Value Creation Awards 2022

Value Square |Posted 16 May 2022 by Pascal Cornelis

VALUE CREATION AWARDS 2022

VALUE CREATION AWARDS 2011-2021

Every year since 2007, Value Square has calculated the fundamental value creation over the past ten years of all Belgian companies that have also been listed on the stock market for at least ten years. Their performance is compared with that of Berkshire Hathaway, Warren Buffett's investment vehicle. Over the period from the end of 1964 to the end of 2021 - Buffett was able to increase the book value of his holding by an astronomical rate of 1,762,634% (in USD) or 18.71% per year and for 57 years. This more than beats the S&P 500 return index, which rose "only" by 30,209%, giving a return of 10.5% per year. Since 1964, Berkshire Hathaway's stock price rose 3,641,613% or 20.1% per year.

Methodologie

The evolution of the book value is a good indicator of the evolution of the intrinsic or "real" value. In our study we assess the fundamental value creation using the following formula: we calculate the evolution of the book value per share (at the end of 2021 compared to the end of 2011) and add to this the net dividends received by a private shareholder over the past 10 years. The book value per share is obtained by dividing the consolidated equity (Group share) by the number of shares at the end of the year (excluding treasury shares). Furthermore, we make adjustments for capital increases at prices above book value (of the fiscal year preceding the capital increase).

This type of analysis of the fundamental economic performance over at least 10 years is also one of the pillars on which Value Square assesses the quality and risks of all the listed companies that it follows.

This fundamental analysis approach is independent of the evolution of stock market prices, which a manager cannot influence. The track record of managers is therefore better evaluated by the evolution of the fundamental figures. In the short term, stock prices are strongly influenced by emotions. In the long term, of course, stock prices must follow the evolution of the underlying fundamental value or preferably even exceed it, as is the case with Berkshire Hathaway.

For the eighth consecutive year, Value Square is awarding awards to the three highest scoring companies in this study and management is being rewarded with a gold, silver and bronze "Value Creation Award". Due to the corona pandemic, the annual physical event of the "Value Creation Awards" could not take place in 2020 and 2021. This year we are pleased to announce that the event will take place on Monday 16 May 2022 at the Handelsbeurs, Kouter, Ghent.