"I am a bit concerned about your un-scepticism of the CEO, tho. Every CEO has serious flaws; I wonder what his are?"
A very interesting and pertinent observation.
My venture capital friends tell me that a great entrepreneur can take a company to the annual sales level of $50 million. Through the sheer force of will and a dynamite personality, a true entrepreneur can and will sacrifice everything to make his/her company (baby) a success. And that is what Bakshi has done for SILW.
But at the level of $50 million in sales, a different skill set is needed. One can't simple resolve a problem and, if necessary, simply do it himself. One becomes spread to thin and therefore must delegate, if the company is to continue its success in the future.
That is why venture capitalists often change horses in midstream, bringing in new management to actually run the company and move the founding entrepreneur to the honory position of chairman. They do this because it is necessary for the success of the company and the venture capitalists have the power (through the funding needs of the company or actual stock positions).
Obviously, with a hot IPO market, the founder opts for the public funding route and public shareholders take the immediate risk of the entrepreneur being able to be a successful manager of a large company. Yes, I know that the venture capitalists today hire the management team for the public offering only a short period before the IPO.
But that is today, in stock market boom times for IPOs. In more normal times, the entrepreneur develops the company, then come the venture capitalists, then management changes, if necessary, then the IPO.
Why the discourse, because SILW is today at the level of $50 million in sales, and a strong, cost conscious and hard driving CEO has successfully driven the company to this point. Can he take the company to the next level. The level that venture capitalists say is the major hurdle. That is the question.
I believe the CEO has the ability to delegate successfully and build the company. Will he be successful? I can only say that the CEO is adding staff with good resumes. Will the CEO and the new additions meld into a strong cohesive management team, or will they be in conflict which results in a marginal company? There are no guarantees. Only time will tell.
I have placed my bet on what I believe is an attractive risk reward investment that is not a true deep value play. But to quote Paul Senior, "I have been wrong..."
Deb |
