Great article which touches on a very interesting and understated subject.
I rarely use screenings for companies - often for the same reason as you do. But sometimes, if I lack some companies to look at, I screen for incremental gains in ROIC over time, which then includes companies that are improving.
Is it perfect? No, but it can help get some companies on the radar at least
It is a completely understated subject Jonas. I used to apply screeners all the time. Now I rarely do it. Incremental ROIC is a good metric. I also use it to identify changing revenue growth figures. I recently did that for the European market and got some interesting candidates that we now have on the bench at Gesda Capital.
Numbers are indeed necessary and one should be data-driven in the investment process. But I have come to the view over the years that a lot of what makes the difference on your returns in the future is truly understanding the business and its competitive advantage (products/services, business model etc.). Also listening to CEOs speak in interviews gives you an idea of the type of people the business is promoting.
Hi Peter, there is one more sort of companies. Big reputable corporations with (used to) decent market share which due to series of bad decisions lost the shine. If management introduces turnaround plan and it brings first results typically they are going stable up for longer period of time. It happened to Meta (and Metaverse dream), Siemens Energy and their wind turbine business, whether it will apply to Intel ... we will see.
Absolutely a good point. Intel could be in that category - time will tell.
It should be said that just because a high ROIC company falls into the lower ranks say from +25% to 11% and therefore losses a lot of market value, the company going forward will still play an important role in an economy and at say 11% the ROIC is likely still above WACC creating value.
Nokia is still playing a role in the economy....and so does Intel.
from a portfolio construction standpoint, having a screen where it shows you all the quality companies with many names still means you have to narrow down from there, and in the flip side if it shows very little nams you will have a drag on your portfolio since you can't fill it up quick enough.
from a portfolio construction standpoint, having a screen where it shows you all the quality companies with many names still means you have to narrow down from there, and in the flip side if it shows very little nams you will have a drag on your portfolio since you can't fill it up quick enough.
from a portfolio construction standpoint, having a screen where it shows you all the quality companies with many names still means you have to narrow down from there, and in the flip side if it shows very little nams you will have a drag on your portfolio since you can't fill it up quick enough.
from a portfolio construction standpoint, having a screen where it shows you all the quality companies with many names still means you have to narrow down from there, and in the flip side if it shows very little nams you will have a drag on your portfolio since you can't fill it up quick enough.
Great article which touches on a very interesting and understated subject.
I rarely use screenings for companies - often for the same reason as you do. But sometimes, if I lack some companies to look at, I screen for incremental gains in ROIC over time, which then includes companies that are improving.
Is it perfect? No, but it can help get some companies on the radar at least
It is a completely understated subject Jonas. I used to apply screeners all the time. Now I rarely do it. Incremental ROIC is a good metric. I also use it to identify changing revenue growth figures. I recently did that for the European market and got some interesting candidates that we now have on the bench at Gesda Capital.
Numbers are indeed necessary and one should be data-driven in the investment process. But I have come to the view over the years that a lot of what makes the difference on your returns in the future is truly understanding the business and its competitive advantage (products/services, business model etc.). Also listening to CEOs speak in interviews gives you an idea of the type of people the business is promoting.
Hi Peter, there is one more sort of companies. Big reputable corporations with (used to) decent market share which due to series of bad decisions lost the shine. If management introduces turnaround plan and it brings first results typically they are going stable up for longer period of time. It happened to Meta (and Metaverse dream), Siemens Energy and their wind turbine business, whether it will apply to Intel ... we will see.
Absolutely a good point. Intel could be in that category - time will tell.
It should be said that just because a high ROIC company falls into the lower ranks say from +25% to 11% and therefore losses a lot of market value, the company going forward will still play an important role in an economy and at say 11% the ROIC is likely still above WACC creating value.
Nokia is still playing a role in the economy....and so does Intel.
from a portfolio construction standpoint, having a screen where it shows you all the quality companies with many names still means you have to narrow down from there, and in the flip side if it shows very little nams you will have a drag on your portfolio since you can't fill it up quick enough.
from a portfolio construction standpoint, having a screen where it shows you all the quality companies with many names still means you have to narrow down from there, and in the flip side if it shows very little nams you will have a drag on your portfolio since you can't fill it up quick enough.
from a portfolio construction standpoint, having a screen where it shows you all the quality companies with many names still means you have to narrow down from there, and in the flip side if it shows very little nams you will have a drag on your portfolio since you can't fill it up quick enough.
from a portfolio construction standpoint, having a screen where it shows you all the quality companies with many names still means you have to narrow down from there, and in the flip side if it shows very little nams you will have a drag on your portfolio since you can't fill it up quick enough.