Our thoughts

 

Family ownership factor – not powerful enough to bring companies to the top anymore

Firms with family shareholding or dominant investor are associated with long-term focus, commitment and flexibility.

 

Tracking Covid-19 impact with alternative data

Stock market is a proxy for how well the general economy is doing and economists and stock market strategists base their forecasts on the set of leading indicators like manufacturing orders or building permits - data that is typically available on a monthly basis.

 

Fixed costs – Death penalty for a cyclical company

Current set-up is such that global economy is basically paralyzed and the GDP forecasts are being adjusted downwards every week.

 

HIGH LEVERAGE IS WELCOMED AT GROWING KPIs

The markets are nervous now. People’s anxiety about COVID-19 was immediately transposed to the financial markets sending even excellent companies, which сould hardly be affected by the pandemic, into the freefall. With markets becoming irrational, we stick to our Quality strategy and regard market sell-off as an opportunity to buy good companies at attractive prices.

 

The magic of “Z” and why fundamentals still matter

Given a mind-blowing global stock markets rally of 2019 that seem to be transposed into 2020 as well, there are many people out there that stayed on the sidelines after Q4’18 meltdown and now are in a rush to catch the last train, driven by blinding fear of “missing out”.

 

Year Review 2019

HÉRENS QUALITY ASSET MANAGEMENT

 

IMPACT INVESTING: ESG MOMENTUM TO ADDRESS CLIMATE CHANGE AND EARN ALPHA RETURNS

Glaciers meltdown, frequent forest fires, Venice under water – more and more cases point to the alarming problem of global warming. Further attention to the climate change has been attracted also by Greta Thunberg giving emotional speech during UN summit.

 

Using glassdoor reviews in assessing quality of companies

On a micro-level ‘black swans’ happen much more often as compared to the global ‘black swans’ and the portfolio diversification perfectly helps in this case. But there is a dilemma of how far one should go with the portfolio diversification as, naturally, it comes with additional costs.

 

Concentration (,) not (,) diversify your equity portfolio

On a micro-level ‘black swans’ happen much more often as compared to the global ‘black swans’ and the portfolio diversification perfectly helps in this case. But there is a dilemma of how far one should go with the portfolio diversification as, naturally, it comes with additional costs.

 

R&D - A value-driver or value-destroyer?

With R&D and marketing expenses there is always a trade-off: to keep them moderate and report nice profit figures, while risking of losing competitive position, or sacrifice short-term profits by investing in product development/marketing to enjoy higher top line growth later

 

Winning growth, beaten value, benefiting quality

Historically, value stocks have been superior to the growth stocks: since 1933, value has outperformed growth in 60% of periods.

 

2019 1H REVIEW

HÉRENS QUALITY ASSET MANAGEMENT HALF YEAR REVIEW

 

How really good are those claiming they are good?

10 tn USD – a tremendous pile or 21 % of US managed assets was invested in funds with ESG focus in 2018, which is a fivefold increase since 2010, when the hype around the topic was just in its infancy in the region. In Europe these figures are even higher, knowing consciousness of Europeans about the climate change and responsible social governance. It is obvious that ESG is one of the underlying reasons for capital migration: mutual fund with ESG focus have a certain tailwind in asset growth.

 

Biased accounting for knowledge-intensive companies

Fixed asset are largely becoming commoditized. Few decades ago, the equipment was often a source of uniqueness to the company as it was not available to every enterprise due to several reasons, limited funding being one of them. In the new millennium, assets such as buildings, cars or factory robots do not offer competitive advantage by themselves.

 

Share Buybacks: An elegant solution to your EPS growth problem

2018 was a year of the ultimate shopping spree for S&P 500 companies, which spent a mind-blowing $1 trillion plus in cash on share buybacks – the biggest amount yet over the course of the last decade.

 

Zombie companies: Economies on the edge of the abyss

The buzz around zombie or ‘walking dead’ companies got louder last year after a series of interest rate hikes in the US brought those operationally sick companies one step closer to their death rope.

 

Year Review 2018

Too much politics on investors’ agenda, rattling the markets, but Quality shows resistance.

 

Business complexity as an investment criterion

It can be argued that Alibaba or Amazon, whose growth is fueled by global hitech hype, are attractive targets for thousands of institutional and private investors also in part because they run business models that are relatively easy to understand.

 

Gehören Währungen und Bitcoins in ein Quality Portfolio?

This article is only available in German.

 

October sell-off – Has the bear woken up?

This October has reinforced the negative reputation of the year’s tenth month.

 

ESG: A natural dimension of quality

More and more investors expect their investments to be managed sustainably.

 

IFRS 16: Putting Balance Sheets to the test

As of January 1st 2019, new accounting regulation IFRS 16 will come into force, and the very nature of this principle will change the look of reported balance sheets globally.

 

Japan-Considerations for the next five years

Our Japanese equity portfolio celebrated its five-year anniversary with an excellent performance.

 

Investment in P2P lending as risk-diversifying and return-boosting additions to the portfolio

Peer-to-peer lending is the fastest-growing form of private debt, which also includes Distressed Debt, Venture Debt, Mezzanine Financing and Direct Lending.

 

Hérens Quality flash takeaways from China

Global investors are concerned about a slowdown in China, but there still seem to be a lot of measures the government can take in order to achieve sustained growth.

 

Staatsanleihen gehören nicht in ein Quality Portfolio

Staatsanleihen sind in aller Regel un­besichert. Das heisst, der Anleger kann in einem Restruktu­rie­rungs­­fall nicht auf zuvor definierte Sicherheiten zurück­greifen.

 

Corporate Excellence Award 2018

Wir von Hérens Quality Asset Management befassen uns seit über 15 Jahren intensiv mit dem Thema Unternehmensqualität und setzen die gewonnenen Erkenntnisse seit der Gründung konsequent in unseren Anlagelösungen um.

 

Strength in Corporate Governane: A path to Alpha

AIG, Citigroup, Intel, Nokia, Orange, Rolls Royce, Target and Volkswagen are all further examples of prominent companies that have, at some time in recent years, lost their shine and substantially underperformed the market. Over the past decade, about one in five CEOs of top 100 companies in the USA and Europe has either been fired or left under a cloud after the company underperformed the market by 25% or more in their last two years.What are the reasons for these stumbles and what ca be done to avoid these cases in the stock portfolio?

 

Companies may change, but corporate excellence standards remain

These are some of the key insights into the Corporate Excellence Award 2018 results and how they compare to the results of the contest from five years ago in 2014.

 

Active or passive investment in an uncertain environment

If the market turns south, the passive investor is guaranteed to lock in all market losses. There is evidence that really active managers have the best chance to outperform in two distinct environments – high volatility and down markets. Reasonably skilled managers are able to capture alpha in an uncertain environment.

 

Problematic leadership: Underperformance starts at the top

Underperforming CEOs are more common within the Energy and Financial sectors, followed by Materials and Information technology sectors

 

Monthly Topic: Alternative Data

Technology is transforming investment management just like any other industry during the last few years and, to stay up-to-date, asset managers should increasingly put focus on enhancing their investment processes with data-driven solutions that could substantially improve their results.

 

Quality of CSR along with Corporate Excellence

The trend towards socially responsible investments has been around for a relatively long time, however global growth in SRI assets has not weakened.

 

Discover Japanese strong quality companies

The period of economic stagnation in Japan from 1991 to 2010, following the collapse of the country’s massive asset bubble, is often referred as Japan’s lost 20 years.

 

Unexpected winners of the tech revolution

That is essentially how the retail industry will look like in the nearest future.

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