1 Epic Investing Lesson from the Most Popular Travel Site in the World

Earlier this morning, I was listening to a short interview snippet from TripAdvisor’s Chief Executive Office, Steve Kaufer. The interviewer was someone from the US-based newscaster, CNBC. At one point, CNBC questioned Kaufer on meeting quarterly earnings expectations. Have a read below on what happened next.

Kaufer: “You know, at TripAdvisor we don’t pay a bunch of attention to the quarterly expectations. We don’t provide a lot of information to help people to come out with really good models or analysis. And, we’re not shy about just saying — that’s not what we do …”

CNBC: “Why not? Why isn’t that what you do?”

Kaufer: “We’re building a company. We helping travelers, we helping our hotelier and air, attractions and restaurant clients build their businesses. We helping the 300 million travelers have a great trip; figure out where they going to go; what they’re going to do; where they’re going to eat; all the great stuff that makes up for a great vacation. We make some money in the middle.

But when we look it we say — alright, what is it going to look like two years out? what is it going to look like four years out? How many more people can we help? And, if that’s a bumpy road between here and there, it doesn’t faze us at all.

I believe that Kaufer’s answer deserves a hearty Foolish applause. In his answer to CNBC’s challenge, he chose to focus on his business, and refrained from the short-term mindset of measuring performance every three months. On that note, Kauffer’s focus is the right one as he wants to build a business which can do well over the long run. And if the business does well, the share price would likely follow.

These are valuable lessons to take away from his answer. And, it also reminds me of the distinct need to focus on the business, especially when your investments move against you.

A Singaporean example

At the local front, shares of instant coffee purveyor Super Group Ltd. (SGX:S10) has taken a beating since the middle of last year. From its all-time high of $2.52 back then, shares have plunged 57.5% up till its close on 19 November 2014. The coffee company is facing business challenges, and has suffered a few bumpy quarters of declining sales and profits which has been a big contributor to its share price decline.

For investors who bought near the peak, the paper losses are no doubt an unpleasant experience. However, it is at this very moment where it is important for Foolish investors to focus on the business of Super Group.

This means keeping our eyes focused on how strong Super Group’s instant beverage brands are in its major markets like Thailand and Myanmar. Further more, we should observe if the company can penetrate and sustain its brands in new markets like Vietnam and the Philippines. Another area we should be watching is the progress of its new products in its Food Ingredients business like botanical herbal extracts and nutritional oil powders.

Despite seeing revenue and sales fall in recent quarters, Super Group remains free cash flow positive, and has more cash than debt. While this does not guarantee that the business can recover its growth, ultimately, any decision taken by the individual investor should be guided by Super Group’s business developments, and not its share price movements.

And to be sure, we should be measuring Super Group’s business progress in terms of years, or decades, rather than over three-month-long intervals.

Foolish take away

Here at the Fool, we are very much attuned to Kaufer’s line of thinking. And that is, to focus on the business behind the ticker, and to think long-term instead of focusing on bumpy quarterly results. If the long term appreciation of a company’s share price is dependent on its business-progress over time, then it stands to reason that this is where we should keep our collective Foolish eyes focused on.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong owns shares in Super Group.