Structural Value Recognition Over Market Timing

“Their advantage has usually been analytical, more than temperamental. They’ve found a structural hole in a particular market, where true value hasn’t been recognised by everyone else, and have exploited that little niche effectively and rationally. Then they’ve often repeated the formula many times. As such, they’ve been predators, and in real life predators seek to incur the least risk possible while hunting.”

“*I yelled at Judge, ‘You know it’s a contract, we’ll sue your asses off.’ Then I got hold of Ron. ‘Alan,’ he said, ‘I’m not going to buy. Do what you like, but I’m not going to buy it.’ He knew as well as I that the threat of being sued was better than buying something you don’t want. This left me in a quandary, because I’d spent months walking through Tappenden’s many premises, examining records in the land registry, searching Companies Office files back several years. In those days companies didn’t publish accounts of subsidiaries; big conglomerates would always try to confuse where the money came from. So it was hard to know where the real money was being made.* *Yet it was critical in terms of valuing the company. I’d taken a fitting off my boat to the engineering works in Christchurch, talked to the sales people about a new fitting, got them to show me around the foundry and could tell whether they were busy or not. I’d done something similar in all their businesses. That’s what it takes. If you want a successful takeover, you have to find value where the market can’t see it. More than that, if you have a better idea than the owners or directors of where the value lies in a company, then you can bend them round to getting what they want, while you get the pearls. I knew more about Tappenden’s various companies than its own directors did. So, I thought this is a good deal going wanting. I* *said to Tom, ‘I’ll buy it.’*”