Yesterday I shared some timeless investing wisdom from Agora Inc.’s all-time best performing stock analyst, Chris Mayer. (Agora is PBRG’s parent company.)

Today Chris shares one key factor he uses to find companies that beat the market…

From Chris Mayer, chief investment strategist, Bonner Private Portfolio: Peter Stormonth Darling may be the greatest investor you’ve never heard of…

During his impressive career as an asset manager, he came to know a number of wealthy people, some of whom were also shrewd investors. He studied them, trying to discover their methods.

Darling had some interesting thoughts on the decline of investment bank S.G. Warburg & Co. One reason is worth sharing here: The insiders at Warburg didn’t own much stock.

While its executives were granted share options, their combined ownership of the firm was only about 1%. They seldom behaved like owners…

This theme is threaded throughout Darling’s memoir. He says it’s common knowledge that people work more effectively if they have “a meaningful stake” in what they do.

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They may not work much harder, but they care about profits and the value of the business. They even start saving paper clips and turning off the lights when they leave the office.

It’s amazing to me how many investors and advisers never bother to look at management’s stake. There’s plenty of research that shows stocks with high ownership outperform. It’s common sense.

One study found CEOs who voluntarily hold at least a 5% ownership stake outperform the market by 10% annually.

How much do insiders of the companies in your portfolio own?

Reeves’ Note: If you’d like to know more about Chris’ investment research—which provided a 17% annual return to his subscribers for over a decade—click here.