Forward Thinking
March 18, 2014

Predictive Attributes

Written by PenderFund

The phrase “predictive attributes” has been coined to describe a set of characteristics that a company may have that tip the odds in favour of potential outperformance.

Some attributes that we believe are potentially predictive include investing in companies that are founder-led, smaller spin offs by parent companies or companies led by management teams that utilize their cash flow to buy back shares at attractive prices and meaningfully reduce the share count over time.

Of course, the presence of such attributes does not guarantee success and does not trump the need for fundamental due diligence. However, empirical research (and common sense) has shown that correlations between such attributes and subsequent outperformance make it worthwhile to include such attributes within the investment decision-making framework.