Philosophy
The investment philosophy of Linde Equity Investment Counsel is based on the premise that companies generating a consistently high return on equity will achieve above average share price appreciation over time. As Warren Buffett's favourite investment metric, a high return on equity contributes to:
- Superior earnings per share growth
- Above average dividend growth
- Indication of a superior business model
- Indication of management effectiveness
These traits can be found in both mature and dynamic companies, both of which are a primary focus of Linde Equity's research.
Mature and dynamic companies can be distinguished as follows:
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The vast majority of Linde Equity's clients' portfolios are weighted towards mature companies with a handful of dynamic companies to provide additional upside.
Linde Equity also seeks companies that display the following characteristics:
- Strong customer loyalty
- Recurring revenue business model
- Sustainable competitive advantages
- Highly regarded management team
Linde Equity uses proprietary screening formulas to uncover companies trading at discounts to their normalized valuation. Key ratios used in determining valuation include price to earnings, price to book, price to sales, price to cashflow and other metrics depending on the industry.
Minimizing capital gains taxes is another priority at Linde Equity Investment Counsel. Once a client's portfolio is fully invested, annual turn over is generally less than 20%. This keeps commissions down, enables our clients to get to know their companies better, and contributes towards greater tax efficiency with their investments.