May 9, 2022 • 4M

What Drives Total Shareholder Return

When we think about maximizing returns, what exactly should we be looking for?

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Paul Cerro
A weekly chart breaking down key data into simple, easy-to-digest insights.
Episode details

TSR Drivers (as % of TSR)

Source: Alta Fox Capital “Makings of a Multibagger”.

I came across a deck made by Conor Hayley over at Alta Fox Capital which breaks down in a detailed 645-page report about what drives Total Shareholder Return for 104 companies he analyzed. Considering its length, I took one chart (above) that highlighted the three key drivers that data has shown to produce outsized returns and his commentary below.

  • On average, EBITDA growth contributed 59.82% of TSR and multiple expansion contributed 44.78% of TSR.

  • However, the medians tell a different story: EBITDA growth contributed 33.65% of TSR and multiple expansion contributed 65.71% of TSR.

  • In general, multiple expansion and EBITDA growth played a roughly even role in driving TSR.

  • Dividends seldom made a major impact and only drove >10% of TSR for 2 companies.

  • Multiples contracted for 11 companies which muted TSR.

If you belive this information is useful (I do), I’d suggest taking a look at the full presentation below when you have a massive amount of time to focus on it.

Conclusion+deck +makings+of+a+multibagger+ +final Compressed
10.3MB ∙ PDF file

Until next time,

Cedar Grove Capital

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Disclosure: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. This article is not meant to be taken as investment advice and you should do your own due diligence prior to taking any action.