Something more than a stockholder

As the owner of a vast and diversified conglomerate, barely identifiable with the corporation I had inherited, I continued to develop my businesses.

In my capacity as majority stockholder of several leading Swiss companies, I actively worked with them to define new strategies and modernize their structures. Although I never directly interfered with their management, I did endeavor to be more than ‘just’ a stockholder. At that time there were few committed investors thinking long-term in Europe, and therefore it was difficult for me to explain my vision of the ‘new stockholder’. I would compare my work then to that of an architect, who is responsible for designing a building and seeks to fit it as best as possible into its environment, while leaving the actual construction to the building contractor.

I actively followed each of my different investments, closely monitoring their ability to generate value, as part of the overall assessment of their performance. And when I concluded that a company had reached its maximum potential -- i.e., that my work as an architect was completed -- I would sell it.

In general terms, that is what was happening with the companies that had been managed by my group for a period of five to eight years and became successful. That was how long it usually took us to carry out the restructuring necessary to make the companies more innovative and competitive. However, when we noticed the growth index begin to slip, or when we could no longer exceed our earlier successes, I never rushed things. Rather, I attempted to find a buyer who would see the acquisition as an opportunity and would try to do better than we had done.

Timing and attention to reality

Through buying and selling businesses I learned the importance of timing; I also realized that good timing can translate into profits. Because of this, I had to finance my companies by investing my own capital at times when all others were selling. I preferred to sell when markets were again on the upswing and a buying fever had broken out. The ‘buy low, sell high’ strategy often seems as easy to understand as it is hard to apply. Consequently, few seriously attempt to implement it. The herd instinct frequently is more powerful than common sense: most investors buy high when markets soar, and then panic during a crisis and sell low.

Many colleagues consider me a visionary for having invested in the Chilean forestry industry in 1982, for having bought Swatch in 1985, for having massively reduced my real estate investments in Switzerland in 1989, and for having sold an Asian trading company shortly before the major Asian crisis of 1996. I myself would not say that I am a visionary; I would admit, rather, that there was vision in my work. I have always observed and studied social movements, seeking to detect the first signs of change in what seemed to be a static context. This is one of the reasons why I recommend to my fellow business leaders that they become interested in the society around them. It is the best early warning system to detect both risks and opportunities. Another reason for my success is that I never allowed myself to be exceedingly greedy. This is another principle that I try to explain to my fellow entrepreneurs, especially the younger generations.

The yields from most of my investments more than exceeded my expectations; on the average, I have sold my companies for five to seven times what I paid for them; for each failure I have had seven successes. In the mid-1970s, following the problems resulting from the asbestos issue, my inheritance appeared to be melting like snow in the sun. However, diversification and careful management in the 1980s allowed me to increase many-fold that initial capital.