Highly innovative companies outperformed again in May, continuing a streak that has been going on for quite awhile now. Whether in the developed markets or emerging markets, Knowledge Leaders have outperformed the broad DM and EM benchmarks over the last month, quarter, YTD, 1-year and since the inception of our Gavekal Knowledge Leaders Indexes. In […]
In our white paper “The Knowledge Effect: Excess Returns Of Highly Innovative Companies”, we identified a stock market pricing anomaly in highly innovative companies. The tendency of stocks of highly innovative companies to experience excess returns can be traced back to two main factors: A surge in the pace of knowledge produced catalyzed by the […]
In a new white paper released today, we identify a stock market anomaly. The Knowledge Effect is the tendency of highly innovative companies to deliver excess returns for investors. Academic researchers first discovered an association between a firm’s knowledge capital and its stock performance. Our research and index results suggest there is an opportunity for […]
The most innovative companies in the world tend to exhibit two highly desirable characteristics: high return on invested capital (ROIC) and low long-term debt as a percentage of total capital. There are fundamental reasons for these characteristics. First, innovative companies are very profitable because they invest heavily in an knowledge, or intangible, investments such as […]
The trend toward knowledge investments and away from traditional investments in fixed assets such as equipment and structures continued in the 1Q in the US. Investment in intangible property products now account 4.1% of GDP.
After our recent call, we received an insightful question about how we view research and development (R&D) because surely not all R&D is productive and profitable?
Most of our readers are familiar with our process that seeks to identify what we refer to as Knowledge Leaders or, quite simply, companies that consistently invest in knowledge-intensive activities such as research & development, advertising, and employee training.
When going through out point and figure charts, we sometimes come across a chart formation that we colloquially refer to as a ”moonshot”. A ”moonshot” is when a chart has been in a basing formation or in a trading range for some time and then strongly bursts out of it to the upside.
One the primary reasons we adjust financial statements to include intangible assets is have a more realistic lens to view every company with. Investment in intangible assets such as R&D, employee training and brand equity create sustainable, competitive advantages that result in higher market share and pricing power.
Last week we received a good question from a client asking for our thoughts on Canon, the well-known maker of office machinery and cameras. Excepts from our response are below. From a relative strength perspective (relative to the MSCI ACWI), Canon has been in a well-defined long-term downtrend for the last four years.