THE FINANCE GHOST: Bored rooms beat boardrooms

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When is dull good? When it’s your CEO or CFO studiously protecting the balance sheet and not doing stupid deals, writes FinanceGhost.

It’s incredible how often the “boring” companies deliver the best returns. Usually run by the accountants who enjoyed auditing and tax at university rather than finance, they stick to their knitting and play it safe with the balance sheet. Over time, they deliver slow and steady returns that add up to an impressive long-term compound annual growth rate.

The market tends to ignore these companies, with low traded multiples and high payout ratios . By not placing any value at all on the underlying growth in the business, the market underestimates the benefit of sensible reinvestment in the business and the power of share buybacks in turbocharging growth in headline earnings per share...

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