Posts Categorized: Strategy

Sustainable Investing: Addressing the Myth of Underperformance

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Despite growing demand for sustainable and impact investment solutions and a body of evidence to support the effectiveness of sustainable investing from a strictly financial perspective, many investors are still unclear about the relationship between ESG factors and financial performance.

Regional and Sector Strategy: May Update

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We are now underweight the most cyclically sensitive sectors: Industrials, Materials, Energy. While we upgrade the CEEMEA region to Neutral from Underweight — in large part because of an improved earnings outlook — this likely reflects a modest rebound in oil prices, which remain 40% below year-ago levels.

The Drought in California: The New Normal? What Investors Need to Know…

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California’s drought poses a resource crisis on a scale that has not been seen in the US for several decades. Experts forecast the drought, now in its third year, will continue at least through 2016, and the lack of rain, combined with a record low water table beneath the Central Valley, may be a “new… Read more »

Regional and Sector Strategy: April Update

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We continue to have a defensive tilt in our regional recommendations, and are Underweight the commodity-rich regions of Central and Eastern Europe, Middle East and Africa (CEEMEA) and Latin America …

Japan’s New Corporate Codes – Studying the Impact on Valuations

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Corporate governance represents the relationship among various corporate stakeholders that determines the strategic direction of a company. Practically, corporate governance adjudicates the balance among key stakeholder interests within the firm. Japan is unveiling a new corporate governance code for companies …

Environmental Issues & Country Valuations: What Matters?

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What Matters? — Some environmental issues that are the subject of popular focus — such as carbon dioxide emissions — do not appear to be statistically significant for global investors. Moreover, many countries’ environmental “health” has moved in the opposite direction of their economic development i.e., more pollution and higher per capita GDP.

The Economics of Automation: Quick Serve Restaurant Industry

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Increasing cost pressure. Labor and food represent a significant portion of restaurants’ cost structure. While these inputs have been relatively predictable in the past, the twin threats of rising wages and increasingly volatile food prices suggest a more challenging environment ahead. It’s not clear that cost inflation can be consistently offset by raising menu prices, so companies are considering new strategies to protect margins . . .

Regional and Sector Strategy: March Update

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Our regional strategy is unchanged. We continue to have a defensive tilt in our regional recommendations, and are Underweight the commodity-rich regions of CEEMEA and Latin America. Japan continues to be the top-ranked country. Over the past twelve months, share buybacks in Japan have been the largest of any country / region, the first time that country has been the global buyback leader since we launched the regional model in April 2014. We highlight changes in the Energy suggesting, perhaps, that stock prices in the sector have not fallen as fast as earnings estimates . . .

Regional and Sector Strategy: February Update

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Our regional strategy is unchanged, even with a heightened focus on monetary policies and exchange rates in the past month driven, in part, by fears of deflation. We continue to have a defensive tilt in our regional recommendations, and are Underweight the commodity-rich regions of CEEMEA and Latin America. Our sector strategy is also unchanged and remains “less cyclical, more defensive.” We maintain our relatively defensive posture given pockets of economic weakness globally. We are Overweight Health Care in North America, the U.K. and Europe ex U.K. We are Underweight or Neutral Energy in the majority of regions….

Regional and Sector Strategy: January Update

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This month we, upgrade Financials to Overweight from Neutral reflecting the combination of relatively attractive valuations and improving earnings momentum. In addition, Financials’ earnings estimate revisions are only modestly negative (i.e., downward revisions just outpace upward revisions), in sharp contrast to most other sectors where estimate revisions are strongly negative. Our regional strategy remains unchanged…..

Harnessing ‘Sustainable Brand Power’

How does a brand stay true to its purpose?  And how does a company create an emotional connection with its stakeholders, employees and consumers? These were just a few of the questions addressed by Jostein Solheim, CEO of Ben & Jerry’s during a Roundtable session Nov. 19th on “Sustainable Brand Power” at Cornerstone Capital Group. … Read more »

Regional and Sector Strategy: November Update

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This month we, upgrade Financials to Overweight from Neutral reflecting the combination of relatively attractive valuations and improving earnings momentum. In addition, Financials’ earnings estimate revisions are only modestly negative (i.e., downward revisions just outpace upward revisions), in sharp contrast to most other sectors where estimate revisions are strongly negative. Our regional strategy remains unchanged. We are Overweight or Neutral the majority of developed regions (Japan, U.K., Australia, North America) and Underweight most emerging markets (Latin America, CEEMEA)….

The Economics of Environmental Issues in Sector Strategy

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Increasing environmental pressures — Corporations globally are experiencing growing pressure about environmental issues reflecting, in large part, regulatory initiatives that could potentially increase costs. Among the factors driving the growth and stringency of environmental regulations: energy security issues, public health challenges, impact of pollution on economic growth. We examine the implications of a potential increase in key environmental costs for ten industry sectors. Subsequent research will examine the implications — positive or negative — of social and governance factors for these sectors.

Regional and Sector Strategy October Update

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Still defensive — We maintain our relatively defensive posture given pockets of economic weakness globally. We are Overweight Health Care in the U.K., North America and Europe ex U.K. We are Underweight or Neutral Energy, Materials and Utilities in the majority of regions Regional strategy — We upgrade the U.K. to Overweight from Neutral, in large part because the earnings outlook has improved materially. We downgrade CEEMEA to Underweight from Neutral….

Flagship Research: Gauging Governance Globally – Macro & Micro Metrics

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Much analysis has attempted to find an empirical link between Environmental, Social & Governance (ESG) factors and investment returns. By contrast, the focus of our research has been the significance of ESG factors for equity valuations….

Regional and Sector Strategy: Monthly Update

In this Executive Summary, we introduce the inaugural edition of a regular monthly update of our regional and sector strategy models, both of which explicitly take into account Environmental, Social & Governance (ESG) factors. More defensive — We extend our relatively defensive posture given more pockets of economic weakness globally. Regional strategy — We upgrade… Read more »