Mega-Brands: Investing in Mega Trends & the Mega Brands Best Positioned to Add Value to Your Wallet

The Dynamic Brands strategy had a great month, handily outperforming the S&P 500 by 400bps. Tech was the worst performing sector, Healthcare the best. In this month's portfolio update, I talk about what worked and what lagged, what to expect from the Trump Tariffs and how to make the VOL your friend not your enemy. I covered how the brands portfolio holdings performed and how the trading book performed for the month. Hint: the trading opportunities are robust and should stay that way for the next 4 years. Honestly, thats a great thing with valuations so high, trading can add a ton of value versus a full, buy-hold approach. For more information on how to invest in the greatest brands ever created: I list the holdings, performance, and all the brochures and fact cards. ⁠https://www.globalbrandsmatter.com/dynamic-portfolio

Mark is my favorite analyst and does extraordinary research on markets. He has seen multiple boom and bust cycles so if theres anyone you want to listen to on tech, media, telecom, its Mark at ISI. In this year end episode we talk about: Meta, Amazon, Google, Uber, Lyft, Booking, AI, Expedia, Pinterest, and Grab. "The year of efficiency has turned into multiple years of efficiencies...we expect this to continue...plus AI implementations driving better ROAI". Great margin stability and expansion. You NEED to have his book on your desk: "Nothing But Net" Amazon: https://a.co/d/5HfAWMp For more information on investing in the greatest brands the world has ever seen: https://www.globalbrandsmatter.com/dynamic-portfolio

I talk about the performance in November and YTD in the Dynamic Brands equity strategy. I focus on the high-tracking error nature of the process and portfolio and highlight the sectors top brands live in vs index weights. I cover the 24 brands we own and then dig into the current health of consumers and how holiday shopping is going. I also highlight a few new brands to the portfolio. I end with the positives and risks we see headed into 2025. For more info about the global brands fund: ⁠https://www.globalbrandsmatter.com/dynamic-portfolio

Using Googles NotebookLM to create a 1-1 podcast chat discussing a new MS report on Black Friday, winners and losers and retail trends. For more about investing in top global brands: https://www.globalbrandsmatter.com/dynamic-portfolio

Using AI 1-1 podcast format for topics and brands focused on the global household spending theme which is $50T in size. For more information on investing in global brands: https://www.globalbrandsmatter.com/dynamic-portfolio

I look at the Dicks Sporting Goods quarter and add some color from MS and Goldman notes. We do NOT own Dicks at this time but are considering it. For more information on the Dynamic Brands Fund: https://www.globalbrandsmatter.com/dynamic-portfolio

This is becoming a very cool experiment. I drop in all my notes on the portfolio of brands we own in the Dynamic Brands Fund HSUTX and Googles NotebookLM summarizes them into a 1-1 podcast conversation. I'll use more of these as a fun way to tell the story of investing in great brands and making money on these great companies by owning the stocks. For more info about the global brands fund: https://www.globalbrandsmatter.com/dynamic-portfolio

If you haven't tried Googles NotebookLM product to summarize marketing brochures and other readings using a 1-1 podcast format, you have to try it, its truly amazing. Here's the AI summary of the recently refreshed Brands Investor Brochure, which can be found here in 1 of the orange boxes at the top of the portfolio page: https://www.globalbrandsmatter.com/dynamic-portfolio

In today's 2024 brands portfolio update, I talk about the fund, HSUTX and its returns for 2024 as well as a look-back since inception 10/17/17. An allocation to leading global brands offers significant diversification benefits as well as return benefits. Brands tend to live in the sectors under-represented across indexes. The Fund is overweight Consumer Discretionary, Staples, Communication Services, and Financials vs the market. I talk about the holdings we own, their weight vs the benchmark and what we think will perform well in 2025. For more information on investing in global brands: https://www.globalbrandsmatter.com/dynamic-portfolio

The options markets have become enormous and are large enough that even long-term investors have to pay attention. There's a ton of madness that happens in options markets and its a favorite for traders. Watching the large and unusual options trades being placed every day can offer traders and investors an edge but its costly, time consuming, and complicated. If you have the skill, congratulations, if you do not but want to gain an edge, considering subscribing to an options trading and research service could be an answer. Today, I discuss the craziness that happens in the options markets and how to sift through all the volume to uncover great investment and trading ideas. I use this service as a compliment to our internal research on Brands and the information is very helpful when I'm looking for active trading around the core brands portfolio, to see when the big money is beginning to get more bearish, and to identify when strong options flows can add more confidence to adding to core long ideas in the fund. You can check out James' options and commentary service here: ⁠https://jamesbulltard.substack.com/⁠ You can follow him on Twitter @jamesbulltard7 For more information on building a portfolio of the most important, blue chip brands and the emerging brands that could become the next Mega Brand, go to: ⁠https://www.globalbrandsmatter.com/dynamic-portfolio⁠

This is the audio version for the Q2 Brands commentary and portfolio positioning. This is not investment advice, just one mans opinion on markets, brands, and the consumer! Enjoy!

Today's interview where we talk about the global consumption theme, why it's an important allocation to a portfolio and what drove outperformance 2017-2021, why we underperformed in a tough 2022, what the current opportunities are, and finally, how the portfolio is positioned currently between offense and defense-related brands. For more information: https://www.globalbrandsmatter.com/dynamic-portfolio To reach out directly to me: eric.clark@accuvest.com

I check in with great investor, Sean Emory CIO of Avory & Co. We talked about the macro and inflationary environment and when we might see a rate of change tailwind. We got back into the company fundamentals, that's what really matters.  We talked about $NTNX growing business case as well as updates on $FVRR $ZG $CPRI Nutanix is still a mis-understood name and acquisition target cited in the press on numerous occasions. Capri is still cheap and their brands Kors, Jimmy Choo and Versace remain strong. Fiverr is still the largest global platform for contract work and technically, the stock looks like a ball under water opportunity. Zillow has been dragged down with the real estate group and remains the leader in real estate search and services. Founder and CEO Rich Barton owns about 14/15% of the biz and they have $3.5B in cash so the stock looks quite interesting after a massive drawdown. 2023 should be the year where company fundamentals matter and the year when great businesses set themselves apart from the peers. You can find more information at linker.ee/avoryco https://www.globalbrandsmatter.com

Today I chatted with a dedicated Cannabis, Consumer and Consumer Tech investor, Paul Cerro from Cedar Grove Capital. I met Paul on Twitter ( @paulcerro )and really enjoy his thoughts and reading his notes on substack  https://www.cedargrovecm.com We talked about the Fed, ZIRP and consumer behavior. We talked about Pauls current views on consumer spending and markets and when markets might bottom. We then talked about his firms new investment in a private pet grooming business and their plans for that new investment. Then we closed on cannabis and where we are with that business line. I really enjoyed our chat and Paul is a super smart investor. Check out his substack research, I'm confident you will love it! If you want more information on the brands portfolios and podcasts: https://www.globalbrandsmatter.com/podcasts The Dynamic brands strategy info can be found here: https://www.globalbrandsmatter.com/dynamic-portfolio

Today's conversation was really fun. I talked with founder of New Constructs Research, David Trainer. David has a long career in fundamental analysis and founded New Constructs to enhance the research and data gathering process by harnessing technology. There's enormously important data hidden in company 10Q and 10K's but 99% of analysts do not read these important reports. I am guilty of that myself. These documents are a painful read and David's robust research extracts the important data from these reports and creates much better snapshots of the current business and places a rating on the business, the quality of earnings (economic versus reported EPS) using important and predictive metrics like ROIC, FCF Yield, etc. From there the team compares that to the current stock price to identify if theres an opportunity for investors. Sell side research is hard to trust, there are too many hidden agenda's inside ratings and recommendations IMO.  We talk about their Zombie stock report, aka alot of the meme stocks and likely many that ARK owns today. ZIRP allowed profitless businesses to thrive for much longer than they should have and now we are getting back to what's important: profitability, ROIC, compounding EPS through strong capital allocation decisions, etc. The fundamentals matter most, even if the market is supremely focused on macro>micro today. In the end, the company and its ability to grow, generate cash, compound earnings and cash flows above its cost of capital. Finally we seem to be getting back to the reality of markets, the business and its profitability matter. https://www.newconstructs.com is a wonderful site to check out to see if they can help you or your RIA practice build better stock, mutual fund, or ETF portfolios. For more information on the Mega brands portfolio: https://www.globalbrandsmatter.com/dynamic-portfolio

In today's 30 minute quick update I talk about the macro > micro world we live in today, the Fed, the effects on the economy, and which sectors tend to outperform the most. Hint: Tech, Consumer Discretionary, and Healthcare have been the top 3 sectors outperforming the market over most time periods and 30 years of data.   I discuss the benefit of having a consumer core equity allocation, and the tremendous benefits that can accrue to investors if they are opportunistic and add to those positions when the market dislocates and a bear market arrives.  We are all programmed to sit on our heels today because the Fed is aggressive, not your friend and stock prices are under assault. Taking advantage of these periods to buy more of great businesses aka brands paid handsomely over time. The next 6 months will provide some of the best long-term buying opportunities we have seen since the financial crisis.  Don't get shaken out folks, big dips in great companies are for buying. https://www.globalbrandsmatter.com/dynamic-portfolio

Today's podcast was a treat for me, I have been following Adam for a very long time back to his days at Morgan Stanley. Adam founded Trivariate Research, which combines fundamental, quantitative, and macro analysis to produce actionable research, practical investment advice and analytically rigorous risk management for our clients. They serve institutions, hedge funds, fund companies, and RIA's family offices through their research platform. "Winners could be those with above average estimate achievability". We talked about the market today, where estimates are likely headed, which sectors likely have a better opportunity and which could see a more difficult go of it.  To learn more about Trivariate: https://trivariateresearch.com To learn more about investing in the world's most relevant global brands: https://www.globalbrandsmatter.com/dynamic-portfolio

Today's chat was incredibly fun. I talked with Paul Sankey, founder of Sankey Research, an energy consultant and advisor to energy companies and large institutional investors. With many decades of energy industry experience, Paul has become THE expert on energy stocks and the energy industry.  We talked about energy policy, the current supply/demand imbalance and the new and improved investment opportunities across the energy sector as these companies transition from cash destroyers to free cash generators and big dividend payers.  Paul highlights E&P names, natural gas opportunities, refining opportunities as well as some in the MLP and pipeline space. Paul is a wealth of knowledge in this category that is still very under-owned by investors of all kinds. His view has been that energy stocks should make up a much bigger percent of the market and indices and the future is bright for the equities that are strong capital allocators and shareholder friendly. For more information on Sankey Research: https://www.sankeyresearch.com For more information on the Global Brands strategy: https://www.globalbrandsmatter.com/dynamic-portfolio

Today I chatted with a dedicated Cannabis, Consumer and Consumer Tech investor, Paul Cerro from Cedar Grove Capital. I met Paul on Twitter ( @paulcerro )and really enjoy his thoughts and reading his notes on substack ( https://cedargrovecapital.substack.com ) We talked about the Cannabis industry and the absolutely huge potential for outsized gains for patient investors willing to hold through the VOL until federal regulation gets approved. It's only a matter of time, the more states approve it, the more likely a federal mandate will happen. A huge amount of investment capital will flow to this industry, it's just a matter of when. We talked about the U.S. companies being the best long term opportunities. Names to research include: Greenthumb, Truleaf, Curaleaf. We then moved into the consumer brands and talked alot about Petco, WOOF, and how its very misunderstood and ignored by investors. I suspect they need to spend more time on the actual brand and why consumers have to spend that extra time getting to their stores versus buying all their pet supplies wherever they are shopping at the moment.  We then talked about Exponential Fitness, XPOS. I didn't know much about this brand because its under my market cap threshold at $800m but I absolutely know some of the sub-brands they own like Yoga6 and Pure Barre. I really enjoyed our chat and Paul is a super smart investor. Check out his substack research, I'm confident you will love it! If you want more information on the brands portfolios and podcasts: https://www.globalbrandsmatter.com/podcasts The Dynamic brands strategy info can be found here: https://www.globalbrandsmatter.com/dynamic-portfolio

I spent a week going through Under Armour's website, its app, the quarterly reports and annual reports to try and identify what's wrong with the company and it's stock. Overall, UAA seems to be following the typical trajectory of a brand that becomes irrelevant over time.  One of the hallmarks of mostly irrelevant brands and underperforming stocks is having lower margins than peers while still having more revenue than the current market cap of the business. The brand just gets less interesting to people each year. I've seen that happening in UAA for many years now. Consumer stocks that have good pricing power, high brand love, and strong repeat business tend to have stronger returns. Revenue growth is key, smart innovation spending and marketing is key, strong overall operating metrics are key. The most important part of longevity with consumers though, is maintaining or increasing your brand relevancy. Staying relevant needs to happen for companies to continue to thrive. Companies don't always need to sell premium products to stay relevant, witness Costco and Target, but they need to offer a better mousetrap, a better customer experience, and to remove as much friction as possible so consumers can act over and over with buying. That game becomes a high sales, low margin and high recurring revenue business. Generally, that's not ideal in the apparel and footwear business, this is not the grocery and general merchandise business. In the athleisure business, "brand heat" or "brand coolness" is very important. Athleisure as a lifestyle and mentality offers companies enormous revenue and free cash flow opportunities but designs have to be cool and sexy and functional, stores have to be aesthetically pleasing, with friendly and knowledgable staff, and there has to be a buzz about the brand. The digital business needs to engage people and serve people. The data needs to be harnessed for continued innovation. Data on your browsers and customers is the X-factor that can and should drive future engagement. Without all of these things combined, you are just hoping someone transacts with you without the ability to keep them engaging. That drives low multiples permanently.  Your buzz can't be that the brand is super cheap and serving a basic consumer staples purpose. Brands that fall into that category tend to be persistent underperforms and ultimately become completely irrelevant. Under Armour has made huge strides to get back on track from an operational perspective, there's more to do but I'm very pleased at their progress. What they need to focus on next is a complete brand reset. Maybe that's creating a new premium brand, maybe it's making a small acquisition, or maybe it's leaning deeper and more aggressive into the Project Rock brand but it has to happen quickly.  For now, UAA is a value stock without a clear catalyst. They have set the bar quite low from a future expectations perspective so it likely has some value around $8.15/share but to make the real comeback which I think can happen, it needs to become a much more relevant brand, make premium and differentiated products, cut the undifferentiated boring skews and spend on a smart branding strategy. They need to connect with people on a deeper psychological level, like they did in their early days. They need to be more than a perceived athletic apparel and footwear brand. They need to move into active lifestyle and street-wear. And most of all, they need to be the edgiest brand in the category. Loud, edgy, opinionated and serving every demographic because we believe what they believe. The Rock and his philosophies are a great first step, now we need a collective of motivators like the Rock, from sports to music to other pop culture categories. Let's find brand ambassadors around the world that stand together with a positive, motivational message to kids through older adults. That's the revolution I want to join. There's no reason UAA can't drive it!