Will Mumford’s go to metric for finding high-quality stocks
What’s the first thing you look at to figure out if a company is high-quality? Return-on-equity, margins or perhaps its a qualitative factor like customer retention. Will Mumford, Deputy Portfolio Manager at Auscap Asset Management, says he looks for long-term earnings growth as the best litmus test for identifying quality. “I’d call out the 10-year compound earnings per share growth of a company. I think it’s just a good shorthand way of thinking about whether a company actually can grow earnings and has a structural competitive advantage.” Mumford says when he started his career he had a bias towards finding companies trading on low price to earnings multiples, but that approach has evolved during his seven years at Auscap. Today he is more focused on finding companies with enduring quality at a reasonable valuation. In this Rapid Fire interview, Mumford discusses one sector rich with opportunities, a stock with a standout management team and a lesson he has learned about managing a portfolio since joining Auscap.
Watch the full episode here.
