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Invest in stocks of a family-run company or one run by professionals? Here's what investors should do

Invest in stocks of a family-run company or one run by professionals? Here's what investors should do
Invest in stocks of a family-run company or one run by professionals? Here's what investors should do

Synopsis

The main advantage of family-owned businesses is their long term vision. However, such businesses are not immune to failure. When selecting stocks, instead of viewing management structure in black and white, investors should take a holistic view.

The ownership structure of a company plays an important role during stock selection, or at least it should. “I prefer companies with high promoter stake because it shows that the promoter has skin in the game,” says Tarun Birani, Founder & CEO, TBNG Capital Advisers. Does that mean investors should insist only upon companies in which the management has skin in the game or would it be fine if hired professional managers are running the show?
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