We cherish the qualities of these companies and would not want to jettison these positions based on short-term market trends. These moves, in our view, have made many multinational companies look increasingly compelling.
Cash return potential remains strong
The primary valuation metric we use when valuing companies is our forward cash return measure.
This is analogous to looking at shares as a bond investor would – for example, a higher forward cash return represents better value.
The chart below updates the forward return potential we see in both the portfolio and the investable universe as a result of the current market correction.
Valuations have improved significantly and, on our estimates, look as attractive as we have seen in the last three years or so. We are also reassured by the cash-backed dividend yields and potential for dividend growth.
