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This next funded so picky that even the Justin Timberlake and beyoncé is a publicly traded companies could not make it past it's an apple -- ropes.
Out of 5000 US companies' stocks fewer than 200 even make the first round of cuts to get into this fund for being picky pays off.
The fun continues year after year to outperform the S&P 500 here to break down the fundamentals.
Is Eric show -- Stein he's Jensen quality growth fund co portfolio manager in a Fox Business exclusive.
Came all the way from Oregon to be with us thank you very much thank you for having this is of very interesting fun to us because you have extraordinarily.
High velvet ropes standards for the stocks that make it -- Let's talk about the main metrics that -- stocks have to you at least reach and touch before they're allowed to enter the door.
Well the primary one is the very first screen that we have is that in order for a company to be included in that exclusive list you talked about they have to have a 15% return on equity.
Each and every year for a minimum of ten consecutive years.
That -- and and ended in a nutshell really what that is is a manifestation of have a few key attributes that are common to those companies strong competitive advantages.
Real durable business models -- proven themselves.
Fortress like balance sheets that really have a lot of straight behind them.
And also a huge amount of free cash flow generated just -- -- -- cash -- got to be crucial it absolutely is critical week you know are we obviously is a calculation based on earnings but what we're ultimately going to be looking for is how much -- -- -- can generate.
And if they can generate cash.
At a level that's a better -- -- return level it's above their cost of capital now you have compound in -- opportunities.
The compound in wealth because -- they're going to invest B they're going to be solid in times of trouble and see they might increase their dividends kind of ideas in my all of those things.
Really concurrently so you see the organic growth opportunity you see the acquisitions.
You see share buybacks if the stock is a price to correctly and you see dividends and -- you have enough cash -- -- really do all of them concurrently -- really.
So now everybody knows how hard it is to get into this fund only 29.
Have made it in out of more than 5000 publicly traded here in North America so.
Let's talk about some of these and if you look at the list you know -- but two of them by the way are hitting all time highs right now and that's three -- and United Technologies but there's oracle.
Pepsi Procter & Gamble Abbott labs Colgate-Palmolive Microsoft that the list goes on Microsoft's surprise me a little bit because.
You know the return on that stock in particular.
Has disappointed some people there waiting for big break out and never seemed calm I think one of things you have with Microsoft as a company that's very very cheap relative to what it actually produces when you look inside the company and the opportunities it has.
Particularly is an enterprise software company I think a lot of people think of it.
Primarily in its competition with apple where it's more about the consumer side when it's about the enterprise side they have true dominance that still exists today so.
Let me just quickly ask you about the market conditions right now we have healthy market conditions we keep hitting record after record do you built into the fund some type of protection for.
The big follow -- Charlie Gasparino Jamie -- they're all talking about.
How well at some point QE from the Federal Reserve made -- break the bond market and in turn -- cause some type of sell off.
And I think the key there is that -- it's the QB that has really been a big driver of a lot of the returns when you look at them from the Fed's buying.
When you look at the -- they seem to be very much and mirrored in line with each other.
The challenges is when that stops.
Do you have the types of fundamentals in your portfolio or in your business that can withstand that and be sort of an all weather performance that can be there no matter what.
That's what these kinds of companies do.
A quick mention.
Of all things always look at the fees that these guys charge Eric yours is below 1% which is considered very fair minimum.
If you want to get into the fund is 2500.
Ticker symbol JE NSX.
Great to have you here thank you welcome to New York for Morgan.
Not Oregon organ that's right thank you Eric -- Stein is -- quality growth fund co portfolio manager only 29 stocks make it -- --
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