Gavekal Capital: Aluminum and Gold Lead European Sub-Industry Performance

Wednesday, January 29, 2014

Aluminum and Gold Lead European Sub-Industry Performance

'Aluminum and Gold???' you say, doubtfully. And your instincts are correct. At first glance, the ranked performance of sub-industries in MSCI Europe puts these two materials groups in the top three so far in 2014:

Closer inspection reveals, however, that each of these sub-industries is comprised of just one company-- neither of which looks very appealing when we take into account a longer term view of relative performance:

Incidentally, neither of these companies passes our knowledge leaders screen as a result of two factors:
1. too little investment in intellectual property and
2. insufficient margins (gross margin in the case of Norsk Hydro and FCF margin with respect to Randgold)

About Gavekal Capital

Gavekal Capital is a US registered investment advisory firm that manages the Gavekal Knowledge Leaders Strategy. Knowledge Leaders are a group of the world’s leading innovators with deep reservoirs of intangible capital. These companies often possess competitive advantages such as strong brand, proprietary knowledge or a unique distribution mechanism. Knowledge Leaders are largely service-based and advanced manufacturing businesses, often operating globally. Gavekal Capital seeks to identify the world’s leading knowledge companies through a proprietary process that analyzes corporate knowledge investments.
We offer the Gavekal Knowledge Leaders Strategy in multiple products for global investors. For more information about our product offerings please visit http://www.gavekalcapital.com.
Blogs are posted by our investment team. Find out more about us at here. Read more about our strategy at www.gavekalcapital.com.

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The information listed on this blog is for example purposes only and should not be construed as the investment Advisor's opinion or investment outlook. As of the most recent quarter end, the named companies may have been held by the investment Advisor. Please review the most recent disclosures. For full information including additional policies and full disclosures on the Advisor, please visit our website gavekalcapital.com.