Unlocking the Strategies of Europe's Top Fund Manager: William Higgons
Exploring Independence et Expansion Fund's Wealth-Building Wisdom
I recently tuned in to the latest talk hosted by @finaryhq, featuring William Higgons, the renowned fund manager of "Independence et Expansion." Affectionately referred to as the "French Warren Buffet," Higgons boasts an impressive annual return of 13.1% since 1992, consistently outperforming the market.
🎥 Watch the talk here (subtitles available).
Here's a concise summary of the captivating discussion:
William's Portfolio:
Excludes CAC40 companies (from the French stock market index).
Comprises 100% stock-picking.
Focuses solely on small-cap stocks.
Maintains no cash reserves.
Top Holdings in His Portfolio:
SII ($SII)
Verallia ($VRLA)
Mersen ($MRN)
Catana Group ($CATG)
Publicis Group ($PUB)
Rheinmetall AG ($RHM)
In addition to these, he holds Total Energies ($TTE) in his personal portfolio, deeming it undervalued and having faith in the longevity of the oil industry.
Valuable Insights:
Prioritizes companies with low price-earnings ratios, acknowledging future unpredictability.
Demands a high return on equity (ROE), disqualifying any below 10%.
Instead of PER or FCF, he assesses a company's self-financing capacity, which equals net earnings minus depreciation and amortization, aiming for companies within the 5-7x range.
Sees value in family-owned businesses, allocating significant investments.
Over the long haul, small-cap stocks tend to outperform large-cap ones. His fund focuses on companies with market caps below 10 billion.
Prefers growth rates exceeding national GDP figures.
Demands companies that invest on their own development (CAPEX, R&D), organic growth
He's exited European automotive equipment stocks for the foreseeable future and also divested from real estate development investments.
Bonds don't make it into his portfolio, as he considers them unprofitable.
Avoids exotic investments, maintaining a conservative strategy.
Recommended Readings:
"The Little Book of Behavioral Investing" (by James Montier) – I've read it and have a copy. I highly recommend it as well. Let me know if you're interested. The book takes you on a guided tour of the most common behavioral challenges and mental pitfalls that investors encounter. It not only highlights these challenges but also provides you with practical strategies to eliminate these traits and become a more successful investor.
"What Works on Wall Street" (by James O'Shaughnessy)
In the interview, William shared an intriguing concept: Every six months, they divest from the poorest-performing company of the preceding six months, embracing Momentum as a risk management approach. I found this idea so valuable that I plan to adopt it myself, as it could have saved me from some painful losses in the past.
In the spirit of sharing, here are some companies in my watchlist that align with William's filters:
Market Cap <10b
ROE >10%
Exclude companies without a significant share of insiders
PER or P/FCF 2023 <15x (I don't have them classified by self-financing capacity)
Growth > 4%
Please note that he only invests in Europe but I didn't applied that filter.
Feel free to explore these opportunities, and may your investments yield prosperity! 😊
