Anthony Mallis on Building SICO into a Regional Asset Manager

November 30, 2014 By in Executive Insight, Asset Management Tags: ,
Anthony Mallis on Building SICO into a Regional Asset Manager

In the first of an occasional series titled Executive Insight I will write together with a regional business leader who shares the benefits of their experience.

Anthony Mallis, the chief executive of Securities & Investment Company (SICO) of Bahrain between 2001 to 2014, grew a boutique brokerage company into a regional asset management powerhouse. (Tony is humble in his accomplishments and all promotion of his accomplishments is attributable solely to his co-author.)

Mr Mallis was hired to a challenging assignment; turn around or close a money-losing entity that was caught short by the GCC market malaise of the late ‘90s. In 2001 the GCC and Mena capital markets were still nascent, with the Gulf still affected by low oil prices and mid-’90s collapsed share prices. Locally, commercial banks had little interest in the domestic capital markets, focusing on deposit-gathering, the local retail markets and pushing third-party foreign investment products to their clients. The small number of local investment banks had a largely real estate focus, or were parochial when it came to regional investments – focusing on their domestic markets for both clients and proprietary activities. Continue reading →

Shareholder Activism Requires Shareholder Networking

November 26, 2014 By in Corporate Governance Tags: , ,

Shareholder activism has acquired a bad name being associated more with corporate raiding than it is with concepts of introducing corporate governance by the shareholders. This is a shame as shareholder activism is the best way to ensure effective corporate governance of a company. The current model gives shareholders the semblance of control at annual general meetings when they get to ask questions about the financials and vote in directors of the board. The reason that this is not real control is that any disparate body of people that does not communicate and internally discuss matters in advance of a group decision will invariably make a bad decision.

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The Role of Meritocracy in Corporate and National Success

November 25, 2014 By in HR Tags: ,

عربي

Meritocracy in the corporate world can be defined as hiring and promoting employees into positions based solely on their competence without any favouritism such as to relatives, known as nepotism, or to benefactors, known as cronyism. Meritocracy is such a strongly held concept in terms of the successful execution of any endeavour that nations have embraced it as a central tenet of their civil service where employment and placement are based on rigorous competitive exams. Singapore, arguably the poster child for successful emerging nations, has meritocracy as a basic national guiding principle. If nations are paying attention to meritocracy, should not businesses do the same?

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Is Hiring Any Different Than Pure Guessing?

November 23, 2014 By in HR Tags:

I must admit that I have found the recruitment process challenging in every single position that I have had. As a senior executive I have often been involved in hires by other managers and frankly they do not seem to fair any better. As far as I can tell there seems to be no correlation between the interview process and the quality of the hire. First pick hires often end up adding no value and at times even destroy value. Fourth picks often end up flourishing and becoming stars. Is there any reason to have an interview as part of the recruitment process? Continue reading →

Lack of SME Lending Harms Large Corporates, Creates Shadow Banking

November 20, 2014 By in SME Tags: , , ,

The existence of an SME credit gap, the difference between demand for loans by SMEs and provision of those loans by commercial banks, and its effects on SMEs has been discussed in detail in a separate article on this blog. The effects on large corporates is no less serious. Using some simple statistics from the earlier article, if SMEs are the source of greater than 50% of GDP and their share of bank lending is only 4% then either SMEs are super efficient, big corporates are super inefficient, or somebody else is financing these SMEs. I think that we can safely agree that it is highly unlikely for the SME sector to be super efficient or big corporates to be super inefficient. That leaves some, or all, of the USD 260 billion SME credit gap funded by a segment of the economy other than banks. Let’s unravel this mystery.

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Saudi Oil Price Redux

November 19, 2014 By in Economy Tags:

In an earlier article I corrected some common misconceptions on what is happening with oil prices and how it affects the economy. This generated some feedback and further questions that I will address in this article. In particular I will focus on understanding the role of a cartel, the long term incentives of an oil producer and why oil prices have risen.

Let’s start with the concept that OPEC is a cartel. It isn’t because it lacks a major feature of a successful cartel: legal enforceability of quotas. To understand OPEC’s actual role in the history of oil, you need to start with the Texas Railroad Commission (‘TRC’). The TRC is the original cartel that controlled global oil prices and was an agency of the State of Texas that controlled up to 40% of US production until the late 1950s. Their power was derived from an oil production boom that saw prices plummet and Texas oilmen demand a cartel system of enforced quotas. The TRC served as a model for OPEC. The irony is not lost upon this writer. Continue reading →

Disinformation in the Investment World

November 19, 2014 By in Due Diligence Tags: , , ,

The main documents pertaining to the state of a business are either legally notarised, such as the memorandum and articles of association, or are heavily regulated, such as the audited financial statements and analyst reports. This information, however, is not enough to understand the business and quite often colour needs to be added in the form of written and verbal commentary from management. Regulation of this commentary is either light or easily circumvented allowing management to present a picture that is at best optimistic and at worst fraudulently manipulative. I had the unfortunate experience of being exposed to several such companies. Continue reading →

Leaders are the Drivers of Corporate Change

November 18, 2014 By in Leadership Tags: , ,

The Change Management industry is doomed. Change means uncertainty. Uncertainty means risk. Risk means danger. Humans are genetically coded to avoid danger. Therefore they will always resist corporate change.

Change management consultants (‘CMCs’) will advise that winning employee buy in is critical. But how do you do that? How do you convince employees that an unknown future is better than a known present? Maybe if the present is really bad, but by then things are usually too late. Continue reading →

Negotiation: Playing Chicken

November 17, 2014 By in Negotiation Tags:
This entry is part 2 of 6 in the series Negotiation

This article is part of the Negotiation Series.

Chicken is a famous game by which two drivers drive their cars towards each other at high speed. The first driver to swerve to safety is deemed a “chicken” and the loser. If neither driver swerves then a high speed collision results with serious injury and even death. This negotiating style has gained popularity as the strategy that a hard nosed negotiator uses, it has become sexy. This is a problem as it is completely destructive and after any game of negotiation chicken the working relationship between the parties involved become irreparably harmed. Continue reading →

Adaptive Strategy Construction

November 16, 2014 By in Strategy, Strategy Cornerstone Tags: ,
This entry is part 2 of 3 in the series Strategy

In a previous post, Deconstructing Strategy, I discussed some of the difficulties in developing a strategy. In this post I present a method that has worked well for me. The philosophy behind this method is based on the two ideas that the Pareto principle, also known as the 80/20 rule, applies to business strategy and that strategies must adapt to new information and changes to the business environment.

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