Hypothetically Speaking

Just imagine some industry which attracts two diverse set of investors, say Group A and Group B (lets not affix any nationalities to them at this time). Group A are financial investors, typically aggregated through a hedge fund and come with a short to medium term horizon, their approach is to find an investment vehicle, ideally a cash cow which is stagnating or hasn't yet reached its maximum commercial potential, put in as little capital as possible and leverage the company with debt, grow revenues, take cash out through dividends and then make a killing in valuation after a point exit. They aren't necessarily structured to be able to pump in money into the business since their original investments are heavily dependent on lenders and their investment horizon is typically short to medium term. These investors usually have a basket of investments and tend to do very well even if some of their investments don't turn out to be profitable.

Group B are long term players.  They are there to  make money too but their approach is radically different, in the sense that they are not very worried about investing heavily in a small or a new company in an emerging industry and they back themselves to build it up to a level where it is world class. There is risk here that their investments can go bad too but they're backed by substantial expertise and a long term plan. And if things go wrong they have the resources to be able to course correct. Their typical approach is to have a sustained investment phase where they build capacity, quality which eventually leads to market share, revenues and valuation.

Add to the mix a third group, say Group C. They have no skin in the game, they own nothing. They're politicians/professional managers who are masters of establishing control over companies where the ownership is fragmented in such tiny pieces that no owner has any semblance of control. They may be career politicians or senior management (employees) of allied businesses to this industry. They thrive on faction politics and have a limited time at the helm no skin in the game. They sit at the big table by virtue of their position and not necessarily their wealth. They have no ability to financially impact their companies but represent their own ambitions or that of their employer.

While there may be merits and demerits to all three sets of investors. Which set of investors benefit the underlying industry the most? Group A bringing low investments and are looking to effectively flip the company for a profit?  Group C whith no skin in the game? Or the guys who are in it for the long term and are ready to invest for the future? 

Lets just say that in an industry dominated by Group A and C could nacent successes of Group B be a big threat? Now what would they (A & C) do if they had the ability to write the rules of engagement? What if they had a control of the regulatory bodies? What if they had a control of the media and hence the narrative? What would the concept of "fairplay" mean to them?

Would they criminalise the practice of loading a company to its brim with debt or the practice of sustained investments? Would they like a level playing field for smaller competition to thrive and have a bigger share of the pie? What would they outlaw?

How long would companies survive under their management? Does the industry itself have a future?

Sometimes I wonder about these questions...and frankly so should you.