Värdeinvestering
- Part 1: Introduction
- Part 2: Moats
- Part 3: Special events
- Part 4: Quality
Literature and affärspressen is full of advice on what things to look at when choosing which shares to buy. Värdeinvesteraren should instead look for companies to invest in. Even if it feels obvious and you’ve heard it many times so it is often easy to forget that there actually is a part of a company one owns. This is all the more important to keep in mind when you invest for the long term and the company’s success is guaranteed, in time, will be reflected in the share price.
In the long term it is always the company’s quality determines your results. It sounds of course like a cliché, and of course it also but it is very often that investors choose a company only in that it has a particular attractive feature. It’s not often a high dividend yield, low PE, many köpglada insiders, surrounded by the many positive rumors or similar factors. All of this is really just a sign of something good, if even that, is not something that describes the company itself or why one should choose it.
If you manage to find the ”best” companies, however, so you need not worry about the low PE’s you thought on the really positive or are there for a reason (value trap), and the like. If you generally manage to invest in high quality companies, so you will outperform the index over time was so sure. Even if you happened to buy at some inappropriate time, etc, the Extra yield you get, then, of course, as I wrote about last week, if you also manage to fit in and buys when it is given the good times ”free” and, conversely, to stay calm and not sell when the unjustified race occurs.
Companies and thus the share’s future is determined, as I also wrote earlier of the bl.a. how to secure their earnings are, m.a.o. if they have a moat that protects them, but also not suffice in the longer term, unless the management and the business in general deliver exceptional results. I intend today to describe the characteristics of quality companies and would be paid from a personal favorite – Apple that I own since many years.
Companies are, of course, not each other’s equals. There is a huge difference on a shaky förhoppningsbolag on the Alternative list which is run by some cheerful but inexperienced 25-year-olds and a large, established and well-functioning companies. Apple is in many ways a good example of quality companies when they during their more than 40 years has steadily delivered new, very popular products and have had very few flops. This is, however, as well as the growth and valuation, just another example of the props that I mentioned above. Real quality, we find if we look deeper.
Many went probably miss out on the signs that Apple would become what it is today. If you go back to the beginning of 2011 when I started taking an interest in shares so looked very different from today. the iPhone had come over three years earlier but was still a fairly small product that they are still looked at as a toy and not a serious ”företagsmobil” as Blackberry or Nokia. In addition, the iPad had its premiere in 2010, but even if it had gained a certain amount of hype so it was a very rare product and rumours spread in the media about how bad it had sold. Analysts were all very worried that the iPhone would not be able to replace the iPod which had long been the major source of income for Apple… It may sound strange, but it was so the world looked like then.
I had enough help that I myself have owned Mac computers in the 90s and enjoyed them, and felt that my recently purchased iPad was in the same league with regards to the ease of use and attractiveness of the product. I also heard of those who owned iPhones (I had like so many other a Sony Ericsson then) how satisfied they were with it and said that they were waiting on the next model. When I researched further, I saw that just this användarlojalitet that has been in the Mac spread to first the iPod and now the iPhone and that it also appear to have resulted in repeat customers – they upgraded their iphone every two years rather than to choose a different model. Apple had fewer customers yet than numerous other companies such as Nokia, BlackBerry, Dell, HP, etc but the as well started to buy Apple products stayed.
Apple seemed on all the way, still have their ability to create strong ties to their customers. One can discuss long and hard about what it is that makes you succeed with this, but the important thing is perhaps not the causes, but the fact that it managed over time. My analysis in the winter of 2011, however, that if this were the case then would the iPhone and the iPad grow to great products and a growing användarskara. A bit like a chain letter.
Then, when the many challenges began to appear as the great Android revolution, the low-PC and cheap copies of the iPad, Apple thanks to its ability to increase and retain existing customers with new and upgraded products stool. The analyst explained that Apple’s time was past, but despite the lost confidence in the market with a race at 45 % in the spring of 2013 and, of course, great new köplägen for us who believed in the company so motored the boat until the company became the world’s most highly valued. It was of course not granted that it would be so 2011, but all the clues were already there then for anyone who wanted to search for them.
Of course this is just an example and there are many others. Starbucks is one of the other holdings I have that also manages to constantly renew its offer and maintain a devoted clientele over soon the whole world. However, with completely different methods than Apple.
Search among the companies that you simply see the ”remains” of the time. Try to see what it is that makes this company stand against the competition and ask the question whether it is likely that this will continue. An even greater challenge, but potentially more profitable, is to manage to find young companies of the highest quality. Here you have not the help of decades of telling success stories, but if you are early to arrive, you can find the ”tenbaggers” and ”twentybaggers” that made Peter Lynch the world’s best fund managers.