FindingSAVNG Research · September 10, 2026

Ranking companies as equity bonds: the top fifth beats the bottom fifth by a wide margin

The claim. If you had bought the fifth of companies with the highest ten-year owner-earnings return each year from 2011 to 2025, held a year, and repeated, you would have beaten the S&P 500 by +0.4 pts a year on average (indistinguishable from luck), and beaten the bottom fifth by +1.4 pts. Over three years the gap was −1.6 pts a year. Measured on 13,036 company-years, prices taken the first close after each annual report.

Treat each company as a bond whose coupon is its owner earnings, growing at a capped rate, and rank the universe by the ten-year return that implies. The top fifth beat the bottom fifth by about eight points a year.

How we tested it
  • Universe: 2,125 U.S. companies with ten-plus years of prices; banks, insurers and REITs excluded by SIC (no owner-earnings coupon).
  • Point in time: at each annual report's filing date we computed the coupon (three-year average of operating cash flow − capex − stock compensation, per diluted share), the yield at the next close, and a five-year revenue growth rate capped between −5% and +15%, using only filings available that day. Later restatements were never used earlier than they were filed.
  • Return: a ten-year internal rate of return with five years at that growth, fading to 2.5% by year ten, sold at fifteen times year-ten owner earnings. Companies ranked into fifths within each filing year.
  • Outcome: total return over the next twelve and thirty-six months minus the S&P 500, using split- and dividend-adjusted prices.
  • Limits: the universe is survivorship-tilted and small-cap, so the levels run negative; the spread between rows is the finding. No costs deducted.
Reproduce: node savng-insider-history/owner-yield-study.js → reports/owner-yield-study.json (generated 2026-09-14); served at /owner-yield-study.
The picture
IRR Q1 lowest−1.0 pts n 2,614IRR Q2−2.4 pts n 2,607IRR Q3+0.2 pts n 2,607IRR Q4−0.5 pts n 2,607IRR Q5 highest+0.4 pts n 2,601

Average twelve-month return minus the S&P 500, in percentage points.

Does it apply to your sector?
SectorCompany-yearsTop fifth, 12 moBottom fifth, 12 moTop − bottomTop fifth, 3 yrs/yrRead
Industrials & manufacturing3,598+0.2 pts n 508−3.0 pts n 763+3.2 pts−18.7 ptsSorts weakly
Services1,353+0.6 pts n 310−6.2 pts n 197+6.8 pts−18.6 ptsSorts well
Retail & consumer1,256+7.4 pts n 272+11.9 pts n 213−4.6 pts−21.5 ptsDoes not sort
Tech hardware & semis1,207+0.7 pts n 127+10.4 pts n 320−9.8 pts−10.5 ptsDoes not sort
Software & IT services957+6.0 pts n 87−3.6 pts n 301+9.6 pts−3.7 ptsSorts well
Other799+1.4 pts n 235−0.1 pts n 95+1.5 pts−18.4 ptsSorts weakly
Finance & real estate670+1.1 pts n 234−7.1 pts n 68+8.2 pts−8.6 ptsSorts well
Biotech & pharma609−2.5 pts n 132−0.6 pts n 124−1.9 pts−23.1 ptsDoes not sort
Energy574−14.1 pts n 335−24.6 pts n 61+10.5 pts−39.4 ptsSorts well
Medical devices458+8.6 pts n 18−2.1 pts n 160+10.7 pts−1.5 ptsToo few to say
Food, drink & tobacco365−11.5 pts n 40−9.6 pts n 70−1.9 pts−17.1 ptsDoes not sort
Utilities290−0.6 pts n 73−6.1 pts n 85+5.5 pts+0.3 ptsSorts well
Transport & logistics287+10.6 pts n 75+0.4 pts n 57+10.3 pts+1.1 ptsSorts well
Construction228+31.4 pts n 47−5.8 pts n 33+37.1 pts+17.0 ptsSorts well
Telecom & media195−6.1 pts n 71+6.4 pts n 34−12.5 pts−29.0 ptsDoes not sort
Healthcare services154+32.2 pts n 30−6.2 pts n 25+38.4 pts−6.5 ptsSorts well

Sectors with fewer than 150 company-years are omitted. "Sorts well" means the top fifth beat the bottom fifth by four points or more over the next year.

Where it applies today

Companies in the deep band today (ten-year owner-earnings return 10 to 30 points over the 5.00% Treasury, yield at or under 25%, $2B+ market cap):

WU Western Union COTechnology · yield 24.3% · IRR 35.0%OWL BLUE OWL CAPITAL INC.Financial Services · yield 14.4% · IRR 33.7%CALM CAL-MAINE FOODS INCBasic Materials · yield 19.2% · IRR 33.5%SKYW SKYWEST INCIndustrials · yield 19.1% · IRR 33.4%TRN TRINITY INDUSTRIES INCConsumer Cyclical · yield 15.4% · IRR 33.2%FISV FISERV INCTechnology · yield 15.5% · IRR 32.9%
Full list, deep band →Every stock on this axisThe backtest in full
Where it does not apply
The lens fails in tech hardware and biotech, where the coupon is not the story. It sorts steady compounders far better than fast growers.

SAVNG is an educational research publication, not a Registered Investment Adviser. Everything here is general-circulation information produced by an automated pipeline — the same for every reader — and is not personalized investment advice, an offer, or a recommendation to buy or sell any security. Any performance figure is hypothetical; past performance does not predict future results. Details.

Published by SAVNG Research. Every figure on this page is read from the study data at render time; if the study changes, the page changes with it.

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