Big, stable, dividend-paying companies, that have been around for a while and have competitive advantages seem to be common candidates on the spotlight for equity investors.
Andrew Headley, veteran fund manager and head of global at UK investment house Veritas Asset Management, takes an analytical approach when picking stocks.
After looking at an universe of 4,000 companies narrowed down to a list of around 250 companies, Headley and his team make a selection of just 25 to 40 stocks at any one time. Average time they hold a company in their portfolios is five years.
When looking particularly at consumer companies, two key aspects to take into account are durability and profitability.
Headley does not particularly favour companies like Amazon or Nokia, since they make you wonder if they will be around in 20/30 years' time. Will people continue to love them?
The veteran stockpicker foresees a challenging future for these two companies since both are subject to the fast-moving nature of the technological sector, therefore might suffer tech disruptions.
Headley said: "Back in the 1990s and early 2000s everybody wanted a Nokia phone. They were coolest phones around and had a 30% market share in mobiles… but times have changed".
On the contrary, he does have a taste for Unilever, the global consumer goods powerhouse with more than 400 individual brands spread across beauty products, personal care, home care, food and refreshment markets, distributed in developed and emerging markets. Nearly 60% of its sales currently come from emerging economies.
Headley believes that Unilever's success lies on its marketing's investment, deep distribution, accessibility, and greater relative market share. "I believe that Unilever will be around in 20 years. But I am not sure about Apple."
