105. L’Oréal, Campari and Schindler lifts: quality companies in Europe

Threadneedle European Select co-manager, Ben Moore, uses Warren Buffet’s pinball machines and L’Oréal’s acquisition of Kiehls to explain organic and inorganic growth of reinvested capital in this podcast. He also tells us why Campari still being a vital ingredient for most bartenders is a good thing for investors and debunks the myth that industrial companies are all about metal-melting furnaces.
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Threadneedle European Select fund has a distinctive process based on the premise that a company’s intrinsic value is determined by its growth, returns on capital, sustainable competitive advantage and pricing power. This approach aims to develop a thorough understanding of the industry in which a firm operates, the competitive landscape that the firm is facing and the actions it is taking to improve its positioning.

Read more about Threadneedle European Select

What’s covered in this podcast:

• How the fund has performed so far in 2020 [0:58]
• The manager’s definition of ‘quality’ companies [4:00]
• What ‘organic growth on invested capital’ is – using Warren Buffet’s pinball machines as an example [5:28]
• What ‘inorganic growth on invested capital’ is – using L’Oréal’s acquisition of Kiehls and Campari’s acquisition of Aperol as examples [6:49]
• Why it’s important for investors that Campari is still a vital ingredient for most bartenders [8:25]
• What are the different types of industrial companies – using Schindler lifts as an example [9:30]
• Why Worldline can benefit from both a move to a cashless society and the need for consolidation in Europe [11:35]
• How L’Oréal has coped with make-up demand and hairdressing salons closing in lockdown [13:41]

This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions. Past performance is not a reliable guide to future returns. Remember, all investments can fall in value as well as rise, so you could make a loss. Before you make any investment decision, make sure you’re comfortable and fully understand the risks.Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.

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