With $21.7 billion in assets under management, this recommended investment firm’s disciplined and conservative investment process has reliably delivered solid performance for more than two decades, explains Ingrid Hendershot, editor of Hendershot Investments.
Westwood Holdings Group (WHG) provides services to institutional investors and private wealth clients.
The firm offers a range of investment strategies including US equities, MLPs, multi-Asset, global, and emerging markets portfolios provides services to institutional investors and private wealth clients.
Westwood’s retired founder, Susan Byrne, instilled a value-oriented approach at the firm focused on achieving superior, risk-adjusted returns by investing in companies generating high levels of free cash flow with strong balance sheets and improving returns on equity.
This investment approach is designed to preserve capital during unfavorable periods and provide superior real returns over the long-term.
Despite a challenging stock market environment, Westwood has generated strong growth over the last five years. Sales have compounded at a 20% annual rate with net income growing even faster at a 26% compounded annual growth rate.
Assets under management (AUM) have steadily grown from $12.5 billion at the end of 2010 to a record $21.7 billion as of March 31, 2015.
Westwood’s operations are highly profitable with net profit margins averaging 20% during the last five years. The business also generates high levels of free cash flow, as capital expenditures are minimal.
Since going public in 2002, the company has paid more than $100 million in dividends, nearly two times the company’s initial market capitalization.
In 2015, Westwood increased its dividend 14% to $2.00 per share, providing investors with a generous 3.5% dividend yield based on the current stock price.
Equity-based compensation is a critical part of the company’s compensation program which attracts and retains talented individuals and aligns employees’ interests with clients and shareholders.
Over 25% of Westwood’s employees have been with the firm for over ten years, reflecting their commitment to the firm and their clients. With every employee an owner of the company, Westwood employees and directors own 25% of the company’s stock.
Other large owners of Westwood include GAMCO Investors with a 7.5% stake and Royce & Associates which owns 9.1%. These investment groups share Westwood’s value-oriented approach, as we do.
Long-term investors should consider investing in Westwood, a high-quality company with strong growth, highly profitable operations, strong free cash flows, a high dividend yield, and high insider ownership. Buy.
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