ADVERTORIAL FEATURE
Companies such as these are rare . Michael Mauboussin , a finance professor at Columbia University found in 2016 that only one in five of the 37,000 stocks he surveyed steadily compounded their earnings at 10 per cent a year or better . To construct a portfolio of these names , it helps to invest globally . Other examples in SAINTS ’ portfolio include :
• Edenred ( France , voucher management )
• Admiral ( UK , car insurance )
• Sonic Healthcare ( Australia , medical diagnostics )
None of the above are growing at a spectacular rate year-over-year . Their outperformance over time is based on relentless compounding of earnings and dividends . What ’ s more , these stocks are often underpriced thanks to chronic market short-termism . A company that can compound earnings for a decade and grow for another decade often doesn ’ t seem valuable to an investment manager incentivised on short-term performance . The search for these stocks is , to borrow another Buffett-ism , “ simple but not easy ”. No algorithm will help you pick them , though a foreseeable period of ‘ more of the same ’ certainly helps . We call these ‘ long runway ’ companies . Then there ’ s another kind of longestablished companies that are nimble enough to spot similar-but-
Annual Past Performance to 30 September Each Year ( Net %)
2018 2019 2020 2021 2022
The Scottish American Investment Company P . L . C .
9.6 13.6 8.7 16.3 -7.2
Source : Morningstar . Share price , total return , GBP . Past performance is not a guide to future returns .
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