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

Threadneedle European Select co-manager, Ben Moore, uses Warren Buffett’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 Buffett’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]

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