Lessons from Quality Shareholders
Lawrence Cunningham is a professor and director of the Quality Shareholders Initiative at George Washington University, a long time collaborator of Warren Buffett in publishing The Essays of Warren Buffett for the last 27 years, and a director of Constellation Software. His most recent research looks at the behaviors of a group of investors he calls “quality shareholders” and he includes Ensemble Capital in this group.
Professor Cunningham’s concept of “quality shareholders” is well described in his book of the same name:
“Anyone can buy stock in a public company, but not all shareholders are equally committed to a company’s long-term success. In an increasingly fragmented financial world, shareholders’ attitudes toward the companies in which they invest vary widely, from time horizon to conviction. Faced with indexers, short-term traders, and activists, it is more important than ever for businesses to ensure that their shareholders are dedicated to their missions. Today’s companies need “quality shareholders,” as Warren Buffett called those who “load up and stick around,” or buy large stakes and hold for long periods.
Lawrence A. Cunningham offers an expert guide to the benefits of attracting and keeping quality shareholders. He demonstrates that a high density of dedicated long-term shareholders results in numerous comparative and competitive advantages for companies and their managers, including a longer runway to execute business strategy and a loyal cohort against adversity. Cunningham explores dozens of corporate practices and policies―such as rational capital allocation, long-term performance metrics, and a shareholder orientation―that can help shape the shareholder base and bring in committed owners. Focusing on the benefits for corporations and their investors, he reveals what draws quality shareholders to certain companies and what it means to have them in an investor base. This book is vital reading for investors, executives, and directors seeking to understand and attract the kind of shareholders that their companies need.”
Ensemble Capital was pleased to have been included in the group of investors that professor Cunningham listed as “quality shareholders” in his most recent research on this topic.
You can download a copy of the paper here.
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