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.
Read MoreOne 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.
Read MoreLast 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.
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Academic research has shown that not all research and development (R&D) is created equal. In every industry, you have two sets of companies: Knowledge Leaders and Knowledge Followers. On the one hand, you have Knowledge Leaders which are companies that introduce new and innovative products. These type of company’s follow a strategic innovation strategy.
Read MoreThere is a new innovation boom playing out in the United States that has many positive implications for US equities. In July 2013, the BEA began including investment in intellectual property in National Income and Product Accounts. As part of this benchmark revision, the BEA revised the US national accounts going back to 1947 to
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The outperformance of the world’s most knowledge intensive companies has continued over the last few weeks and in developed markets the outperformance gap relative to all developed market equities has widened.
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The recent focus of the financial world (including for us) has been on the massive currency moves going on in the forex markets. By this point, everyone and their grandma knows that the US dollar has been on an explosive move higher.
Read MoreAs we never tire of pointing out, the massive levels of intangible assets on multinational corporations’ balance sheets is one the most overlooked drivers of profitability by the investor community.
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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.
Read MoreWe 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).
Read MoreOur 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.
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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.
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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.
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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.
Read MoreFor 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.
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