Uncovering High Quality Global Companies

GEORGE WYPER: It's really not geographic specific. It is all across the globe you can find a company like Straumann in Switzerland that's one of the world's leading dental implant and tooth and dentistry companies. About half of their business is done in Europe. The other half of the business is principally done in Asia and the United States. And they are state of the art in terms of dental implant business around the world. And if you think about it, with the aging population in a lot of the Western countries and even in the emerging countries, a lot of those citizens need tooth work as they get older. Another company that kind of fits that bill is a company in Germany called Fielmann. And they have roughly 700 eyeglass stores in Germany which they're now taking into Switzerland and Austria and Eastern Europe. And what they've very cleverly done is they are state of the art on lenses and frames, they have optometrists in the offices, each of their 700 stores, they have a Fielmann University where they train 3,000 people a year to go out to their stores and expand their stores. And what they've done which is particularly clever is in a number of their stores recognizing that people wear glasses as they get older, they have put in little stores within the store for hearing aids. So as the population gets older and they need more eyewear, they go in and they can also get their hearing aids as well. And that's a very clever business. So you can also go to Brazil and find a company like Grendene. Brazil, as you probably know, is the third largest footwear nation in the world. China and India produce about 1-1/2 billon and 1.2 billion pieces of footwear per year. And Brazil produces about 900 million. Grendene is the leading footwear company in Brazil. And their principal footwear are sandals. If you go to the beach, you probably wear Grendene sandals in the United States. So it's not by any means a geographic phenomenon where you find very interesting little companies that are meeting their domestic populations. But also the global populations. You can also go to China and find a company like Espirit which is a clothing retailer, very strong throughout Europe. You can go down Fifth Avenue here in New York and see an Espirit store. Very high quality fashion. But this company originates in China. Again, all of these companies meet the Royce metrics of clean balance sheets, a high return on capital. Many of them in fact from a return of capital standpoint which is important to us as investors have very high dividend to payout ratios because often you'll find these little companies that are leading edge technology around the world and whatever field they're in, often still have a very strong family ownership component from their early days. And so those families are very interested in high dividends and high dividend payout ratios.