Worldwide All Cap

Halma is a global group of companies who develop innovative safety, health and environmental technologies aimed at enhancing quality of life and protecting people and the planet. Its stated purpose is “to grow a safer, cleaner, healthier future for everyone, every day.”

In a world in which the importance of health and safety is rightly receiving increased attention, a relatively unknown UK engineering company has been quietly innovating and saving lives for more than 50 years. It has also consistently reinvested cashflows and generated compound returns for its shareholders. Since its foundation in 1972 by David Barber and Mike Arthur, Halma has combined strategic long-term vision with underlying purpose – a combination that still holds true today.

From its early years, Halma has focused on developing innovative safety solutions for industry. Not only has it gained a reputation for quality and reliability, it has also developed a distinctive business model along the way. Key to that business model is the acquisition of niche companies. Halma is a disciplined buyer, targeting well-run small-to-medium-sized companies whose technologies are helping solve some of the world’s most pressing challenges and keeping people safer, cleaner and healthier. Over 50 years on from its founding, Halma consists of nearly 50 companies and employs over 8000 people in over 20 countries.²

• In safety… businesses include Firetrace, which automatically detects and suppresses fires in high-risk equipment.
• In environmental analysis… businesses include Deep Trekker, whose cutting-edge underwater robotics make maintaining offshore wind farms easier.
• In healthcare… businesses include PeriGen, which monitors more than 600,000 births a year, tracking foetal heart rate and labour progression to provide early warnings if things start going wrong. According to the WHO, over 800 women and one million newborns die each year due to preventable causes during pregnancy and childbirth³. After the PeriGen technology was introduced into a regional hospital in central Africa, the mortality rate was reduced by more than 80%.⁴

By supporting the management of the businesses it acquires and allowing a brand to grow even after the original founder steps away, Halma has steadily built a reputation as a ‘good owner’. This has helped make it the preferred buyer for many founders. This, in turn, has supported Halma’s organic growth and given its shareholders access to the cashflows of businesses that would otherwise have remained in private hands.

Halma’s focus is on growing the market and providing value to its customers by acquiring niche companies, rather than trying to take market share from competitors. Using its internal cashflows to buy companies in areas in which it is already an expert, reduces risk and increases the chances of generating enduring returns. Over the past 20 years, it has grown its cashflows by 12% per annum and its earnings per share by 13% per annum⁵, as it continues to make good on its long-term vision.

With future growth supported by structural developments such as growing safety regulation, increasing demand for healthcare and clean water and efforts to address climate change and pollution, we see no reason why Halma’s growth can’t continue for at least another 50 years.

The chief risks facing Halma include the levels of debt on its balance sheet, a degradation of its ability to acquire good companies and the potential for product-related failures.

[1] Source: S&P Capital IQ as of 31 March 2025.

[2] https://www.halma.com/who-we-are

[3] https://www.who.int/news-room/fact-sheets/detail/maternal-mortality

[4] https://www.halma.com/our-impact/protecting-mothers-and-babies-during-childbirth

[5] Halma annual accounts between March 2004 and March 2024 as reported by FactSet.

WEG manufactures electrical products, including energy efficient motors, transformers, turbines and generators. They have production facilities in 17 countries and produce around 19 million motors every year.²

In 1961, a young electrician, mechanic and administrator founded the electric motor company to which they lent their initials: Werner Ricardo Voigt, Eggon João da Silva and Geraldo Werninghaus.

Today, WEG produces electrical products, including motors, for customer markets from industrial automation and power generation and distribution to large electric vehicles. The second generation of the three founding families are majority shareholders and the company is run by an experienced management team. The new Chief Executive Officer, Alberto Yoshikazu Kuba, is only the fourth in WEG’s history. He joined the business in 2002, aged 24 and demonstrates how much of WEG’s success comes from a culture built over 65 years.

WEG is a vertically integrated company. This means that they make every element of every product themselves, and even source packaging from their own forest. This helps them supply customers with more customised, hard-to-replace motors. Although it is less efficient than outsourcing and slows the rate that they can expand capacity, it provides a crucial advantage for WEG: it enables them to capture a larger share of the market when competitors are blocked by supply chain disruptions. WEG’s self-sufficiency is helping them supply transformers to data centres which require large amounts of electricity, while competitors face long delays building additional capacity.³

Doing more with less, under their own steam, is key to what WEG do. Vertical integration also makes WEG more efficient in their operations by helping to limit production waste. In Brazil, WEG collect and recycle older motors at the end of their life. They recycle the motors and the production scrap metal. WEG’s motors also help customers reduce their energy requirements and reduce their greenhouse gas emissions. One example of where they are used for a sustainability solution is the Kaleshwaram Lift Irrigation Project which helps address water shortages in India. WEG’s motors will help move 240 thousand million cubic feet of water over 500 kilometres into northern India.⁴ This amount is greater than the volume of Lake Michigan, one of the Great Lakes in North America.

WEG's strong focus on excellent operational processes helps it deliver steady profit levels, even with some ups and downs in sales growth. The company has a healthy cash balance, which allows it to buy raw materials when supply chains are strained and to grow by buying new companies in their international business. We are excited to see where WEG’s cautious approach and ongoing innovation take the company in the future.

Risks facing WEG include raw material prices, competition from Chinese and Indian manufacturers, and customer markets which are sensitive to economic cycles.

[1] As of 7.1.25.

[2] 2023 integrated report - https://api.mziq.com/mzfilemanager/v2/d/50c1bd3e-8ac6-42d9-884f-b9d69f690602/b96ceffc-95bf-5115-8eec-72fbc563ea72?origin=1. Production facilities as of 31.12.23; WEG in Numbers | WEG.

[3] World’s largest transformer maker warns of supply crunch’; Financial Times article, 3.11.24.

[4] WEG supply for Kaleshwaram irrigation project. 240 thousand cubic feet = 1.63 cubic miles. Lake Michigan is 1,180 cubic miles by volume: Lake Michigan: How Big Is It? - The Environmental Literacy Council. 

Founded in 1873 to make products for Sweden’s railways, Atlas Copco is a multinational provider of industrial solutions including air compressors, vacuum pumps, and tools. 70% of its sales are from outside Europe.²

Atlas Copco was named after the mythological Titan who carries the sky on his shoulders; reflecting the high levels of ambition, determination and passion that has driven this company over 151 years. Beginning with one of the three original founders of the business, André Wallenberg, Atlas Copco continues to be lead and stewarded by the Wallenberg family, and benefitted from their support during two difficult periods in the 1880s and 1930s when the business pivoted from railway products to diesel motors and, finally, air compressors.

Atlas Copco’s end markets are well-diversified, ranging from manufacturers of semiconductors, automobiles, food and beverage, and pharmaceuticals. The product portfolio is impressive, but Atlas Copco’s key innovation was the development of energy-saving variable-speed drive compressors in 1994, which are still evolving today using new software and sensors to optimise performance. The latest version saves a further 11% of carbon emissions compared to their predecessors, and as much as 90% of the energy used can be recovered for use in heating or steam.³ Further innovations in dry air compressors – critical in the manufacture of electronics – illustrate the rewards of Atlas Copco’s sustained research and development (R&D) spending, which was 4% of sales in 2023.⁴

As innovative as Atlas Copco’s new products are, their closeness to customers allows them to seize the opportunity of finding new applications for existing products such as the use of an oil-free air compressor to create ‘bubble curtains’ around offshore wind developments. This reduces underwater noise by over 90% to protect marine wildlife.⁵

Much of Atlas Copco’s innovation has been spurred by the way the business is structured into divisions and smaller business units, which are entrusted to make their own decisions and take accountability for their own financials and customer engagement. An internal job market and strong encouragement of internal career mobility – including internationally – has built a strong culture, whether employees are based in Stockholm or Manila. An example of this is the number of years that Chief Executive Officer, Vagner Rego (25 years) and Chief Financial Officer, Peter Kinnart (31 years) have worked at the company.

With an efficient business model and outsourced manufacturing, Atlas Copco’s income is stabilised by regular and repeated servicing and repair and maintenance revenues. External growth from new technologies should complement internal growth opportunities within industrial electrification and digitalisation, setting Atlas Copco up for another 150 years.

Atlas Copco faces the risk that worsening macroeconomic conditions may reduce customer budgets and spending. There is also the risk of intensifying competition from Chinese companies.

1 As of 19.9.24.

2 CapIQ.

3 No waste - low emissons - Atlas Copco Group

4 Keeping it dry - Atlas Copco Group. R&D spend – S&P Capital IQ.

5 Oil-free bubble curtains protecting marine life - Atlas Copco UK.

Founded in 1896 by Fritz Hoffman-La Roche, Roche is a multi-national healthcare company that produces pharmaceutical drugs and diagnostic equipment and reagents which are used to detect diseases and medical conditions. In 2023, its medicines treated 22 million patients worldwide and its diagnostic systems produced 29 billion test results.¹

One hundred and thirty years on from its foundation, Roche continually finds new ways to meet patient needs. The ownership of the Hoffman and Oeri families empowers Roche to pursue decade-long opportunities; that Roche has had just seven CEOs in 125 years is testament to their long-term outlook.

Roche is industry-leading in its research & development (R&D) spend at 26% of pharmaceutical sales – almost USD15 billion²– and has produced blockbuster drugs in areas as diverse as neurology, oncology, and immunology. Their multiple sclerosis drug Ocrevus, for example, has over 25% share of the market in the United States³ and a recent formula adaptation now allows treatment by injection rather than the original 4-hour infusion. This is important for saving patient and healthcare professionals’ time.⁴ Roche’s continued investment in drug development has built a diversified pipeline of over 100 drugs, with nine in final phase testing⁵. Roche is also open to finding new ways of developing treatments. Their gene therapy subsidiary, Genentech, has partnered with Nvidia to use artificial intelligence (AI) to maximise drug discovery opportunities from Roche’s extensive datasets.⁶

The pharmaceutical business has been strengthened by Roche’s market-leading diagnostics segment, which generates consistent income from the sale of consumables (such as testing kits) as well as equipment. Roche currently offers 600 tests and plans to launch a further 40 each year⁷. Long-term structural health trends guide investment and development and their new, automated mass spectrometry systems (measuring the characteristics of chemical samples) should enable laboratories to perform more sensitive tests without hiring highly specialised technicians to operate complex machinery. Similarly, Roche has pioneered one of the first regulatory-approved⁸, self-administered cervical swabs to address the low uptake of cervical cancer screening. This innovative solution will hopefully reduce the 4,000 annual, preventable deaths from cervical cancer in the United States, and many thousands more in middle- and low-income countries.⁹

Roche’s true opportunity lies at the intersection of its unique expertise across diagnostics, data, and drug development: personalised medicine, enabling earlier detection of illness, individualised treatment, and better patient monitoring. With its consistently strong finances and cash flows (the movement of money into and out of a business) we believe Roche is ready to seize the opportunity.

Roche faces the risk of failures within its drug pipeline, although its extent and diversification, as well as the diagnostics segment, should cushion the impact of any one failure. Similarly, technological disruption could affect Roche’s business, despite its strong position in R&D investment. 

1 Roche factsheet, 2023

2 Source: Stewart Investors investment team and company data

3 Source: Stewart Investors investment team and company data

4 Subcutaneous Ocrevus gets approval in EU for forms of MS (multiplesclerosisnewstoday.com).

5 Source: Stewart Investors investment team and company data

6 Genentech and NVIDIA Enter Into Strategic AI Research Collaboration to Accelerate Drug Discovery and Development | Business Wire

7 Source: Stewart Investors investment team and company data

8 Approved in the United States by the Food and Drug Administration (FDA)

9 Press release by Roche on cervical swab approval, 2024