We’ll go out on a limb here and say that every investor wants to put their money into ASX shares that outperform.
At least, as opposed to ASX shares that underperform.
Working on that rather safe assumption, how do you go about narrowing the field of options to those companies more likely to deliver outsized gains?
You’re probably familiar with Ryan Stokes, eldest son of billionaire Kerry Stokes.
Among the other captain’s hats he wears, Stokes (the son) is the CEO of Seven Group Holdings Ltd (ASX: SVW). And his family’s Australian Capital Equity investment group owns a majority stake in Seven Group, which has a market cap of $7.7 billion.
Speaking at a private dinner address in Sydney, Stokes told attendees that “the owner’s mindset” is a key to identifying outperforming ASX shares.
According to Stokes (quoted by The Australian):
You take the dollar personally. You think about that from an expense perspective and from an investment perspective, and really try to instil that value through the group. How do you, as an owner, think about that? Not from a sense of empowerment to do what you want, but what is a responsible thing to drive value for that dollar.
That’s something we think permeates through our group. But it’s also empowering the right people to lead and driving the organisation to success.
Stokes added that his own owner’s mindset at the helm of Seven Group makes his job a “personal” passion:
You have to love it and in that love comes a real commitment to it. That emotional connection is a bit contagious within organisations. Leaders who have that belief, it can transpire through others as well.
ASX shares run by company founders also can benefit from a quicker response time.
According to Shane Galligan, Credit Suisse senior client partner (quoted by The Australian):
They can also act more quickly than others. We believe that’s what separates entrepreneurial companies, as well as the cultural aspects in executing well. It’s that ability to see something early. We see it with entrepreneur-led companies in Australia. They’ve got that vision for change; they drive that vision through their businesses. Not to say that corporates that aren’t founder-led don’t, but entrepreneur-led companies are typically more nimble.
There is a bit more of a can-do kind of attitude. If there are problems, they seem to be able to cut through them and resolve them more quickly. They don’t take no for an answer, more so than non-founder led corporates.
Supporting the idea that ASX shares run by owners may be more likely to outperform, The Australian cited a recent study by Bain & Co.
That study concluded that, on average, companies that were run with “a founder’s mentality” delivered 3.1 times better total shareholder return than non-founder led companies over a period of 15 years.
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