Knowledge Leader Company Research

Knowledge Leaders are highly innovative companies that possess deep reservoirs of intangible capital as a result of their history of investing in knowledge-intensive activities like R&D, brand development and employee education. When we talk about investing in highly innovative companies, most people think of tech stocks. But did you know the digital revolution is driving companies to lead their industries in every sector and geography in the world? To illustrate how each Knowledge Leader employs intangible capital in a different way, we feature our spotlight research on these companies below.

Tip of the Spear of Moore’s Law

Company: Cadence Design Systems
Country: United States
Sector: Information Technology
Published: 4/15/19
Summary: Making semiconductors is the most advanced manufacturing process in the world. Which is why firms like Cadence — which builds software used by engineers to design chips – are so critical to the pace of development in the semiconductor industry. Semiconductor makers can’t build new features into chips until Cadence builds them into the design. No wonder Cadence spends so much on R&D.


The Brains Behind Border Security

Company: Elbit Systems
Country: Israel
Sector: Industrials
Published: 2/22/19
Summary: Elbit’s most visible project at the moment is a cluster of 55 surveillance towers at the Nogales, Arizona, area of the US-Mexico border. Deployed in 2015 for the US Customs and Border Protection agency with more installations in 2016 and 2017, the towers cover a total of 200 miles, providing about 2,500 square miles of surveillance. Using radar, cameras and sensors, the towers quickly transmit data to a command center to provide situational awareness to patrol agents.


Novozymes, An Innovation Catalyst

Company: Novozymes
Country: Denmark
Sector: Materials
Published: 12/13/18
Summary: Novozymes is working to replace chemical processes with enzymes, naturally derived proteins that initiate biochemical reactions. If you eat bread or drink beer, you’re familiar with the work of enzymes. This Knowledge Leader ferments enzymes into tiny granules and liquids to help customers to produce more with less.


The Surprising Science Behind a Century of Soap

Company: Kao Corporation
Country: Japan
Sector: Consumer Staples
Published: 11/19/18
Summary: An analysis of Kao’s greatest hits reveals one strategy stands out: its commitment to innovation. After 130 years, Kao’s singular commitment to this vision remains, though the firm has refined it to a pursuit they call “interface science.”


How Energy’s Harsh Storms Led to a Greener, Smarter Future

Company: Equinor (Formerly Statoil)
Country: Norway
Sector: Energy
Published: 10/17/18
Summary: At the trough of the oil crisis in 2015, Equinor’s management was scrambling to prepare the company for an unknown future. Management believed that while the oil and gas industry would eventually recover, the industry would never be the same. The team decided to use the setback as an opportunity to reset the company. To embrace change. 


Inside Prada’s Knowledge Workshop

Company: Prada
Country: Italy
Sector: Consumer Discretionary
Published: 9/1/18
Summary: The real reason for Prada’s leadership is quickly identifiable to those of us who measure innovation. After nearly five decades of running what its CEOs describe as an “experimental workshop of ideas,” Prada has built up the hallmark of a Knowledge Leader company: rich stores of intangible capital that fuel future innovations. A look at our intangible-adjusted financial statements reveals the pattern.


Where Fanuc’s Robots Go, the Rest of Industry Follows

Company: Fanuc
Country: Japan
Sector: Industrials
Published: 8/16/18
Summary: With nearly half a million robots installed on factory floors in nearly every industry and every region of the world, Fanuc is in a unique position to illuminate the future of the knowledge revolution.


How Swatch Became the World’s Largest Watch Company

Company: Swatch Group
Country: Switzerland
Sector: Consumer Discretionary
Published: 6/27/18
Summary: Swatch Group not only lived to become the world’s largest watch company today, the company’s consistent and long-running investments in R&D, brand development and organizational capital have resulted in the accumulation of rich stores of knowledge, a key marker for Knowledge Leader status in our investment process.


Diageo, Toasting New Continents of Consumers

Company: Diageo
Country: UK
Sector: Consumer Staples
Published: 6/4/18
Summary: With about 730 million new consumers able to afford to drink alcohol over the next decade, 85% of them will be in the developing markets. Diageo aims to shape the drinking habits of an emerging middle class by offering famous brands like Crown Royal and J&B at affordable prices.


Why iRobot’s Robots Are Cleaning Up

Company: iRobot
Country: US
Sector: Consumer Discretionary
Published: 5/14/18
Summary: Through its military missions, iRobot struck on and began the multi-decade development of the technology that sets it apart from competitors. Reconnaissance tasks require a complex process of navigation and mapping. By trial and error, engineers developed an integrated system of software, hardware and electronics that enables its robots to complete complex tasks.


The Secret of Chevron’s Permian Dominance

Company: Chevron
Country: US
Sector: Energy
Published: 5/4/18
Summary: Chevron was one of the early Supermajors to revisit the Permian with new innovations a decade ago after production peaked in 1973 then fell off. New breakthroughs in hydraulic fracking industry-wide led production in the Permian to surpass its 1973 record for the first time in 2017. By the end of the year, production in the Permian is on track to hit a new all-time high.


Rio Tinto and the World’s First “Intelligent” Mine

Company: Rio Tinto
Country: UK
Sector: Materials
Published: 4/9/18
Summary: Later this year, Rio Tinto will seek board approval to spend $2.2B to build the world’s first “intelligent” mine, a network of robots and autonomous vehicles all working together on the site of the earth’s largest iron ore complex in Western Australia.


Will Shionogi’s R&D Machine Outrun the Flu?

Company: Shionogi
Country: Japan
Sector: Health Care
Published: 3/20/18
Summary: In the midst of the worst flu season in a decade, Japanese pharmaceutical company Shionogi & Co., Ltd. is making headlines for a new drug it says can kill the influenza virus in 24 hours with a single dose.

Disclosures

The information contained in our spotlights is provided for informational purposes only and should not be regarded as an offer to sell or a solicitation of an offer to buy the securities or products mentioned. Knowledge Leaders Capital may deviate from the investments or strategies implementation as discussed in this presentation. The strategies discussed in this presentation may not be suitable for all investors. Knowledge Leaders Capital makes no representations that the contents are appropriate for use in all locations, or that the transactions, securities, products, instruments or services discussed are available or appropriate for sale or use in all jurisdictions or countries, or by all investors or counterparties.

The Knowledge Leaders Indexes are the property of Knowledge Leaders Capital, LLC. The publication of an Index by Knowledge Leaders Capital, LLC is not a recommendation for capital investment and does not contain any assurance or opinion of Knowledge Leaders Capital, LLC regarding a possible investment in a financial instrument based on this index. For full information on the indexes, please visit the document “Terms and Conditions” available at www.KnowledgeLeadersCapital.com.

The Knowledge Leaders investment process uses a proprietary methodology based on academic research. To create an intangible-adjusted financial history, we capitalize intangible investments—including R&D, advertising, brand development and employee training expenses—treating them as a company would tangible investments. Using these intangible-adjusted financial histories, we run each company through a proprietary Knowledge Leader screen. Companies that pass through every level of the screen emerge as Knowledge Leaders.

An investor cannot invest directly in an index.

Any reference to index performance does not represent the performance of any investment product offered by Knowledge Leaders Capital, LLC. Index performance does not represent actual trading or the impact of material economic or market factors.

Past performance or historical trends are not necessarily indicative of future results.

Companies are selected for “Spotlights” based on high levels of innovation activities in their industries and illustrate innovation being employed across all sectors and geographies. Spotlight selection is separate from stock selection by the investment team. Spotlights are not necessarily representative of investment opportunities and can be selected regardless of investment performance.