Global Brands

Global Brands – Global Diversification

The Idea

Nearly 40% of all revenues for the S&P 500 now come from outside the US.  Corporations with globally recognized brands are striving to not only increase their market share in developed markets, but access new markets for the first time.  Shoes, smartphones, search engines, software, sports teams, sports drinks, soft drinks, breakfast food, gas, snacks, coffee, drugs, banks, credit cards, airplanes, coffee.  What are the first brands that pop into your head when you think of these?  Most likely these names are the corporations that are trying like mad to dominate the global consciousness.

Billions of people are gaining access to markets to the first time.  They will be looking to connect to the broader world through, of course the internet, but also through culture, shared experiences and brands.  The portfolio will focus on companies with global recognition that survived the tech bubble of 2001 and held up well through 2008-2009.  Throughout the world, we’ve looked at how companies/corporations contend with international operations and look to benefit from pushing into new markets that they hadn’t otherwise explored.  In some cases, they are small or mid size US based companies looking to expand into Europe or other developed markets.  But the corporations having the most success are those with size and economies of scale.  They can minimize taxes and move to productive areas fast.  These companies also share general concerns about the effects of massive amounts of global stimulus.

The Process

We screen all 9 S&P 500 sectors through 4 criteria: brand strength, dividend yield, dividend growth, and globally diversified revenue.  From this list, we take the top names with a minimum of 1 security from each sector with a total of 25 names at any given time.

Currently our focus is on US based equities but we are looking to broaden our list in 2014 to include global brands based outside the United States.