Gavekal Capital: Last Week The Focus Was On Liquid Balance Sheets

Monday, May 19, 2014

Last Week The Focus Was On Liquid Balance Sheets

According to our Factor Scoring Model, net debt as percent of capital had the highest R-squared of any fundamental factor that we track. Long-term debt as a perecent of capital had the second highest correlation to the market as well at 0.61. This is contrast to the trend over the previous year where the focus seems to have been on EPS growth by a wide margin (R-square value of 0.95). Factor relationships by week and year for the MSCI World are below.

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.
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