We had the privilege of interviewing Fernando del Pino, private investor and former board member of Ferrovial (Madrid: FER), which was founded by Fernando’s father, Rafael del Pino y Moreno, in 1952. Fernando helped manage the family’s proceeds of the Ferrovial IPO in 1999. After serving on Ferrovial’s board for eight years, Fernando left the company in 2007. He has since then focused on investing his private capital via Myway Investments.
MOI Global: Please tell us about your background. How did your multi-year involvement with Ferrovial influence your approach to investing?
Sitting on the Board and Committees of Ferrovial taught me a lot about how businesses are really managed and how Boards work in the real world, and also about the big challenges they face, such as the immense power of what Buffett calls the institutional imperative, and the permanent threat of group-thinking.
Fernando del Pino: I studied business administration and economics in Madrid and then worked for an American bank for a few years. During my stay there I was asked to start the equity research department in its Madrid branch; a friend lent me The Intelligent Investor and as I closed the book after reading it (or rather devouring it) I decided that was what I wanted to do professionally. Since that providential read, realizing university hadn’t taught me anything too useful as far as successful investing was concerned, I have read maybe a hundred other books on investment and a few on behavioral finance, family businesses and strategy. I left the bank as soon as I understood that my realm of analysis would be constrained to only certain sectors within the Spanish stock market. Wanting to invest globally, I then went to work at my father’s family office to help invest the proceeds of Ferrovial’s IPO, which was soon to take place. After a few months, in early 1999, my father offered me the chance to join Ferrovial’s Board, which I happily did; I also joined the Executive and the Audit Committees. My father was the most anti-nepotistic guy you’ll ever find and even though the family held 58% of the company’s stock immediately after the IPO, at the beginning only three out of the eleven Board members belonged to the family (my father, Founder & Executive Chairman, my eldest sibling, CEO, and I).
After six years, even though I was working with a terrific small team in the family office, had a great relationship with its CIO (my direct boss and a great investor) and had a very pleasant working environment, I couldn’t resist the call of the wild and decided to go independent, much to my father’s surprise (though he fully backed my decision). Two years later, in 2006-07, I sold my shares in Ferrovial and left the Board, after belonging to it more than eight intense years. I have been managing my net worth as a global value investor since then.
Sitting on the Board and Committees of Ferrovial taught me a lot about how businesses are really managed and how Boards work in the real world, and also about the big challenges they face, such as the immense power of what Buffett calls the institutional imperative, and the permanent threat of group-thinking. I also witnessed the deep, lasting cultural effect of a private business going public, the huge importance of the reward systems and the risks of debt-financed, fast M&A-based growth. I feel very grateful to my father for having given me that fantastic opportunity at such a young age.
MOI: Let’s stay with Ferrovial for just a moment: What are the main business lessons you have gleaned from the tremendous growth of the company since the founding in 1952? Ferrovial now has more than 50,000 employees and generated roughly $1 billion in operating income in 2012…
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