Cedar Grove Capital Management
Chart of the Week
What Drives Total Shareholder Return

What Drives Total Shareholder Return

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

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.
Cedar Grove Capital Management
Chart of the Week
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Paul Cerro