The odd thing about the head-to-head debate between Sarah Kaplan and Geoff Owen on profit motives (“Are companies right to abandon the shareholder-first mantra?”, August 28) is the perception that scrapping “shareholder first” is bad for shareholders, when quite the opposite is true. As the managing partner of an investment business myself, I believe that putting the needs of other stakeholders (clients and employees, principally) ahead of short-term shareholder returns (a “shareholder-last” mantra if you like) will in fact be the reason we are able to generate significant, sustainable long-term returns.
When investing in portfolio businesses we always look for management teams who discuss, and demonstrate, this commitment to stakeholder value — such as chief executives who refer to their workforce as an intangible asset as opposed to simply a cost base to keep cutting.
This necessitates a long-term holding period to benefit from the fruits of these labours (in our view an average of 10 years seems sufficient), and businesses like these are, not coincidentally, the businesses best placed to demonstrate the fairer side of capitalism at work. Long-term sustainable business models benefit all stakeholders, and no one more so than shareholders themselves.
Latitude Investment Management,
London SW1, UK
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