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

A February 2024 and YTD Dynamic Brands & Market update. I also talk about the active trading environment and the net gains taken for the month with all the stats.

For more info on investing in Mega Brands:

Todays episode talks about the energy markets, energy stocks, and where there could be opportunities for investors and even traders. I check in with energy expert, Paul Sankey, of SankeyResearch.com

We talk about the integrated oils, oil services, refiners, and LNG. Paul is such a great chat because he has such a great grasp of energy markets, M&A, production, and the stocks.

In today's episode, I discuss the 2023 Brands Fund returns, what worked, and what we expect for 2024. I highlight the Mega Brands returns, the mean reversions that still are likely to come and what a goldilocks scenario looks like using 53 years of market returns at different Fed Funds and inflation regimes.

To get more information on how to invest in the brands that matter most:

Travel has always been a very important spending category for consumers globally. Post pandemic, we still see strong travel demand and better profitability for key online travel platform Expedia, EXPE. Through Expedia brands like VRBO, Expedia, Travelocity, Orbitz, Hotwire, CarRentals.com, and Homeaway, Expedia is getting its mojo back. There's a huge gap between the market cap of EXPE and its two key peers, Booking and AirBnb. As Expedia gets back on track and the industry continues to flourish, we expect a major catch-up opportunity in shares of EXPE. Using a conservative comp with ABNB, the VRBO division on a stand-alone basis would likely be worth at least 50% of EXPE total value making the rest of the business exceptionally cheap. EXPE trades at 9x, BKNG at 16x and ABNB at 27x earnings. We think EXPE can expand the multiple well and the company seems to agree with its new $5B buyback authorization.

To learn more about investing in the world's leading brands:

In today's quick video, I discuss our allocation to a more defensive, stable consumer spending industry, auto parts and retail auto maintenance via the two leaders, Autozone and O'Reilly Automotive. I'm sure you have seen each brand in your community. AZO has 7165 stores and ORLY has 6111 stores so they are well represented in most communities. They have been strong compounders as stocks in a very important but boring industry making them solid investments over time.

For more info on how to invest in leading global brands:

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:

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.

This is an all encompassing audio presentation that discusses why anyone would want to invest in the theme of global household spending (it's a $40+ trillion a year theme), why the theme is the ideal core holding for a portfolio, why having dedication to the most relevant brands makes sense, and why the HSUTX fund is the easiest way to get the broad "lifestyle spending" allocation you need. I also remind listeners that most portfolios are chronically underweight the consumer stocks, which is a great complement to the growth stocks or growth funds/ETF's one might own. The Brands fund tends to be equal or underweight technology in favor of being overweight Consumer Discretionary and often, Consumer Staples brands. The best performing 2 sectors long-term are tech and consumer discretionary yet theres 3x more money invested in tech than in consumer stocks. That's the opportunity, having exposure to both sectors through the leading brands is an ideal core portfolio and gets you exposure to some of the most powerful beloved brands ever created. I show what a portfolio of great brands would have looked like going back 20 years to highlight how important "brand relevancy" really is. I also talk about the current portfolio of brands, which can change at any time. I describe the holdings through the sub-sectors of consumption we think are most powerful and enduring today.

If you would like to chat about brands and/or the fund, you can reach me at eric@globalbrandsmatter.com or check out the brands page:

Like many in our industry, John started investing (studying businesses and valuing stocks) in college so he's been analyzing businesses and following markets for almost 25 years. John graduated Phi Beta Kappa and Magna Cum Laude from the University of Richmond and graduated with his MBA as part of the Beta Gamma Sigma International Honors Society from Tulane University. John published a book on Investing titled "A Manual on Common Stock Investing" in 2013. For the past 9 years John has been the Senior Analyst, Portfolio Lead, and the Head of Investor Training and Development at The Motley Fool. He recently resigned from the Motley Fool so he could focus on joining a new team at an institutional value firm as a senior analyst.

We talked about a handful of John's favorite businesses and stocks including BRK, O'Reilly Automotive, Nextera Energy, CarMax, and Domino's.

We also talked about the private market alternative asset managers via Blackstone, KKR and tried to dispel the myths around taking marks, and the opportunities for the Alt firms as prices get dislocated and dry powder gets put to work at attractive prices. We also talk about John liking energy and banks as sentiment has turned sour. We both like to buy diamonds (great businesses) in the dumpster (hated and with low expectations). We also talk about the JNJ spin-off of its consumer products brand, now called Kenvue.

Great talk, I think you'll enjoy it.

Follow John on Twitter @JRogrow

For more information on the Brands Fund and investing in the worlds leading brands, please go to:

This is the audio version of our 2022 Fund Letter for the brands strategy.

I discuss what went wrong in 2022, where sentiment is and what that could mean for 2023, the history of Fed Funds and inflation versus what we have seen since 2009 and what mega themes and brands we are exposed to as we start 2023.

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

Today I chatted with a dedicated Cannabis, Consumer and Consumer Tech investor, Paul Cerro from Cedar Grove Capital.

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.

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.

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. 

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.

Today I chatted with a dedicated Cannabis, Consumer and Consumer Tech investor, Paul Cerro from Cedar Grove Capital.

This chat is my all-time favorite conversation with the best consumer analyst in the industry. He's a top ranked analyst for a reason, he knows retail and the consumer better than anyone. Simeon started his career at Goldman and simply has better insights than most analysts. In my experience, not every analyst understands the power of the brand, sometimes the intangible asset of brand tells a different story than the excel spreadsheets. When combining the raw numbers with the brand relevancy analysis, and adding some technical & sentiment work, better entries and exits often happen.

We talked about the state of the consumer (don't bet against them), how inflation is affecting consumption trends, inventory issues short term, demand being pulled-forward, and which categories seem well positioned.  We talked at length about Under Armour, a new obsession of mine. We also talked about the discounters like TJX and Ross Stores. Other brands and categories discussed: Nike, Lulu, Deckers, footwear, apparel, omni-channel.

It's nice to have a former guest, Sean Emory back on the podcast.

We talked about the macro and inflationary environment and when we might see a rate of change tailwind.

We also talk about the kinds of companies that should continue to perform well into the future and how disconnected the current businesses are from their stock prices. Eventually the actual business performance will drive these stocks which, given the drawdowns in many of these great businesses, should offer very robust recoveries once the market bottoms and macro stops driving the narrative.

We talked about Duolingo $DUOL $WIX $SHOP $SQ $FVRR $ZM

There will be an epic opportunity to buy so many of the emerging growth brands that have been left for dead, its only a matter of time.

I discuss the market for the first half of 2022 and add a historical perspective from 1970, the last time markets had as bad a first 6 months. I talk about the inflation, rates and macro headwinds we face and add some color around how consumers and businesses are dealing with a slowdown and high inflation. I talk about the power of Brands and why they are very well positioned for the environment we are in, even if the market does not reflect this currently. I also discuss the top 10 holdings as of June 30, 2022. Thanks for listening!

Today's conversation was one of my favorites. I have been a long-term follower of Mark Mahaney (@markmahaney on Twitter).

He's been covering tech and Internet stocks for 30+ years and has seen every cycle - good and bad. In periods like today, that's enormously valuable to investors.  We talked about his recent book release "Nothing But Net", my new favorite. 

In episode 6, I have a wonderful conversation with Barry Schwartz of Baskin Wealth in Toronto. Barry's a very smart investor of high quality, stable companies. We talk about the current market sell-off and what drives his investment decisions. Baskin runs a core equity portfolio that holds some significant exposure in Mega Brands like Microsoft, Apple, Google, Costco, Visa, Amazon, Netflix, Ferrari, Domino's Pizza, Vail Resorts, and more.  We talk about the firm's target client and running their core portfolio plus some bonds where appropriate. Barry focuses on 5 core criteria:

1. Moat businesses

2. Tailwinds for opportunities

3. Great management & culture

4. Strong history of smart capital allocation decisions and ROI

5. Attractive valuations

Portfolio focus: think like a business owner and don't sell the companies that execute.

Clients have benefitted greatly because of this strategy and have some tremendous long-term gains.

Great convo on Adobe and what looks attractive to his team.

In today's chat, I talk with an incredibly experienced retail investor, Rahul Sharma of Neev Capital (@Retail_Guru on Twitter) 

Rahul is a former Global Consumer Fund Manager and has worked with Citi and Alliance Capital.

Our discussion begins with the state of the consumer and consumer balance sheets. We talk about consumer sentiment and the inflation that consumers around the world are seeing and feeling in their purchase decisions. We talk about the obvious high comparisons across the consumer discretionary & staples sectors. We dig deep into the concept that many of the most relevant brands are now structurally much stronger and how the best brands used the pandemic to become a better company. The opportunity is to identify the better companies that are still trading for multiples that do not reflect they upgraded business models, margins and growth opportunities. Consumer sentiment is now back to 2009 levels which makes it more like a contrarian indicator as the economy heals and inflation goes lower over time. US housing is still severely supply constrained and high end consumers are still generally flush and willing to spend on important, high priced consumer goods. Rahul answers my question about a handful of brands that he would be comfortable owning for the long-term without much worry.

We talk about the following brands: Dicks Sporting Goods, Target, Williams Sonoma, Home Depot, Lowes, Amazon, Nike, LVMH, Richemont (Cartier)Porsche, Estee Lauder, RH, Nordstrom Starbucks as well as broadly about the discount brands like DLTR and DG

Today I welcome back a former guest, Sharif Farha from Safehouse Capital in Dubai. We both manage consumer-focused portfolios and todays conversation we cover a host of brands and thematics.

We talked about the loathing of anything with the word "growth" attached to it and talk about why we own:

RH - Restoration Hardware & Amazon

Why Sharif likes and owns: Sony, Activision, Spotify, Universal Music, Crocs

We also talk about China Tech and his stakes in Alibaba, TenCent and TenCent Music.

This is the audio version of our 2021 Brands Fund Letter. Welcome to Mr. Toads Wild Ride market in 2021.

I highlight the kind of market environment we had in 2021, what we see for 2022 and how we are positioned.

I talk about the spending categories we are invested in as well as which brands are the most relevant based on our analysis.

I talk about the distortions that have been created through Covid and what we see normalizing in 2022.

I show how the fund has performed in the 2 year stack of 2020 & 2021 - hint - we outperformed the S&P 500 ~575 bps annual due to a strong 2020 Covid stage 1 year. I compare the fund to the S&P 500 and a plain vanilla, traditional ETF-only blend which lagged the S&P 500 by roughly 300bps annual with this blend. The ETF’s & weights we used for this analysis are: SPY(15%), QQQ(25%), SPHD (20% - low vol, high dividend), IWS (5% - mid-cap value), IWP (5% - mid-cap growth), IWN (5% - small-cap value), VGK (5% - broad based Europe), GEM (5% - emerging markets), IWD (15% - large cap value). This is a fairly typical broad market portfolio using ETF's.

If you would like to read the commentary, please email me at Eric.clark@accuvest.com and Ill send you the PDF.

Today, we have a spirited discussion with two well-informed METAVERSE investors and ETF product creators.

Sean Avory or Avory & Co and Will Hershey of Roundhill Investments join me to discuss the Metaverse, (META ETF via Roundhill) why it's being created and demands our attention and who likely benefits from its creation and evolution. We also talk about the video gamers and their role in the METAVERSE development as well as NFT's and crypto through blockchain development.