By
Borsgade
During one of the latest meetings at the Columbia Student Investment Management Association (called CSIMA), Bill Nygren discuss the three key features he looks for in his potential investments. Nygren invests in companies with these three key features:
Significant discount: Buys stocks at a price significantly below their estimated business value, typically around 60% of that value.
Market-matching return: The company’s expected growth in Earnings Per Share and dividend yield should combine to at least match the overall market return. This ensures a decent return even if it takes time for the market to recognize the company’s true value
Shareholder-friendly management: The company’s management should be focused on maximizing long-term value for shareholders, not just short-term profits
So S&P today might say has maybe six or seven percent expected earnings growth, 2% dividend yield. So something like an eight or nine percent total return.
We don’t care whether it’s got a dividend of 9% and no growth, or 9% growth and no dividend, but that combination we want to at least match the market. Because if it’s not then time kind of becomes your enemy.
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