Ann: ResMed to Acquire Brightree, page-10

I am pretty sure management is much smarter then u and me so they r there at first place instead of you and I...

I am 100% certain that they are infinitely smarter than you or I at running their business of sleep disorder diagnosis and treatment.

But I think you far over-estimate the ability of executives to make sound strategic investment decisions, especially when it comes to acquisitions.

And the reason I make this seemingly brazen statement is because over my time in the investing game I have seen umpteen management teams, that were universally considered to be highly competent and astute, go out and make acquisitions that sounded like simply sensational ideas at the time, but that turned out to be disasters. It is far, far more common than not.

As for them having consulted major shareholders, I don't think you know how the institutional investing game works... no institutional investor ever wants to be consulted on something like that because it requires the institutional fund managers to be wall-crossed and that removes all their trading flexibility.

As for consulting investment bankers, that's like asking a used car dealer of you should buy one of his cars off the lot. These are the most conflicted and greedy members of all of humanity. Their payment will take the form of fees on any deal that is consummated, so do you really expect them to say, "No don't do it"? Why, it would have been a team of investment bankers that pitched the deal to the company's management in the first place!

Ditto for the company's accountants, business analysts, and R&D people. When the boss says "I want to do this deal. Will you take a look at it and tell me what you think?", what chance do you think there is of his underlings ever coming out forcefully and saying, "Actually, Boss, no offence, but we think its a terrible idea."?


"....so we just need to be patient as they will not reveal their long term plans so easily due to competition threats etc and I trust their capabilities...."

When it comes to running their core business, I trust their capabilities implicitly.

But when it comes to strategic acquisitions in unrelated businesses, history and precedence tells me to be actively lacking in trust. So I am.


"...do anyone read ur investment ideas?"

I very much doubt it.
At best, for a laugh, possibly.