How much to trust? Or not?The endless back and forth here between the Quarterhill pumpers and dumpers, the believers and the cynics, is interesting in that it highlights one of the most fundamental issues in investing--one which doesn't get addressed much, if at all, in business school or CFA school. It also gets almost no attention in the business media, in part because raising it could get you sued.
The issue is . . . if, how much, and/or when should you trust a company whose shares you're thinking of buying, selling, or holding?
Since the picture an investor will have of the inside of a company is ALWAYS incomplete, there is very good reason to be suspicious of any or all of a company's representations. There's also a long history of insiders falling for the temptations that go with this incomplete picture to commit all manner of fraud--or simply to hang onto their positions (and maybe also overpay themselves) by manipulating or controlling the situation in not-quite outright fraudulent ways.
The need for some distrust of public companies is actually built into the system. They're required to be audited. Some company leaders are no doubt so honest that they could just give us the year-end numbers and they would be spot on. Nope. Not allowed.
As I've already suggested, the challenge (for investors) with Quarterhill right now is that although there are lots of positive signs in terms of what's going on, they're not the kinds of things that can be confirmed by an auditor (or anyone else for that matter). No auditor is going to confirm that the board is made up of smart people or that, say, the ITS business is currently as good as Bret Kidd says it is. Or that the plan is actually going entirely according to plan. Or, say, that there aren't problems going on in the company that Bret Kidd can't fix.
On a very different note--and for context--I've had insider experience with two public company CEOs who were so bad that their services were (in my opinion) worth less than nothing. It would have been worth it for the company to pay them to stay home and let other people in the company run things. And there was no way to get rid of them.
(BTW, this has much to do with the fact that I view it in a more positive--or less negative--light than v_g that the company has had a fair bit of CEO turnover. My experience tells me that while you don't want a CEO revolving door, it's a good sign that a company CAN make a CEO change.)
Until an audited turnaround really happens, Quarterhill will continue to have what you might call shareholder challenges. Because of a history of not-entirely-great performance (and maybe some missteps) there are a non-trivial number of shareholders who are pre-disposed to distrust board and management.
There are interesting questions of human psychology here. If someone made mistakes in the past you might conclude that they're fools and you should never invest in them. Alternatively, you might take the view that people learn from their mistakes and they'll be better for having lived through them. There's no formula for this one. Every case is different and investors will judge as best as they can.
Where am I going with this? While my gut feel is that Bret Kidd is 100% the guy, I also don't want to be too quick in dismissing v_g's cynicism. It would be naive to disregard the possibility that there are some things going on in Richardson, Texas or Saskatoon or Belgium that would make an investor cringe.
Of course it's the job of Bret and the other senior executives (and, ultimately, the board) to make sure the right people are there doing the right things.
I know this post may be apt to come across as a little preachy but I think it's important to think about this stuff.
We pumpers tend to see the dumpers as mired in delusional degrees of negativity. And I think they are. But we should also turn the spotlight on ourselves. I know I have a history of trusting a little too easily and I suspect the other Quarterhill believers here have tended toward that disposition also.