Loblaw Companies is one of 43 large, successful family run companies in Canada that National Bank says outperform the S&P TSX composite index.
The bank looked at Loblaw and a number of other companies, such as Bombardier, Rogers and Shopify and found that they achieved an absolute return rate of 206 per cent over the last 13 years, from June 2005 to June of this year. That’s significantly ahead of the 133 per cent total return over the same period.
The “2018 Family Advantage” report, the bank's analysis of companies including Bombardier Inc., Loblaw Companies Ltd., Rogers Communications Inc. and Shopify Inc. says the businesses have achieved an absolute return rate of 206 per cent over the last 13 years, between June 2005 and June 2018. That’s much higher than the 133 per cent S&P TSX composite total return over the same period.
The study also says returns for the family run companies were about nine per cent on an annualized basis, compared to 6.7 per cent for the S&P TSX composite total return index.
The bank's conclusions are based on an analysis of companies where a founding family or founder controls 10 per cent or more voting rights or an individual and related entities with ownership controls 33.3 per cent or more of voting rights.
Some key advantages leading family run companies to outperform include a focus on sustainable long term profitability versus short term results and a strong corporate culture driven by family values. That corporate culture includes intangibles such as the values of the founders: entrepreneurship, vision, work ethic, commitment to the communities in which they are involved, personal relationships with stakeholders across the value chain, loyalty and concern for reputation. Preserving the uniqueness of their culture, for instance by avoiding a one size fits all governance model, is also highlighted as a key success factor.