Why you should consider founder-led firms for your portfolio

Founder-led firms tend to outperform. Dr Mike Tubbs explains why and surveys the world’s equity markets to gauge which ones currently look the most appealing

Founder-led firms business leaders meeting in board room
(Image credit: Getty Images)

Companies managed by their founders are often better investments than those managed by newcomers for three reasons. First, the founder usually has a substantial stake, so their personal wealth rises with the firm’s success. Second, the founder is an entrepreneur and likely to be good at spotting business opportunities. Third, as far as science and technology-based firms are concerned, the founder will hold the key patents and will defend them strongly, thus enabling the company to expand without larger competitors grabbing market share. The following examples illustrate these points.

Golden era of founder-led firms 

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Dr Mike Tubbs

Highly qualified (BSc PhD CPhys FInstP MIoD) expert in R&D management, business improvement and investment analysis, Dr Mike Tubbs worked for decades on the 'inside' of corporate giants such as Xerox, Battelle and Lucas. Working in the research and development departments, he learnt what became the key to his investing; knowledge which gave him a unique perspective on the stock markets.

Dr Tubbs went on to create the R&D Scorecard which was presented annually to the Department of Trade & Industry and the European Commission. It was a guide for European businesses on how to improve prospects using correctly applied research and development. He has been a contributor to MoneyWeek for many years, with a particular focus on R&D-driven growth companies.