One of the flagship principles of our investment process is an investment in intangible capital should be treated the same from an accounting standpoint as an investment in physical capital . Said differently, we are firm believers in the symmetry principle for capital accounting.
We have developed two indexes that are designed to track the world’s leading innovators based on our proprietary intangible-adjusted data We have a developed markets knowledge leader index and an emerging markets knowledge leader index. Both indexes are equal-weighted and are rebalanced twice a year (April and October).
Our good friend Jeff Saut from Raymond James highlighted our favorite topic in his daily ”Morning Tack” today. That topic of course is intangible capital! Our focus in Denver is finding companies that invest and create large reservoirs of intangible capital in order to deliver sustainable, growing earnings in the future.
2015 has so far thrown investors some curve balls in just three short weeks. Fortunately, one trend has remained firmly intact this year which is the outperformance of global Knowledge Leaders.
Autodesk (Ticker: ADSK) is a design software and services company that serves customers in various fields ranging from architecture, engineering, construction, manufacturing, digital media and entertainment. We think there is a positive case to be made for Autodesk in 2015, especially when one properly accounts for their vast intangible capital reservoir on their balance sheet.
GaveKal Capital’s Steve Vannelli discusses the GaveKal Knowledge Leaders Emerging Markets Index, explaining how stocks are selected for inclusion in the index and providing a new performance update.
As we never tire of saying, we believe that companies that continually invest in knowledge-intensive activities such as research and development and have deep reservoirs of intangible capital on its balance sheet are structurally misunderstood and undervalued in the financial community.
For most investors, investments in research and development (R&D) and investments in other intangible assets such as brand building, employee training and codified information are overlooked and misunderstood. Current business accounting standards contribute to this misunderstanding by treating intangible investments as current period expenses rather than as the capital investments they truly are.
We have introduced our knowledge leader concept to our readers over the past few weeks (click here, here, here and here for more information). Today, we thought we would check in on how knowledge leaders (i.e. leading, innovative firms with a deep intangible capital reservoir) have done relative to knowledge followers (i.e.
Firm Launches First Strategic Beta-Style Index Family to Track World’s Leading Innovators DENVER, Colo., September 17, 2014 – GaveKal Capital today introduced the GaveKal Knowledge Leaders Indexes, the first family of indexes designed to track the world’s leading innovators.