NDTV World Summit: Mark Mobius' Three Key Focus Areas—Earnings, Return On Capital, Management Quality
Mark Mobius said that emerging markets and emerging countries are important as all big organisations have realised that free enterprise is required to make countries rich.
Ace investor Mark Mobius, while sharing his three key focus areas for investing, said he looks at earnings' growth of companies, along with the return on capital invested and the quality of management.
The 88-year-old, who is the founder of Mobius Capital Partners LLP, said he has stopped looking at P/E or the price-to-earnings ratio as a key metric. "This is because the E of P/E is backward looking. I realised that this is not a good metric," he said, while speaking at the NDTV World Summit on Monday.
"The metric I look at now, which is very important, is return on capital," said Mobius. This metric is crucial as a higher return on capital usually translates into lower debt to equity.
Looking at the earnings growth of the company is also very important, Mobius added, during the interaction with market veteran Ramesh Damani.
"But, probably, the most important element is the quality of management. This is why I travel so much. I look at the management and their way of working closely...Because if you don't look at the management quality, you can be misled," Mobius said.
On being asked by Damani about his investment advice to his younger self, Mobius said, "Don't be in a rush, and study carefully". One has to "listen to the market", he added.
Mobius, a veteran fund manager, believes that emerging markets and emerging countries are "important as all big organisations have realised that free enterprise is required to make countries rich".
Emerging markets are currently growing at double the pace as compared to developed markets, he said, while pointing towards the achievement logged by India in recent years.
Mobius also sounded bullish on India's semiconductor industry, claiming that the country is poised to become "one of the leaders" in this space. The biggest reason behind this prediction is demand, he said. "The second reason is that it is a relatively open economy; and third is that India already has a robust software ecosystem."
