Exploring the family effect

September 30, 1991

How do family-controlled firms stack up against the market? At the
Pitcairn group's request, Wharton professor Peter Davis identified
and analyzed a broad sample of companies with at least 10% family
ownership over the 20 years to 1990. The resulting index of 165
stocks gained an eye-popping 27-fold, while the S&P 500 rose only
sevenfold. Then Davis culled the list to 32 stocks that best fit the
Pitcairn ideal: high family ownership, superior return on equity, low
debt and little or no dividends in order to preserve capital for
reinvestment. The 32 standouts produced an embarrassment of riches --
up 46- fold over 20 years.

HOLE YARDS PAR R1 R2 R3 R4
OUT
HOLE YARDS PAR R1 R2 R3 R4
IN
Eagle (-2)
Birdie (-1)
Bogey (+1)
Double Bogey (+2)