Founder’s Story (May 2025)
The Capital Cycle is the official podcast that Marathon Asset Management (the London firm founded in 1986) launched in 2024, hosted by financial historian Edward Chancellor, who interviews Marathon's investors about each Global Investment Review letter — applying the firm's long-term, contrarian "capital cycle" supply-side approach.
In plain words
This report argues that a company's management matters more than its financials for long-term investing. The authors found that humble, self-critical CEOs who avoid the spotlight often create the most value, while flashy, empire-building bosses tend to destroy it. For example, Coca-Cola's stock went nowhere for 17 years under a mediocre CEO, while Coloplast, a medical company with a steady management team, became one of the best investments. For ordinary investors, the takeaway is simple: don't just look at earnings—pay attention to who's running the show and whether they have their own money in the game.
This report discusses the core role of capital cycle analysis and management assessment in long-term equity investing. Since 1996, the Marathon team has conducted a total of 18,298 management meetings, which they consider the most effective investment activity. The central thesis is that management
Theme and Background
This chapter discusses the decisive role of management assessment in long-term equity investing. Since 1996, the Marathon team has conducted a cumulative total of 18,298 management meetings, considering this the most effective yet most overlooked investment activity. The report points out that sell-side analysts do not objectively criticize management, and that the capital cycle is ignored during market fundraising peaks, making independent analysis a source of excess returns.
Core Thesis
The author's core investment argument is: Management quality directly determines a company's long-term destiny, and humble, self-critical CEOs with clear strategies are the true signals of success; conversely, CEOs who confuse IR with PR and excessively promote the stock—so-called "glass-half-full managers"—require caution. Counterintuitive judgments include:
- Warren Buffett's "business so good that a fool can run it" is extremely rare; most companies are dragged down by mediocre management (e.g., Coca-Cola's stock price was flat from 1993 to 2010).
- CEOs who publicly flaunt their personalities (e.g., Fred Goodwin, Jürgen Schrempp, Jean Marie Messier) are often value destroyers, while truly successful CEOs (e.g., the CEO of Novo Nordisk) are not household names.
- Family control or management ownership (owner-managers) provides a long-termism advantage and is a key factor in many super-companies.
Key Arguments and Data
The report supports its views with extensive historical cases and comparative data:
| Company/Case | Key Data | Management Impact |
|---|---|---|
| Benckiser (Dutch household products) | Market cap $1.8 billion, stock price rose 20x in 20 years | A "special CEO" identified at the first meeting, yielding substantial returns for investors |
| Carrefour (1990s) | Stock price rose 15x in 10 years | CEO proactively self-criticized during meetings, considered a signal of success |
| Reckitt Benckiser | Stock price rose 650% from 1999 to 2011 (founder Bart Becht); doubled under his successor's tenure; flat under the two CEOs after 2016 | Strategic missteps and poor acquisitions weakened competitive position |
| Compass Group | Stock price fell 36% from 2001 to 2006 (previous management); rose 572% from 2006 to 2017 (Richard Cousins) | Cousins completely transformed the company: exited multiple geographies, doubled net profit margin, and grew revenue more than threefold |
| 3i Group | Stock price rose 1,621% since 2012 (CEO Simon Borrows) | Success largely attributed to Action (Dutch discount retailer), purchased during the predecessor's tenure, indicating an element of luck |
| Coloplast | Market cap $28.8 billion; Marathon has met with CEO/CFO 91 times since electronic records began | Long term, consistent engagement with small shareholders—a hallmark of loyalty to long-term investors |
| Novo Nordisk | CEO is not well-known | Avoids self-promotion, in stark contrast to value destroyers |
| Vodafone (Chris Gent) | Value massively diminished after M&A frenzy; was the largest European company in 1999, now significantly below that value | Empire-building CEO |
| Lafarge / Saint Gobain (Collomb/Beffa) | Created massive corporate scale over time but no value for shareholders | CEOs with no personal shareholdings |
| Reckitt Benckiser (Bart Becht) | Personal stake exceeded £100 million | Exemplar of owner-manager |
| 3i's predecessor CEO | Stock price had previously fallen 80% | Unlucky/unfortunate, yet laid the foundation for later success |
Other key executive comparisons:
- Sergio Marchionne (deceased): Consecutive and significant outperformance at SGS, Lonza (also Chairman), and Fiat (merger with Chrysler).
- Björn Rosengren (current CEO of ABB): Previously at Sandvik and Wartsila, where company stocks clearly outperformed during his tenure.
- Family-controlled cases: Richemont (Cartier, etc.), Luxottica (founder died in 2022, built a $50 billion eyewear empire, later merged with EssilorLuxottica), Walmart, Amazon, AB Foods (Primark)—all exemplify long-termism and stability.
Companies/Assets Covered
- Benckiser (predecessor of Reckitt Benckiser): 20x in 20 years, bullish (early identification).
- Carrefour (former top holding): 15x in the 1990s, bullish.
- Reckitt Benckiser: Long-term bullish (Bart Becht era), turned cautious in recent years due to strategic missteps.
- Compass Group: Bullish during Richard Cousins era (572% gain); future view depends on management continuity.
- 3i Group: Strong performance under Simon Borrows, but note the luck factor; cautiously bullish.
- Coloplast: Marathon's most successful long-term investment, bullish, 91 meetings.
- Novo Nordisk: Positive example (low-key CEO), but not discussed as a holding.
- Vodafone: Value destruction under Chris Gent, a cautionary case.
- Saint Gobain / Lafarge: Created scale without creating value, bearish.
- ABB / Sandvik / Wartsila: Companies managed by Björn Rosengren outperformed; track his moves.
- Fiat Chrysler / SGS / Lonza: Sergio Marchionne's consecutive outperformance; recommend monitoring his successors.
- Richemont / Luxottica / EssilorLuxottica / Walmart / Amazon / AB Foods: Cases of family-controlled advantages, bullish on long-term structure.
Investment Implications
- Management assessment must be integrated into the core investment process, rather than relying solely on financial metrics or macro factors. Combining capital cycle analysis with objective management evaluation can generate consistent excess returns.
- Prioritize management that is humble, self-critical, strategically clear, and willing to regularly meet with long-term shareholders (even if equity stakes are not large). Avoid CEOs who revel in self-promotion, ostentation, refuse to take questions, or cannot succinctly articulate their strategy.
- Value owner-managed companies (family-controlled or CEOs with significant personal stakes). They typically focus more on long-term value creation, such as Bart Becht, the Richemont family, and the Luxottica founder.
- Be mindful of the luck factor in management (e.g., 3i's Action investment), but managers who consistently outperform across multiple roles (e.g., Marchionne, Rosengren) are still worth following to their new positions.
- Beware of M&A-active management: Most acquisitions destroy value, especially empire-building CEOs (e.g., Vodafone, Lafarge). Successful acquisition cases (e.g., Compass's divestiture of non-core businesses) actually represent value-oriented capital allocation.