Dilok Kraisataporn
CFA, MBA, PhD – not required
I’m not smart and I’m too young to have much experience. So you have to rely on other people or simple data metrics to keep your money safe. Your hard earned money is in the smartest hands (4 portfolio investments and 1 investment/savings account). There’s no one way to judge “smart,” but in my five examples of him, each investment is the epitome of its own smart qualities.
“Good vibes and smart people can get a lot done.” – Jim Simmons
Backed by my own biased but data-driven opinion, I honestly believe these five companies are the smartest in their promising field. Also, I am not focusing on any particular area of the market or one individual measure. This helps neutralize the influence of company size and industry. However, it also introduces peers who come closer but cannot reach the same level. The list of tickers, in no particular order, is:
- Alphabet (GOOG) (GOOGL)
- JPMorgan Chase (JPM)
- Exponent Co., Ltd. (EXPO)
- Houlihan Lokey (HLI)
- Berkshire Hathaway (BRK.A) (BRK.B)
These five companies tick off a number of key items related to business and financial quality. Some are very popular and well known, but popularity is not required. Rather, if customers, clients, and peers all respect these companies, they should have a vote for me. To set the stage before discussing each, let’s compare total returns to SPY and QQQ. As you can see, total revenue is not the goal, but factors such as longevity and safety are also important.
coifin
Alphabet – cultivating ‘other bets’
I believe the first obvious way to determine the smartest companies is by the number of employees with PhDs. To that end, we looked at data provided by his Revelio Labs, a workforce analyst. According to the company, Alphabet currently employs more than 5,000 Ph.D.s, representing about 3.5% of its total workforce. Second place Intel (INTC) has more than 4% PhD level staff and many smaller biotech or engineering start-ups have more than 10% PhD employees. This is certainly not the highest percentage of all employees, as there are What matters is how financial performance is supported or influenced by these smart people.
Well, Alphabet has created a trillion-dollar business, so I think it’s working. Meanwhile, Intel has other issues they should try to fix with their recent adoption. Also be wary of relying on this data, as names like Facebook (META), IBM (IBM), and pharmaceutical companies perform much worse than Alphabet. Again, a PhD is not useful by itself.
Rebellio Lab
A key future impact for Alphabet, as opposed to its first appearance, is the Other Betting segment. However, these startups are only possible thanks to a dropout or PhD level software/computer engineer developing his platform for the legendary search engine. Profitable Google Search, Ads, YouTube, Cloud, and other services all generate significant cash flows that can fund speculative bets. Smart minds are leading these speculative bets, and Alphabet can afford and pay for research (across multiple industries).
A prime example is AlphaFold from DeepMind, a proprietary open source drug discovery platform. We’ve covered the platform in detail in a previous article, but the main conclusion is that AlphaFold and all its other speculative subsidiaries are engines of continued growth, not instruments of net loss. For example, if AlphaFold succeeds, the integration of its services into the Google Cloud platform will drive customer acquisition, allowing Alphabet to compete with other cloud providers such as Amazon (AMZN) and Microsoft (MSFT). Organic growth of this nature is critical to weathering weak economic conditions, and a moat of legacy Google assets allows for continued profit generation regardless of investor sentiment, inflation, etc. That’s why I believe Alphabet is the smartest technology investment on the market. .
JPMorgan Chase – Global Systemic Importance
Another way to determine a wise investment is to determine how important the position a wise leader has created for the business. Often seen as a “moat”, economies of scale, or other positive monikers, establishing a top position in a particular sector or industry is no easy task. I think it’s wise, whether you are Every year, the central bank-funded Bank for International Settlements publishes a list of the top global systemically important banks. Thanks to its multi-financial sector and global leadership, JPM has been the world’s most important bank since the start of data collection in 2014, outperforming peers Citi (C), HSBC (HSBC) and BNP Paribas (OTCQX: BNPQY)
“The key to investing is not in assessing how much an industry will impact society or grow, but in assessing the competitive advantage of a particular company and, above all, the sustainability of that advantage. It’s a matter of judgment.” – Warren Buffett
With this data, JPM should always be your first consideration if you need a stable place to store your extra cash, whether it’s an investment or a savings account. Unfortunately, some risk points to consider are fluctuations in investor sentiment due to economic factors, and thus fluctuations in valuations/stock prices. Also, no global bank has a perfect track record, and one small risk can cause major problems in global markets (like 2008 and mortgage-backed securities). With more global regulation in place, risk management in place, and a significant lead over peers, I still think JPM is a smart investment, but stay away from tickers and stick with banking services. intend to.
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Houlihan Lokey – “Smart Money” Advice
For those looking for smarter financial investments, look no further than Houlihan Lokey. My bullishness as my personal greatest financial asset lies in the fact that HLI is his primary financial advisor on M&A, restructuring and valuation equity. Retail investors may be unfamiliar with the name, as HLI primarily serves the private and mid-cap or small-cap markets. However, aside from leading the number of completed transactions, HLI has delivered a phenomenal financial growth profile and this pattern is set to continue.
HLI website
What makes HLI smart is the fact that it backs up its financial advisory skills with industry-leading financial performance. Clients are primarily in the institutional market, also known as ‘smart money’, rather than public companies, highlighting the value of the services offered out of the public eye. HLI is also passionate about sharing key financial insights across all market sectors based on our experience in various transactions and relationships. This makes me a smarter investor. See my editor’s picks for healthcare spinoffs to see the data in action.
Similar to the pattern of HLI and the last two companies I discuss, smart can be proven through a business’s financial performance, not just a label or rank.
looking for alpha
Exponent – Selling Research Expertise
Another area of the market that investors should look to for smarts is research and consulting. If other big companies are willing to pay millions of dollars for the data and expertise you can provide, that’s a great sign. Unfortunately, there are many companies within the industry that fail to provide a strong and reliable financial profile. However, Exponent, a STEM research and consulting firm, is clearly the leader in the field, thanks to its strong track record (and significant PhD rate) over the past 30+ years.
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While going at a measured pace, one of the best financial indicators of success is a stepped growth rate. Earnings per share are growing rapidly at over 12% per year, driven by share repurchases and improved profitability, even though earnings are growing only 6% per year. Ratings have also risen rapidly, with EXPO being the group’s top performer for over the past decade, highlighting their talent. Not just them, my other industry favorites include FTI Consulting (FCN), his KBR redeemed (KBR), and Stantec (STN). But none can reach EXPO’s staggering levels of growth over decades.
looking for alpha
Berkshire Hathaway – Aged fine wine
Finally, I would like to conclude by highlighting the best ways to be smart. It’s age and experience. No company exemplifies this more than Buffett and Munger’s Berkshire Hathaway. With more than half a century of success and an experienced group of staff under it, relying on BRK is hardly a problem. Legendary data-driven investor Jim Simons said:
“Past performance is the best predictor of success.”
As an individual investor, you don’t need to build your own trillion dollar Internet empire, become the world’s most systematically important bank, or provide research and advice to the world’s smartest people. . Instead, take the easy way out and let others do the heavy lifting. Once you know which companies are doing well financially, you’re ready to go. Don’t forget all the small lessons, failures and successes you’ve experienced along the way.
“Live a life of humility, gratitude, intellectual curiosity, and never stop learning.” -GZA
Warren Buffett has successfully led Berkshire for years, so while it’s an interesting idea to rely solely on current and historical financial data, investors are discouraged from investing in companies they don’t understand. It is often said to be avoided. Can pure financial analysis alone provide enough detail to understand a business? In my eyes, it does. That’s what I plan to continue to do throughout my research.
Outperformance relative to peers, long history of success, continued profitability, etc. are all “clever” allowing investors to understand the true underpinnings of a company rather than the technical details of its products and services. It’s a scale. Whether its style is old-fashioned or outdated, Berkshire Hathaway is a perfect example of what can happen when you take this simple, quantitative approach to investing. We all know he doesn’t understand how to make one, but Apple (AAPL) is still his biggest holding!
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Whether you choose to rely on others to manage your money wisely, or choose to work on your own, I hope this article will begin to uncover the key metrics behind the scenes. We believe it is important to ignore the short-term noise and focus on the horizon because short-term weakness leads to long-term success. Follow Simmons, Lynch, and other shrewd investors.
thank you for reading. What other companies, assets, or strategies do you consider to be “smart” investments?
