Family Business Index

[Pendrainllwyn]

In case anyone is interested, I have been looking into the The Family Business Index (FB500) post formoverfunction bringing it to my attention. I think there is some merit in trusting ones money to a family run company so I have decided to take a closer look.

Background
From the website http://familybusinessindex.com/ "The Family Business Index is a global ranking of family-owned businesses by revenues. Companies that have not published accounts in the last 24 months are excluded from the Index. The business must be run by the second generation or more. One or more family members must be involved in the running of the business, i.e., be a part of either the board of directors or executive leadership. To meet our criterion of a family business, the family should have substantial ownership of the business. Private companies where the family controls over 50% of the shares and voting rights or public companies where the family holds at least 32% of the shares and voting rights are included."

Objective
Find 1 or 2 new companies worth investing in. If not, learn about some companies I don't know about.

Public and Private
* The FB500 has 255 publicly listed companies. 245 are private.
* The UK has 2 publicly listed companies in the FB500; Liberty Global [Malone family] and Antofagasta [Luksic family] and 7 private so one needs to be agreeable to investing in overseas listings. Fortunately I am, at least in some markets.
* Of the 255 I am ruling out looking at 86 because they are listed in countries I don't have access to or in currencies I currently don't have assets in and don't want to start (Brazil, Chile, Colombia, India, Indonesia, Israel, Malaysia, Mexico, Philippines, Russia, South Africa, Taiwan, Thailand, Turkey). It could be that some of these companies are listed in a different currency than their home market exchange or have ADR's available. Anyway, that still leaves me with 169 companies and life is short.

Current holdings - 9
If memory serves me correctly Adrunkenmarcus put me onto Kone and Richfool onto Fundsmith. Thanks to them.

Companies previously researched* and already on my watchlist - 2
*Researched means (a) reading the investor presentation/ annual report / website and (b) crunching numbers into a pricing model I have developed for about 30 minutes. I have no meaningful strategic insight over any company or sector. My pricing model doesn't guarantee what I am buying is under-priced (who knows what the future holds) but it does help me understand why I think I might be getting value.

Companies researched - 8
Expensive doesn't mean that this company isn't the next best investment - it just means that I can't see value and will leave it alone. A company with negative shareholder funds might be great value. It's just something I am averse to and leave alone. Plenty of other companies to choose from.

That's it. The market looks quite rich at the moment so a good time for doing some research.

Pendrainllwyn

[Dod101]

Thanks Pendrainllwyn. I think you could legitimately add ABF to the UK family companies. It is substantially owned by Wittington Investments Ltd, the private company owned by the Weston family and its charitable foundation and which is mentioned in the FB500. Furthermore, there are quite a number of UK quoted companies which have a strong family connection even although they do not qualify for inclusion in the FB500. Neither am I at all clear why it is necessary only to invest in family companies included in the FB500 or that it is necessarily advantageous to do so, especially for a UK based investor.

I like companies with a significant family shareholding g and influence because they tend to have a longer term perspective and a more conservative outlook than many of the truly 'public' companies which, with some truth, have been called 'ownerless corporations'.

Dod

[MDW1954]

Back on TMF, writer GA Chester maintained a "family folio" that had somewhere between a dozen and twenty companies, I think. I don't know what happened to it when the boards closed.

MDW1954

[Prof103]

An interesting thread.

The "family folio" on the old TMF site was interesting to me because it contained several companies that met my twin investment criteria of low debt (gearing) and earned a lot of money (high operating margin). I don't think this is a coincidence since family firms are often well run businesses.

The other thing with these family UK based firms is that you tend to find them in the FTSE 250 or even smaller in the FTSE Small Cap. Again what you might expect.

I have been more than satisfied with their performance.

Best wishes,

Prof103

[PinkDalek]

... The "family folio" on the old TMF site was interesting to me because it contained several companies that met my twin investment criteria of low debt (gearing) and earned a lot of money (high operating margin). I don't think this is a coincidence since family firms are often well run businesses.

The other thing with these family UK based firms is that you tend to find them in the FTSE 250 or even smaller in the FTSE Small Cap. Again what you might expect. ...

I know some were most definitely AIM shares, as G A Chester included Young & Co.’s Brewery, PLC in the portfolio at some stage. Not that I've been able to find the old Family Firms Portfolio articles, such as via https://archive.org/web/web.php.

I have found this short article from 2015, which mentions three old favourites, described as well-established family businesses:

https://www.fool.co.uk/investing/2015/0 ... horpe-plc/

[Prof103]

... The "family folio" on the old TMF site was interesting to me because it contained several companies that met my twin investment criteria of low debt (gearing) and earned a lot of money (high operating margin). I don't think this is a coincidence since family firms are often well run businesses.

The other thing with these family UK based firms is that you tend to find them in the FTSE 250 or even smaller in the FTSE Small Cap. Again what you might expect. ...

I know some were most definitely AIM shares, as G A Chester included Young & Co.’s Brewery, PLC in the portfolio at some stage. Not that I've been able to find the old Family Firms Portfolio articles, such as via https://archive.org/web/web.php.

I have found this short article from 2015, which mentions three old favourites, described as well-established family businesses:

https://www.fool.co.uk/investing/2015/0 ... horpe-plc/

A few names of family firms as they were then are:-

Hikma, Antofagasta, Thorpe, Renishaw, Halstead, Latham(James), Young & Co NV, Bodycote, Daejan Holdings, Rotork, Spiro-Sarco Eng, Goodwin, Henry Boot, Fullers, VP.

Regards, Prof103

[Pastcaring]

Westfield was a company I bought, WDC. (ASX) in the 1990s.Frank Lowy,Hungarian refugee I think.Famous for shopping centres.Doesn' t exist now,taken over by Unibail Rodamco.

Frank didn't want the 3 generation rags,riches,rags,family squabbles etc.Sold out 1-2 years ago,lock stock and barrel
Tears in his eyes as the company he built from around 1955 and listed in 1960 went ,gone.Really proud how he helped the people that had faith in him,a £500 ( $1000 ) investment on listing calculated out to be either $414 or $441 million with all dividends reinvested over around 57 years.That's why I like to leave things alone forever .£ 500 then was around average annual income,probably a touch less.

For those interested ( nobody) there is a decent family run company called Washington H Soul Pattinson. SOL ( ASX ).Chatting to people at AGM,s over the years it has always come up in conversation as worth looking at.
Me being so lazy I never did.

Having 5 minutes over the weekend it came to mind that I had promised myself for years ( decades?) to have a look at it,I never did.C' est la vie.

WOW,family run company,into 4 th generation.Listed in 1903,paid a dividend every year since then. Magnificent growth,derived from a concentrated share portfolio,own a few companies,large shareholding in a few others. Main business was chemists ( think Boots ,Walgreen's).Profits used to buy other investments.Said the Australian BRK.There must be 2 Australian BRK,s.Wesfarmers is one ( WES. ASX),I own Wesfarmers,the weekend was the first time I have looked at SOL.If I was 30 years younger straight in to that.

As it is I might check it out deeper,lots of spare money doing nothing.Pay cash rather than leave it in the bank.

There SOL leave it alone for 30 years and see how it turns out,have a bit of fun.

The inertia of my decades of laziness is hard to break,90% certain I will never buy them.Perhaps a charitable foundation,we shall see.

[YeeWo]

The Swire Family
- John Swire & Sons. (Private)
- Swire Pacific (Hongkong listed Public Holding Co., controlled by JS&S)
- Swire Properties (Hongkong listed, substantially owned by Swire Pacific)
- Cathay Pacific Airways (Hongkong listed, substantially owned by Swire Pacific)
The Keswick Family
- Jardine Matheson & Jardine Strategic (Singapore listed interlocking Holding Cos.)
- Dairy Farm (Singapore listed Pan-Asian retailer, substantially owned by Jardine Strategic)
- Hongkong Land (Singapore listed, Asian Property business, substantially owned by Jardine Strategic)
- Mandarin Oriental (Singapore listed, Global Luxury Hotel Group, substantially owned by Jardine Strategic)
- Jardine Cycle & Carriage (Singapore listed Holding Co., largest foreign investor in Indonesia (Astra), substantially owned by Jardine Strategic)

I love the longterm focus of family controlled entities. Caveat Emptor though, Your longterm may be Very Different to Their longterm!!!