Three family-run businesses to buy now
Family-owned and run businesses really come into their own after sharp sell-offs, says professional investor Adam Johnson of Pictet Asset Management. Here he picks three of his favourites to buy now.
The real value of families becomes apparent in a crisis. The same applies to family-owned and run businesses. Our analysis shows that while they do well over the long term – between 2007 and June 2020 they outperformed the MSCI All Country World index by 56% – they really come into their own after sharp sell-offs, such as the one triggered by Covid-19 this spring.
Research shows that family firms are not only more profitable, but also outperform non-family owned companies. The source of this resilience is an emphasis on quality, growth and profitability. These firms tend to have lower leverage and consequently stronger balance sheets, something investors welcome during turbulent times.
A leader in luxury goods
These strengths reflect family owners’ priorities. First-generation companies tend to retain the founder’s drive, entrepreneurial spirit and ambition. But there is also a deep sense of stewardship from the first generation onward.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
This encourages a long-term approach. Of course, there are potential pitfalls too, not least risks to corporate governance that can be posed by a dominant shareholder.
We evaluate companies’ governance according to our customised metrics. A particularly high-scoring company, and one we invest in, is Hermès (Paris: RMS), the luxury goods firm. Hermès’s long-term vision and identity is fiercely protected by the family.
The focus is on quality, maintaining iconic status and resisting quick wins. The result is a stable, very profitable industry-leading company with plenty of cash to tide it over through crises such as the Covid-19 pandemic.
Delivering food with driverless cars
Roughly half of the firms we invest in have been family-held for several generations. The other half are still managed by their founders. One of these is our fifth-largest holding, Meituan-Dianping (Hong Kong: 3690), a leading Chinese online-shopping and services platform.
Co-founder and major shareholder Wang Xing has impressed analysts with his entrepreneurial drive. He has a particular gift for identifying new niches and disrupting existing businesses.
He demonstrated it during the height of the Covid-19 crisis and lockdown, when he managed to maintain grocery deliveries in Beijing by introducing an unmanned service in which driverless vehicles brought people their orders.
A second-generation winner
Another company in our top ten is CGI (Toronto: GIB.A), one of the world’s largest IT and business-consulting services firms. Catering to both commercial and government clients, it is now in its second generation of family ownership. One of CGI’s key successes has been integrating acquisitions, thanks to its commitment to capturing the loyalty of its employees.
Our portfolio is very different from standard global-equity indices. North American companies comprise less than 40%, with about as much in European investments. We hold between 40 and 60 companies. Our stocks are cash-rich and boast higher returns on equity, a key gauge of profitability, than the market average. And though we pay a premium based on price/earnings ratios, the valuations look very attractive once their growth potential is factored in.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Adam Johnson is a product specialist at Pictet Asset Management's Pictet Family.
-
Half of UK homeowners will need to tap housing wealth to pay for retirement
Unlocking property wealth could inject £21 billion each year into UK economy by 2040, according to new research
-
When will M&S take online orders again?
Shoppers have not been able to place orders on the M&S website for more than two weeks, following a cyberattack. Meanwhile, the retailer’s share price has plummeted by 15%. When will things get back to normal?
-
Who will be the next Warren Buffett?
Opinion There won’t be another Warren Buffett. Times have changed, and the opportunities are no longer there, says Matthew Lynn.
-
Will Comstock crash – or soar?
Opinion The upside for Comstock, a solar panel-recycling and biomass-refining group, dwarfs the downside, says Dominic Frisby.
-
'As AGMs go digital, firms must offer a new form of scrutiny for shareholders'
Opinion Technology has rendered big AGM meet-ups obsolete, but the board still needs to be held to account, says Matthew Lynn
-
Unilever braces for inflation amid tariff uncertainty – what does it mean for investors?
Consumer-goods giant Unilever has made steady progress simplifying its operations. Will tariffs now cause turbulence?
-
'Technology will determine tomorrow’s top stocks in emerging markets'
Opinion John Citron, investment manager of the JPMorgan Emerging Markets Investment Trust, tells us where he’d put his money
-
Two ways to tap into monopoly profits from airports
Most investors can’t get their hands on airports. Here are two ways you can
-
Three British mid-caps that could make 'attractive' investments
Opinion Charles Luke, manager of the Murray Income Trust, highlights three UK-listed mid-cap companies, as he tells us where he'd put his money
-
Fat profits: should you invest in weight-loss drugs?
The latest weight-loss treatments could transform public health and the world economy. Should you invest?