#6 Only Invest In Companies That Make Money
This very simple statement is indicative of the investment philosophy at Mawer Investment Management Ltd. As simple as it sounds, it is not easy to find companies that consistently create wealth over time. We have developed a very extensive screening and analysis process to help identify wealth-generating companies, those with a return on capital exceeding their cost of total capital (debt and equity). This is combined with extensive industry analysis, economic analysis, interviews with the company's management as well as suppliers and customers, research from other analysts and many other independent sources of information.
By investing in wealth generating companies and striving to buy them at a discount to their true (intrinsic) value, we achieve two goals for our clients:
- We reduce the risk of the investment. This is achieved by investing in profitable companies that generally weather economic downturns better than others. The risk is also diminished because we have not overpaid for these stocks and they are less likely to fall given that they reflect a discount or close proximity to the true value of the company.
- We provide our clients with an opportunity to earn better than market rates of return. This is achieved by emphasizing those companies that are doing the best job of increasing their rates of return on capital. Also, buying at reasonable valuations provides more room on the upside for potential gains.
Strict adherence to Mawer's investment philosophy has sheltered our clients from some of the worst market conditions in recent history, such as the bursting of the U.S. housing bubble. We are professional investors buying quality companies.
If you would like to learn more about how we manage money, please contact our office toll-free at (888) 549-6248, and ask to speak to a Portfolio Manager, or email us for an information package.