KastelCo, <<quick version of why you don't like manufacturers>>
It seems to me that if a company explicitly promises never to pay a material dividend, and may not be able buy back shares, then the company is worth-less. I believe manufacturing companies come closest to such a worth-less company.
If I were running a manufacturing company, my time, and the resources at my command, would be devoted to:
- Strategic planning against competitors
- Maneuvering my company in implementing the strategic plan
- Monitoring the operation of my company in regard to
o Research & development
o Product development
o Raw material and input sourcing
o Capital equipment upgrade
o Marketing & sales
o Distribution and after-sales service
- Interacting with regulators
- Grow with the economy and against my competitors
- … and how to better allocate money
- … with paying back investors/bankers an after-thought, just enough to keep my job
If I were running a service company, I would need to:
- Strategic planning against competitors
- Maneuvering my company in implementing the strategic plan
- Monitoring the operation of my company in regard to
o Research & development (a little bit)
o Product development (a little bit)
o Raw material and input sourcing (simpler than manufacturers)
o Capital equipment upgrade (ditto)
o Marketing & sales
o Distribution and after-sales service
- Interacting with regulators
- Grow with the economy and against my competitors
- … and how to better allocate money
- … with paying back investors/bankers an after-thought, just enough to keep my job
- … but once I have some scale and a customer roster, unless I screw up, my company should do OK, scaling up, and pay some sort of a respectable dividend
If I were running a resource or real estate company, my company needs to, at the simplest level:
- Analyze acquisition and/or engage in exploration
- Dig or grow or build or buy
- Pay my investors/bankers, and everybody knows, more rather than less, about my financial flows since it is a simple business, and so I better pay out quite a bit unless I am buying a lot of new resource so that I can pay out a lot later
- Interact with regulators, but most of my fellow resource companies will likely have the same exact interest as I
- Grow with the economy, and not to the same extent as the manufacturing/service businesses to grow against my competitors |
