Companies with 9% return on equity are good bets: Kenneth Andrade

We need to know what is the end case and we are always wrong with it (laughs). But our growth numbers are dynamic, always aligned with industry growth and not what most management talks about. We do not build in the surprise element.

Search horizon and valuations

Banks, not in this cycle. Technology, yes we like a few companies. We have expanded our universe of looking at pharmaceuticals. I want low valuations and I want cash flows.

Bullseye — 9% RoE

I like to buy companies that are making profits. I define companies that are making profits as the ones that are making 9 percent return on equity (RoE). Even if it making 9 percent RoE, it is a good business, especially at a time when the rest are losing within that vertical. Because when the cycle turns they are the first off the block.

Balancesheet & leveraged companies

I need to be very focused on seeing that everything is right and the balance sheet is not deteriorating. Balance sheet deterioration is the last thing that I can stand. So, we manage business which we know goes through cycles. But in every cycle, the company has to come out on the top. That’s a good company for us.

But if a company is leveraged it cannot come on the top, then it carries a lot of financial risks. Because on the down cycle the leverage hits it.