Alejandro Betancourt López keeps a short rule for the companies he backs: set expectations you’re sure you can beat. “Deliver what you say you’re going to deliver,” he said in 2023, when asked how he keeps the trust of partners and customers. A service company that promises to do A, B and C, he said, should make sure it does exactly A, B and C.
The investor, who heads O’Hara Administration, an international investment group, argues that markets punish a broken promise far more than they reward a kept one. Over-promising and then missing is, in his words, one of the problems “the market discounts hugely.”
What Research Shows About Missed Expectations
Douglas Skinner and Richard Sloan studied how stocks react when companies miss forecasts. Their 2002 paper in the Review of Accounting Studies, volume 7, found that growth stocks were about as likely as value stocks to report negative earnings surprises, yet their prices fell much harder when they did. In the authors’ words, “growth stocks exhibit an asymmetric response to earnings surprises.”
Once they controlled for that lopsided reaction, the long-observed return gap between growth and value stocks disappeared. Skinner and Sloan concluded that investors set overly optimistic expectations for growth companies and that later disappointments correct them. The paper’s subtitle reads “Don’t Let an Earnings Torpedo Sink Your Portfolio.”
Alejandro Betancourt López on Building a Margin Into the Forecast
Alejandro Betancourt López’s fix is to forecast conservatively and push the team hard. “When you surprise on the upside, that’s when the market rewards you,” he said. “It’s better to go conservative in your estimates that you’re giving to your partners and to your investors, and really demand a lot from your team,” he added. Estimates should leave a margin of error large enough to absorb conditions nobody can control, he explained, so that whatever the company says will happen actually happens. “You can’t control everything in the market, but at least you can control enough about how you can perform,” he said.
Alejandro Betancourt López builds the bad scenario into the same plan. “Always have a plan B, C, D and E,” he said in a separate interview in February 2022, warning that a run of wins tempts people to assume conditions will stay constant when markets move in cycles.
A November 2023 profile in Global Banking & Finance Review quoted Alejandro Betancourt saying, “You could have many great ideas, but the execution is what matters.” The same profile said the executives he looks for “don’t see problems, but solutions,” and described O’Hara Administration as the international investment group where he serves as lead investor.