Hawaiian Electric Industries (HE) has geographical protection against new competitors, being located in Hawaii, away from continental U.S. competition, says Paul Sutherland, President of Financial & Investment Management Group.
“We like moats around the business. We like businesses that have theoretical moats. A good example is Hawaiian Electric. A utility company in California cannot come compete with Hawaiian Electric. They’ve got this Pacific Ocean that makes it hard to get their electricity here. So that’s a simple example of a moat,” Sutherland said.
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Sutherland looks for companies with good balance sheets that are not highly leveraged as part of his values-driven approach to investing, as a way to maintain financial flexibility. He also looks for yield and growth, even if slow.
“We are attracted to more conservative, straightforward accounting policies. We like companies that tend to pay dividends, we like dividends — we think that we’re going to have a very slow-growth economy going forward, and we think interest rates will stay low for quite a while, and so we do believe that dividends make sense. You want companies that have really good significant cash flow,” Sutherland said.
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