Kara Lilly: Quiet Heroes

by Kara Lilly, Mawer Investment Management's The Art of Boring Blog

Lights flash and the code blue alarm sounds as nurses rush into the patient’s room. Time seems to slow. Then, from out of nowhere, a nurse steps in and restarts the patient’s heart. A life is saved and the skilled nurse emerges a quiet hero.

Crisis avoided, right?

But what if the nurse intentionally triggered the cardiac arrest in order to facilitate starring in his own dramatic resuscitation scene?

What if I said the above is a true story?

A few weeks ago, my colleague shared the story of a nurse in Germany who was convicted for injecting patients with medication that triggers cardiovascular failure. He claims to have poisoned patients so he could jump in at the last minute and practice his “excellent” resuscitation skills. Officially 30 people died between 2003 and 2005 because of his actions (unofficially, the tally could be as high as 200). The man now faces life in prison.

This story shows the extent that some people will go to bask in the limelight. There can be an ugly—even dark—side to the pursuit of glory.

Society has exalted heroes for thousands of years. Whether the hero is Hercules or a modern day Olympian, we are inspired by the men and women who defy the odds and rise above great obstacles. This is only natural; to be moved by our heroes is intrinsically human. Yet I wonder whether the idea of a hero has been distorted over the years by its frequent association with the kind of dramatic feats showcased by Hollywood. Too often, we seem to confuse heroism with heroics, significance with pomp and flash.

Likewise, I don’t think investors give good management teams nearly enough credit for simply staying out of the limelight. Usually, the front page of a magazine goes to the visionary leader who has dramatically turned around a company or is leading an organization in a bold new venture. But what of the management teams who are quietly successful day-in and day-out? What about the teams who have grown their businesses steadily and consistently over the years?

We pay attention to the flashy stories about management teams that have “saved the day,” in part, because so many organizations fail. But there is something to be said for leaders who never get their companies in a mess in the first place.

One example of a company that is quietly successful is Winpak. This packaging company out of Winnipeg has steadily yet consistently grown its business over the years and delivered excellent returns for investors over time. You may not be familiar with their name, but you are probably familiar with some of their products: for example, the company has a 100% market share in 1lb bacon packaging in Canada.

Every year, the men and women at Winpak improve their products—allowing food to stay fresher in your grocer’s fridges and display cases—while supporting their competitive position in the market. They invest into their business prudently and focus on return on invested capital. And they avoid the kind of incentive schemes (e.g., options) that can lead management teams astray.

If I could, I would take back the hero mantle from the notoriously dramatic…and give it to the steady boring. True heroes are often the ones doing the quietly difficult work, reliably and systematically.

Kara Lilly, CFA
Investment Strategist

- See more at: http://artofboring.com/quiet-heroes/#sthash.F33lQXq0.dpuf

Copyright © Kara Lilly, Mawer Investment Management's The Art of Boring Blog