저자: TerrySmith · 외국인
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좋은 기업은 높은 투하자본이익률(ROCE), 성장 원천(재투자 여력), 지속가능한 경쟁우위(해자)를 가진 기업이다. 고ROCE 기업은 장기간 주가가 시장을 상회하며(MSCI World Quality 지수가 1996년 이후 롤링 기간 내내 인덱스 대비 우위), 저평가보다 기업의 질을 보라고 강조한다. 소비 성장(신흥국 소비화, 프리미엄화, 고령화, 반도체 아닌 소비재·결제·반려동물 등) 관점의 구조적 성장 주장이 중심이다.
다듬은 글
I'll say what I think a good company is first and then I'll come on to why we think it's important to invest in them the primary measure of a good company in financial terms which David touched upon in his introduction I I I take from Warren Buffett's 1979 annual chairman seta the first and most important measure of a good company in financial terms is it makes a high return on operating popular profit capital in cash the cash delivered in a reporting period divided by the capital employee is a high number in our portfolio at the moment it's probably 25% something like that it's a it's a high number basically um secondly it's has a source of growth which enables it to reinvest those cash flows it's no good having wonderful Returns on your business if you are landlocked into a a very small segment Niche or geography and you can't deploy the cash that's being generated to grow the business you need both of those elements to make a truly grow investment and last but by no means least you need a source of sustainable Capital advantage to prevent mean reversion if you make 25% Returns on Capital and you've got very good growth to enable you to reinvest at 25% um people are attracted to compete in your business there's a perfectly good law of Economics called mean reversion which says that all returns revert to the mean in the end it's not quite right this La of course the answer is most companies returns revert to the mean or average in the end there are a few companies that have got competitive advantage that enables them to fend off the impact of competition I just want to touch upon each of those in turn come right take us off high Returns on Capital um why is this important companies are just like us people over complicate analysis companies have a cost of capital and a return on Capital um if they make a return above their cost of capital consistently then the value of the company grows at the time if they make a return below their cost of capital consistently the value shrinks over time think of it in personal terms if you go out to your bank and borrow money at 5% and you invested in funds to the last decade at 18% you would have become more wealthy right if you borrow from your bank at 5% and invested in somebody else's fund at 2% return you would have become poorer this is not we don't need to get into higher mathematics here or any particularly sophisticated level of thinking it's a fact this is this is the case yet since Warren Buffett wrote that in his annual report in 1979 I would say more people in the investment Community have ignored it than have used it basically take us home comrad please um this um quote from Warren Buffett's uh number two Charlie Munga uh in many respects summarizes why this is important so you know I think I've given a simple explanation here's a slightly lengthy explanation I don't know why he choses this time period or these particular rates but it doesn't matter I'll just read it over the long term it's hard for a stock to earn a much better return than the business which underlies it returns it earns if the business earns 6% on Capital over 40 years and you hold it for that 40 years you're not going to make much different to a 6% return here's the punch line even if you originally buy it at a huge discount conversely if a business earns 18% on Capital over 20 or 30 years even if you pay an expensive looking price you'll end up with one hell of a result he's telling us something here which is very important this is not a theory he's not putting forward a theory of investment it's a mathematical fact that's important to realize that and what he's telling you here is something like this I wish I'd had a diary that I'd kept from when I started in finance all those years ago and that I put two columns in each day and every time in the investment business somebody asked me whether a company or a strategy was high quality good at high Returns on Capital I put a tick in one column and every time they said but is it cheaper EXP expensive I put a tick in that column I would have far far more ticks in the is it cheap or expensive column people spend almost their entire effort thinking about whether something's cheap or expensive highly rated or lowly rated which I guess is a better way of expressing it and far too little deciding whether it's a highgrade business that they really want to own that can compound in value um and I think uh Munga basically um encapsulates why it's important in that quote as I said return on capital is the single most important thing there's no point in engaging in a business has low Returns on Capital I haven't bothered today because we've got limited time but we can show you a slide for the airline industry uh which never makes an adequate return on Capital and it is just a machine for losing money basically that is there is no point in investing in business having adequate returns however once you've got adequate returns you need to have a source of growth to enable you to reinvest it's no good having a business that makes 25% return on Capital but you can't sell anymore of the product or service nothing nothing for them to deploy more Capital into they just have to give you the the cash back basically so we look for companies that have got a source of growth for them to invest in when they invest in a very high quality company's franchise like that at high rates of return on Capital they do a better job for you than I can ever do I was asked in an article recently whether managers of companies are better at deploying Capital than than fund managers and the answer is it's not really a fair question because fund managers don't control businesses the managers who are in control of very high quality business some of the world's great consumer companies tech companies medical companies and so on have a different opportunity to fund managers they have a business that can generate High returns to reinvest in they just have to not screw it up basically easier said than done but that's what they have to do um where does this growth come from we look for a business has a a source of secular growth not cyclical growth not it goes up and it goes down everything has a bit of cyclicality but but we're looking for for companies which both at the peak and the trough the business cycle are bigger than they were previous uh pie parts of the business cycle that grow not in every reporting period or every year but they do grow over time and it typically comes from one or more of these things consumerization of the developing World um you know all the statistics on this are clear when people in the developing world go past a certain level of disposable income they become consumers they're part of a developing economy they no longer spend all their time sourcing and preparing food they've got jobs in uh in factories and call centers and all kinds of things like that they need the the benefits of consumerization and they they aspire to become consumers as well uh and so that's a very big driver um of the of the growth for some companies um but in the developed world there's premiumization um we may not be consuming more mostly but we consume better uh over time you know we may not drink more hopefully most of Stone but we might drink better quality we might upgrade what we do so whatever it is we're talking about consuming U there's quite a good chance that we will go up the curve in terms of uh the brand of of goods that we're consuming over time and prize it aging populations an awful lot of people look for growth in in Investments through young populations in fact that's part of the drive in the consumerization of the developing world but aging populations are pretty good too aging populations have increased consumption for a number of things and not least forms of Medical Care uh and and so you aging populations can be quite a Big Driver uh of of certain uh companies white space white space as you probably know is a term used by people in the marketing uh uh and sales business if they've got a map of of the world or a country or territory somewhere where they've got no representation no sales they color white on the map a white space there's lots of white space around the world for people to grow into I've given you three examples their eyes and what do I mean by that something like 2third of the world that needs vision correction doesn't currently have it they don't currently have access to reading glasses and other forms of vision correction they will get it in time and clearly that will be a source of growth to people like ESS or like zota and so on who are in the business of manufacturing I and and retailing eye classes payments um we're often asked whether we prefer Mastercard or VISA or or pay or Square or Apple pay or Google pay or or and and the answer is yeah we've got a view on which one might be better than the other one and so but the reality is they'll probably all do pretty well and the reason they'll all do pretty well is they've got an enormous white space to grow to something over 80% of the world's volume of transactions is still done in cash basically it won't be if we ask our grandchildren if we describe to our grandchildren describing to their children all that once upon a time we would uh get some uh some uh some material made from uh a pulp of of Judes something of that and and plastic and turn it into this note we'd have holograms on it and metal in it and Engravings on it to make it difficult to uh to forge and then we put it in armor cars and transport it to Banks which should doll it out to us to go and spend in shops we pay it back into shops pay back into Banks and then that's how we get into the system they'll look at us rather quiz basally given that all they've got to do basically is walk up to a counter with their phone in their pocket and pay for something um and that clearly is the future toothpaste bit like eyes um you again something like 60% of the world doesn't yet use toothbrushes and toothpastes uh to clean their teeth they will as I am fond of saying on this one if you want to have an intimate relationship with somebody who started cleaning their teeth best you take it up I think would be my way of looking at it and so you know for people in this industry like Colgate there is clearly a very long runway for one of a better term ahead of them and there are other Trends which are just out there which which we light upon just put a couple down there pets uh if I had to pick one area of secular growth which appears to have a very very long way ahead of it it's spending on so-call companion animals or pets uh pets as any of you who got them will know are on a journey to becoming full family members um our spending on pets is is rising very very rapidly um I'll have to update the statistics I know that I'm a few years out of date but uh in the year that I last looked which was probably about five years ago now time flies Americans spent 10 billion dollar per anom on diet pet food um now have a think about that for a moment there are not very many pets that can open the cup you could just try spending giving them less to eat but no diet pet foods are what they buy and of course for diet read more expensive and higher margin um and so on and so forth um you know 40% of American adults live alone to them particularly during things like the pandemic uh a pet is is an important point of contact basically if you wanted a a cat or a dog in America during the the lockdown you would have had to have gone on a waiting list at a pound never minded a breeder uh to obtain that to obtain this testing is something we like as well people do more and more testing as time goes by is there horse meat in your burger um covid-19 has obviously given it a b Big Boost as well International Trade so it leads to boosting testing of Commodities and goods and so on and sometimes these two things cross over one of our companies is the world leader in Veterinary diagnostic testing equipment um testing pets is very important for two reasons one is I said they're on a journey like their human owners more and more of them are being given health care which is as good as or even surpasses their human owners in terms of what's spent on it and the other thing is testing is more important for uh for pets than it is for the human animal for a very simple reason reason they can't speak it's no good asking them how they feel and where the pain is uh so you have to do more testing to get an accurate diagnosis for pets take us on please com and lastly as I said we need some way of warding off the competition take us on I'm running over a bit uh the so-called mo one other Warren Buffet ISM he says great businesses not only have great returns and source of growth they have a moat that we get around a castle to protect them from this attack what constitutes the most brands pretty good note um you know strong Brands can last indefinitely if you maintain them with marketing uh with advertising with promotion and with development and uh you know you will pay more for a brand than a non-branded good you will pay more for a primary brand than you were for a tertiary brand um control of distribution and supply chain it's not just Brands if you come up with something new if you came up with a new vodka during the course of this call rather than listening to me um well great uh but I'm not sure how you're going to get it in bars and and restaurants and shops because the distribution is already controlled by people like deio and pero Ricard and bardi who owns things like smof and and absolute uh and so on you know this this is already a great Goose these are these are people who have already got a very big control sometimes it's control of supply chain as well if you want to compete with some of the modern Dairy companies particularly in the emerging world people like nest and Denon you're going to have to go and find your own deer at farms to convert the dairy farms and build the refrigerated supply chain and processing and you're going to have to put your own fridges into the shops that hold this stuff you can't put your your goods into a nestl fridge so that's good installed bases of equipment or software people who Supply things and once they've supplied them you are riant upon them for maintenance Spar service and it's difficult to change in terms of equipment things like elevators and escalators once you've bought a con or Shindler or an Otis Elevator escalator 75% chance you'll sign the maintenance contract with it that's where the real money is made uh software people who make software that goes into your computer around your operating system or to run your conference call like we've got now people who make Airline reservation software hotel reservation software payroll processing software etc etc once you've got this stuff it becomes very embedded very difficult to T change and it gives you a a tank CL and lastly patents patents obviously to some degree ward off competition they're our least lik form of of competitive advantage actually because they do expire obviously patents expire a good example of a competitive advantage that you can get with a brand and installed base long after a patent expires would be things like otus in elevators is the world's biggest elevator company uh Mr Otis patented the safety elevator in about 1858 I me his patented had expired by the 1870s yet it's still got the number one position basically so we think actually the development of Brands and install based f far more important than that just towards the end now I returns are persistent good companies don't become bad companies by and large or vice versa you'll see this is quite a long run of data it goes back to 1966 and it basically looks at companies with high Returns on Equity that more Buffet measure you can see on the vertical axis there you see the red companies at the top which are gravitating around the sort of 20% and you can see the low return companies at the bottom which are gravitating around around the the 12% so we're starting with a universal companies started with 20% and started with about 12% and looking at what happened to them over the intervening half a century or so and as you can see uh not a lot has changed the red ones are still very significantly uh above the green ones um and that's the case you know good company sectors don't become Bad Company sectors and vice versa you know Airlines aren't suddenly going to become good businesses any more the consumer goods are suddenly going to come back businesses and um and they do persist and it's partly these barriers you know for the companies down at the bottom to get into where the companies are at the top is difficult there are real barriers to entry take us on comrade another example of the same thing this is the return on on invested capital for these companies we've given you this B sector here uh and you can see there are two bars there's a red bar which is a long run from 1963 to 2004 so 40 years and then there's a gray bar which is the latest 20 years and so what it's telling you is what the return on Capital was for the 40 years and what it was in the latest 20 and you'll see when you look across these sectors there aren't any examples of a company which has gone from one end to the other of the company a sector that's gone from one um uh level of return to the other at the moment you know we haven't suddenly found that Transportation um was you know around about the as you see there I don't know seven or eight% and and but more recently it's been in the 20% B no these things persist basically and if you look over on the you cran your head there you can see what does well pharmace IAL household and personal Goods software media commercial service semiconductors Health Care food consumer services they're all pretty darn good aren't they uh what does badly over here well we've got utilities telecoms transport energy materials and retailing y um you know they aren't suddenly going to turn around basically and as it says in the punch line at the bottom on the left there being cheap or lowly rated doesn't isn't going to make a Bad Company become a good company it may give you a short-term opportunity but it certainly doesn't give you a long-term one keep going com um yeah that's the point I was just making sorry that slide Y and I think with that we're nearly there um this looks at the actual share prices because I talked a lot about companies I said to you the reason for that in part is because that's my background I came to fund management through running businesses not the other way around or or just being for management all my life but that's all very well but how does it translate into performance this is the MS SDI uh world uh index and it takes uh back to 1996 as you can see there so we're dealing with about 25 years here and it takes the quality Subs sector of that index so the companies that they Define as high quality with high Returns on Capital High profit margins good cash conversion and it Compares it with the index and you can see in any rolling 120 month period so any 12 months 10 years in any rolling 12 period during this period quality always outperforms the index now quality is being slightly handicapped in this comparison in my view because of course the quality is still in the index that is being measured against if you subtracted quality from the index I don't have the data to do it it's an msci calculation this uh this would be more extreme it would be a more extreme out performance and very probably for shorter periods as well and I realize that that's a long period of time but frankly we are long-term investors if you're not long-term investors you are probably in the wrong fund would be my suggestion comrad keeps going um and finally I think this is it um Buffett as ever is better encapsulating all of this stuff that I've been talking about than I am uh it's far better to buy a wonderful company at a fair price than a fair company at a at a wonderful price as I said to you I spent most of my working life listening to people asking me about whether something's cheap oras they should be asking about how good it is thank you
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