For fund manager Brian Yacktman, the secret to winning performance is a concentrated portfolio of what he calls “global champions.”
Growth opportunities In an interview April 8, Yacktman said “nearly all businesses are deflationary over time, after you adjust for inflation, because competition and innovation drive down prices in real terms.” “Scare goods will have pricing power,” Yacktman said. “The obvious scarce good is our time, relative to the increased opportunities that are afforded to us by this increase in global wealth.”
Some of Nike’s athletic shoes are very expensive. “A status filter has pricing power because if it is easily obtainable, it loses its status.” Yacktman sees L’Oreal as similar to a bond with a triple-A rating. The company has “a short repurchase cycle and products considered mission-critical by users, so they grew revenue during the Great Recession,” he said.
Yacktman said he prefers Moody’s to S&P Global as a pure-play in the ratings space, and that he believes MSCI MSCI, +0.79% — the eighth-largest holding of the fund as of Dec. 31 — “has more pricing power” in the international stock index business than S&P at this point. Charles Schwab SCHW, -0.02% has a market advantage as a one-stop shop where individual investors can trade securities with very low commissions and also manage their investments easily, with access to thousands of mutual funds and exchange traded funds .
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