저자: TerrySmith · 외국인
요약 보기
결론: 장기적으로 높은 ROIC와 성장 동력을 가진 우량 기업에 투자해야 하며, 싼지 비싼지보다 좋은 기업인지가 더 중요하다. 좋은 기업의 재무 기준: 영업이익·현금자본 수익률(ROIC)이 높아야 하며 포트폴리오 내 대략 25% 수준이라고 언급. 이 수익률이 자본비용을 지속적으로 웃돌면 기업 가치가 시간에 따라 증가한다. 성장 동력: 높은 수익률만으로는 부족하고, 벌어들인 현금을 재투자할 수 있는 장기 성장원이 있어야 한다. 경기순환적 성장이 아니라 고점·저점 모두에서 이전보다 커지는 구조가 필요. 성장 원천 예시: 개발도상국 소비 확대, 선진국 프리미엄화, 고령화, 미개척 시장(white space)으로 안경(시력보정 인구 약 2/3 미보유), 결제(글로벌 거래의 80% 이상 현금), 치약, 반려동물 지출(미국 다이어트 사료 연 100억 달러 수준 언급), 검사·진단 수요 등. 경쟁 우위(해자): 브랜드, 유통·공급망 통제, 설치기반(엘리베이터 유지보수 계약 등 교체 어려운 하드웨어·소프트웨어), 특허(만료되므로 가장 선호하지 않음). 오티스 엘리베이터는 특허 만료 후에도 1위 유지 사례로 제시. 수익성 지속성: 고ROE 기업군과 저ROE 기업군의 차이가 약 50년간 유지되었고, 업종별 ROIC도 40년·20년 기준 큰 변화가 없었다. 항공·유틸리티·통신·에너지·소재·소매는 낮은 수익성, 제약·소비재·소프트웨어·반도체·헬스케어 등은 높은 수익성. 리스크/조건: 저평가나 낮은 밸류에이션만으로 나쁜 기업이 좋아지지는 않는다. 단기 기회일 수 있으나 장기 투자 기회는 아님. 백테스트 근거: MSCI World 퀄리티 서브섹터가 1996년 이후 롤링 10년 기준으로 지수를 항상 상회했다고 주장. 퀄리티 제외 시 초과수익은 더 클 것이라고 추정. 출연자 전망: 장기 투자자 관점 유지, 단기 트레이딩 펀드는 맞지 않는다는 입장. 좋은 기업을 적정 가격에 사는 것이 적정 기업을 싸게 사는 것보다 낫다. 종목 언급: 개별 한국 종목·지수 가격 방향에 대한 구체 언급은 없음.
다듬은 글
First, I'll say what I think is a good company, and then I'll move on to why we think it's important to invest in it. The key indicator of a good company in financial terms, which David mentioned in his introduction, I took from the 1979 annual letter of Chairman Warren Buffett . The first and most important indicator of a good company in financial terms is that it provides high profitability of operating profit and cash capital.
Cash received during the reporting period divided by invested capital is a large number. In our portfolio right now, it's probably 25%, something like that. This is, in fact, a large number. Second, it has a source of growth that allows it to reinvest these cash flows. There is no point in getting great returns from your business if you are limited to a very small segment, niche, or geography and you cannot use the funds you receive to grow the business.
You need both of these elements to make a truly great investment. Last but not least, you need a source of sustainable capital to prevent reversion to the mean. If you are earning 25% return on capital and have very good growth that allows you to reinvest at 25%, people will be interested in competing in your business.
There is a perfectly valid law of economics called reversion to the mean, which states that all returns eventually revert to the mean. This is not entirely correct. The answer is that most companies' profits eventually revert to the mean. There are a few companies that have a competitive advantage that allows them to offset the impact of competition.
I just want to touch on each of them in turn. Cameron, let's begin. High return on capital. Hmm, why is this important? Companies are just like us. People overcomplicate analysis. Companies have a cost of capital and a return on capital. If they consistently earn returns above the cost of capital, then the value of the company increases over time.
If they consistently earn a return below the cost of capital, the value decreases over time . Think about it from a personal perspective. If you went to your bank and borrowed money at 5% and invested it in funds over the last decade at 18%, you would be richer, right? If you borrowed from your bank at 5% and invested it in someone else's fund at a 2% return, you would become poorer.
It's not... We don't need to go into advanced mathematics or any particularly complex level of thinking. This is a fact. That's right. However, since Warren Buffett wrote this in his annual report in 1979, I would say that more people in the investment community have ignored it than have used it. Basically, bring us home, camera, please.
Um, this, um, quote from Warren Buffett's number two, Charlie Munger, pretty much sums up why this is important. So, you know, I think I gave a brief explanation. Here is a slightly more detailed explanation . I don't know why he chose this particular time period or these particular rates, but it doesn't matter.
I'll just read it. In the long term, it is difficult for a stock to generate much better returns than the business that underlies its returns. She earns money . If a business earns 6% on capital for 40 years, and you hold it for those 40 years, you won't make much difference from a 6% return. That's the point.
Even if you initially buy it at a huge discount. Conversely, if a business earns 18% on capital over 20 or 30 years, even if you pay a high price, you will end up with an incredible result. He is telling us something very important here. This is not a theory. He does not advance an investment theory.
This is a mathematical fact. This is important to realize. And what he's telling you here is something I just wish I had a journal that I kept since I first started working in finance all those years ago, and I would write two columns in there every day, and every time someone in the investment business asked me if a company or a strategy was high-quality, good, and had a high return on capital, I would check one column.
And every time they asked, " But is it cheap or expensive?", I checked that column . I had a lot more ticks in the "Is it cheap or expensive?" column. People spend almost all their effort thinking about whether something is cheap or expensive, whether it has a high or low rating, which I think is a better way to put it, and too little deciding whether it is a high-quality business that they really want to own that can increase in value.
Um, and I think that, uh, Munger basically, uh, sums up why it's important in this quote. As I said, return on capital is the most important thing. There is no point in doing business with a low return on capital. I did n't bother today because we're limited on time, but we can show you a slide of the aviation industry, which never gets an adequate return on capital, and it's just a money-losing machine, essentially.
That is , there is no point in investing in a business that has insufficient profitability. However, once you get an adequate return, you need to have a source of growth so you can reinvest. There is no point in having a business that gets a 25% return on capital, but you can't sell more product or service, and there is nothing they can invest more capital in.
They just have to give you your money back, essentially. So we look for companies that have a source of growth that they can invest in. When they invest in a franchise of a very high quality company like this one, with high rates of return on capital, they are doing a better job for you than I could.
Recently, in an article, I was asked whether company managers are better at allocating capital than fund managers, and the answer is that it's not exactly a fair question because fund managers don't control the business. Managers who oversee very high-quality businesses , some of the world's largest consumer companies, technology companies, healthcare companies, etc., have other opportunities for manager funding.
They have a business that can generate high returns for reinvestment. They just need to not mess it up, basically. Easier said than done, but that's what they have to do. Where does this growth come from ? We're looking for a business that has, um, a source of long-term growth. Not cyclical growth, not something that goes up and down.
Everything has a certain cyclicality, but we look for companies that are larger at both the peak and the trough of the business cycle than they were at the previous, um, peak parts of the business cycle. They don't increase in every reporting period or every year, but they do increase over time. And it usually happens because of one or more of these things.
Consumerism in developing countries. Um, all the statistics on this issue are clear. When people in developing countries exceed a certain income level, they become consumers. They are part of a growing economy, they no longer spend all their time searching for and preparing food, they work in factories, call centers, and everything else.
They need the benefits of consumerism , and they also aspire to become consumers. And this is a very important growth factor for some companies. But in the developed world, there is premiumization. We may not consume more overall, but over time we consume better. You know, we can't drink more, hopefully most of us don't , but we can drink better quality.
We can improve what we do. So whatever we say about consumption, there's a pretty good chance that we'll move up the curve in terms of the brand of goods we consume, and over time, we'll premiumize them. The aging population, many people are looking for investment growth at the expense of the young population.
In fact, this is part of the movement towards consumerism in developing countries. But the aging population is also quite good. The aging population has increased consumption for a number of things, not least for types of medical care. And so, you know, the aging population can be a pretty big driver for certain companies.
Uh, white space. White space, as you probably know, is a term used by people in the marketing and sales business. If they have a map of the world, a country or territory, somewhere where they have no representation, no sales, they color the map white, white space. There is a lot of white space in the world that people can grow into.
I gave you three examples. Eyes. And what do I mean? Approximately 2/3 of the world's population who need vision correction currently do not have it. They currently do not have access to reading glasses or other forms of vision correction. In time, they will get it. Uh, and obviously this will be a source of growth for people like Essilor, Zotica, etc., who are involved in the manufacturing and retailing of eyewear.
Payments... we are often asked what we prefer MasterCard, Visa, PayPal, Square, Apple Pay or Google Pay, and the answer is: yes, we have an idea of which one might be better than the other, etc. But the reality is that they will all probably do quite well, and the reason for that is that they have a huge white space for development.
Over 80% of global transaction volume is still carried out in cash. Basically , this is not true. If we ask our grandchildren, will we tell our grandchildren, will we tell their children, or something, that we used to, uh , get some material made of , uh, jute pulp, a little bit of this and plastic, and turn it into this banknote, and it would have holograms, metal, and engravings on it to make it hard to counterfeit.
And then we put it in armored cars and transported it back, which we then gave to ourselves to spend in stores, and we returned it back to the stores. As part of the return to the banks, and that's how we get into the system. They will look at us quite puzzled, considering that all they have to do is walk up to the cash register with their phone in their pocket and pay for something.
And this is certainly the future. Toothpaste , a bit like eyes. You know, again, about 60% of the world still doesn't use toothbrushes and toothpaste. They will use. As I like to say on this subject, if you want to have a close relationship with someone who starts brushing their teeth, it's best to just go for it.
I guess that's my take on it. So, you know, for people who work in this industry , like Colgate, there's clearly a very long road ahead to better development. And there are other trends that simply exist, which we have stopped at . Just to name a few. Pets. If I had to pick one area of long-term growth that seems to have a very, very long way to go, it would be spending on so-called pets or household pets.
Pets, as each of you who own them knows, are on their way to becoming full-fledged members of the family. Our expenses for pets are increasing very rapidly. I'll have to update the stats. I know I'm a few years behind the times, but, uh, the year I last looked, which was probably about 5 years ago, time flies, Americans were spending $10 billion a year on diet pet food.
Now think about this for a minute. Not many pets can open a closet. Uh, you could just try to cut back by giving them less food, but no, diet pet food is what they buy, and of course, for diet, read, more expensive and with a higher margin, uh, and so on and so forth. Uh, you know, 40% of American adults live alone.
For them, uh, especially during things like a pandemic, uh, a pet is an important point of contact, essentially. If you wanted a cat or dog in America during the lockdown, you would have to get on a waiting list at a pet store, let alone a breeder, to get one. Testing is something we also enjoy. People are doing more and more tests over time.
Is there horse meat in your burger ? COVID-19 has obviously also given this a big boost. International trade leads to a significant increase in testing of goods and merchandise, etc. And sometimes these two things intersect. One of our companies is a world leader in the production of veterinary diagnostic testing equipment.
Pet testing is very important for two reasons. First, as I said, they are on a journey, just like their human hosts. More and more of them are receiving medical care that is as good as or even superior to that of their human masters in terms of how much it costs. And secondly, testing is more important for pets than for people, for a very simple reason: they can't talk.
There's no point in asking them how they feel and where the pain is. So, you need to run more tests to get an accurate diagnosis for your pet. Please, Conrad, take us into consideration. And finally, as I said, we need some way to fend off the competition. Take us into consideration . So, I'm going a little overboard.
Er, the so-called moat. And another one of our Warren Buffett says: "A great business not only has great profitability and a source of growth, it has a moat that surrounds the castle that will protect it from this attack." What is a moat? Brands are a pretty good moat. Uh , you know, strong brands can last indefinitely if you support them with marketing , uh, advertising, promotion, and development.
And, uh, you know, you'll pay more for a brand than for an unbranded item. You will pay more for a primary brand than a tertiary brand. Uh, distribution supply chain control. It's not just brands. If you come up with something new, if you come up with a new vodka during this conversation, instead of listening to me, well, great.
Uh, but I'm not sure how you're going to get into bars, restaurants and stores because distribution is already controlled by people like Diageo, Pernod Ricard and Bacardi, who own Smirnoff, Absolut, etc. You know, Grey Goose already has it. These are people who already have a lot of control. Sometimes it's also about controlling the supply chain.
If you want to compete with some of the modern dairy companies , especially in developing countries like Nestlé and Danone, you're going to have to find your own dairy farms to convert and build a supply chain and refrigeration processing plants, and you're going to have to put your own refrigerators in the stores where these things are stored.
You cannot put your goods in the Nestlé refrigerator. So, you know, that's good. There are installed bases of hardware or software, people who supply things, and once they supply them, you rely on them for maintenance, spare parts, service, and that's hard to change. As for equipment, things like elevators and escalators.
Once you buy a Kone, Schindler, or Otis escalator, there is a 75% chance you will sign a maintenance contract with them . This is where real money is made. Software, people who create software that plugs into your computer to run your operating system or to make conference calls like we have now, people who create software for booking airline tickets, booking hotels, processing payroll, etc.
Once you have that hardware, it becomes very built-in, very difficult to change, and that gives you a chance to win. And finally, patents. Patents obviously deter competition to some extent. They are our least favorite form of competitive advantage, precisely because they expire. Obviously, patents expire.
A good example of the competitive advantage you can gain with a brand and installed base long after the patent is out are things like Otis and elevators. This is the world's largest elevator manufacturing company. Mr. Otis patented a safe elevator around 1858. I mean, his patent expired by the 1870s.
However, he still holds the top spot. So we believe that developing brands and the installed base is much more important than patents. Just for all of you, and now I want to say that profitability is constant. Good companies generally don't become bad, and vice versa. As you can see, this is a fairly long period of data.
It dates back to 1966. And it basically looks at companies with high return on equity, which is what Warren Buffett measures, you can see on the vertical axis. You can see the red companies at the top, which weigh in at about 20%, and you can see the low- yield companies at the bottom, which weigh in at about 12%.
So we start with a series of companies that started at 20% and started at about 12%, and we look at what happened to them over the course of half a century or so. And, as you can see, uh, not much has changed. The reds are still significantly, uh, higher than the greens. Er, and er, that's right. You know, good sectors of companies don't become bad, and vice versa.
You know, airlines are n't going to suddenly become good businesses, just like consumer goods aren't going to suddenly become bad. And, uh , they are stored. And partly it's these barriers, you know, that make it hard for companies at the bottom to get to where companies at the top are. There are real barriers to entry.
Take the song , comrade. Another example of the same thing . This is the return on invested capital for these companies. We have listed it for you here by sector. Uh, and you can see that there are two columns. There is a red bar that shows a long period from 1963 to 2004, that is, 40 years. And then there's the gray bar that shows the last 20 years.
So this shows what the return on capital has been over 40 years and what it has been over the last 20. And you'll see when you look at these sectors, there's not a single example of a company that's gone from one end to the other, or a sector that's gone from one level of profitability to another at this point.
You know, we did n't suddenly find that traffic was at about 7 or 8%, but recently it's been in the 20% range. No, these things are mostly stored. And if you look at the faucet , you'll see what's doing well: pharmaceuticals, consumer and personal goods, software, media, commercial services, semiconductors, healthcare, food, consumer services.
They're all pretty good, aren't they? What's not working well here? Well, we have utilities, telecommunications, transportation, energy, materials, and retail. Yes. You know, they won't suddenly go back to normal. And as stated in the climax at the bottom left , cheapness or a low rating will not make a bad company good.
This may give you a short-term opportunity, but it definitely won't give you a long-term one. Keep going, comrade. Um, yes, that's exactly what I meant, sorry, on this slide. Yes, and I think we're almost there with that . Um, this is about actual stock prices. So, I've talked a lot about companies, I told you the reason for that is partly because that's my experience.
I came to fund management through business management, not the other way around, or I've just been in fund management my whole life . But, this is all very well, but how does it reflect on the results? This is the MSCI World Index, and it takes us back to 1996, as you can see. So, we are dealing with approximately 25 years.
And it takes the quality subsector of that index, which is the companies that they define as high quality, with high return on capital, high profit margin, good cash conversion, and compares it to the index. And you can see that in any rolling 120-month period, that is, any 120 months of 10 years in any rolling 12- year period, quality always outperforms the index over that period.
In my opinion, quality is somewhat inferior in this comparison, because of course, quality is still in the index by which it is measured. If you were to subtract quality from the index, I don't have data for that because it's an MSCI calculation, it would be a more extreme result. This would be a more extreme excess than is very likely, and for shorter periods.
And I understand that this is a long period of time, but honestly, we are long-term investors. If you are not a long-term investor, you are probably in the wrong fund, I would advise. Come in, continue. And finally, I think that's it . Um, Buffett, as usual, summed up everything I was talking about better than I could.
Um, it's much better to buy a great company at a fair price than a fair company at a great price. As I said, for most of my working life I've listened to people ask me if something is cheap, when they should be asking how good it is. Thank you.
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