than a company with an appealing product or service, but burdened with poor leadership.

Among top investment funds, corporate leadership is an important metric. In Canada, Anson Funds is known for the emphasis it places on investing in talent — discovering the most gifted corporate leaders, and investing in their dreams.

Anson Funds’ people-focused perspective has worked well for clients. In recent years its performance has been recognized by BarlcayHedge, Barclay Managed Funds Report, Barrons and Bloomberg.

Its focus on people includes directors, the respected professionals from other companies or fields who are entrusted with important oversight responsibilities.

For many investors, company directors are literally passing acquaintances — faces in an annual report. Given their importance in setting corporate direction and promoting healthy shareholder returns, it’s important to look beyond the glossy portraits and become familiar with the backgrounds, skills and strategic vision these individuals bring to their mission.

A board pursues one prime directive: protect investments and maximize returns. Board directors do this within the guardrails established by laws, regulations, rules and ethical restraints. Board members are the ultimate authority on whether to pay dividends, whether to split or repurchase stock and whether to merge or acquire other companies. They also have critical oversight responsibilities, including whether the management team is performing well. Such tasks are part of a board’s “fiduciary responsibilities,” which directors must pursue in good faith, placing the interests of the company and shareholders ahead of individual interest.

In recent years, North American companies have favored individuals with financial expertise to fill this role. Active and retired CEOs and COOs have also been popular choices for board seats, followed by professionals with risk expertise, technology expertise and regulatory/government expertise.

Directors who specialize in issues of legal compliance may not always be the type of think-outside-the-box strategists that can lift a business to higher levels of success. The best companies populate their boards with professionals who are leaders in their own right.

This is a key consideration for top performing investment funds such as Toronto’s Anson Funds, which believe exploring biography is as essential as analyzing balance sheets.

Through extensive professional networking, Anson Funds co-founder Moez Kassam gets to know many such company directors personally; and for those he hasn’t met he takes the time to review their skills, knowledge and successes. He looks for sparks of imagination and ambition, and the strong leadership qualities that can transform a great idea into the next-best-thing in the marketplace.

A vibrant leader with vision and integrity is a safe — and ultimately rewarding — long-term investment.