Edmund Harriss serves as an Investment Director, Fund Manager and Director of Guinness Atkinson Asset Management Inc. as well as a Portfolio Manager of the Asia Pacific Dividend Builder Fund (MUTF:GAADX). His investment criteria screens thousands of stocks for those that consistently generate above average returns and dividends. He details this process in his exclusive interview with the Wall Street Transcript.
“We require a company to have generated a return on capital that has been above the cost of capital for at least eight consecutive years…A company that has generated a return on capital above the cost of capital for eight consecutive years has a 90% probability that it will do so the following year and a 73% probability it will do so in three years’ time.”
Further, the companies selected for Mr. Harriss’ portfolio must “…all companies that we invest in have to pay a meaningful dividend. They have to have a dividend yield at the time of purchase of at least 2%, and what we are looking for are companies, therefore, that demonstrate the quality in terms of these returns on capital, which will drive profitability…They are undervalued by the market, which will give you the expectation of capital growth. ”
The portfolio manager details his investment process for a variety of holdings in this interview. “The third stock that interests me is a company called TISCO Financial (BKK:TISCO) in Thailand. They are a financing company that focuses on providing higher-purchase finance for scooters and cars…Their offices are not particularly flashy, and they are a bit down-at-heel in fact. It is not particularly well thought of as a high-quality brand, but that is just a reminder that as an investor you can get distracted between what is shiny and glossy and what actually is a value creator.”