Harding Loevner believes that shares of high-quality, growing companies, purchased at reasonable prices, will provide superior risk-adjusted returns over the long term. Following this philosophy, the firm has defined four quality growth criteria that a company must exhibit before it will be considered for investment:
- Competitive Advantage: a strong position within an industry with favorable global competitive structure, as manifested by high and/or improving margins;
- Financial Strength: business-appropriate balance sheet and borrowing capacity availability, internal free cash flow generation capability;
- Quality Management: track record of successful management with a clearly articulated business strategy and a consistent regard for shareholders; and
- Sustainable Growth: prospective growth of revenues, earnings and cash flows.
This philosophy has served as the foundation for our investment strategies since the firm was established in 1989.