New paper: Searching for Superstars 🌟
• Ability to attract talent is a moat 🏰
• Companies hiring talent from elite competitors and universities outperform 📈
• Company social networks / PageRank 🕸️
• March Madness-themed bonus section 🏀
The performance gap between the best and average worker is growing. However, unlike in sports, investors lack metrics to identify teams with top-tier talent.
(2/10) Human Capital Map
To solve this problem, we build a "social network" based on human capital flows from one company to another.
(3/10) Superstar Aggregators
We apply the PageRank algorithm to this network to find companies that are winning the War for Talent. We run a backtest and find these firms have outperformed the stock market.
(4/10) Wall Street vs. Silicon Valley
From a macro level, superstar talent has been fleeing Wall Street into Silicon Valley's open arms.
(5/10) Industry Clusters
Our graph allows us to cluster firms based on their hiring patterns. This provides a useful alternative to static industry classifications (GICS, SIC).
(6/10) University Alumni Portfolios
We build portfolios of companies that employ high concentrations of alumni from top universities. Here are the employers with the highest concentration of Ivy League grads.
(7/10) US News & World Report
Using US News & World Report rankings, we find that companies able to attract grads of the top 50 universities have outperformed.
(8/10) March Madness 🏀
We use hierarchical clustering to build a March Madness-style "bracket." Each match will be decided by a horse race of 2005-2020 performance of each school. Before you peek at the next Tweet, place your bets! 🏇
(9/10) Tournament Results
And the champion is ... UC San Diego 🏆!
(10/10) Conclusion
As in sports, the economy is increasingly driven by superstar talent. Companies with superstar teams have beat the market. Human capital flows allow us to find these winning franchises.
1 | New Paper: International Intangible Value
Can investors take advantage of cheaper foreign markets without compromising on growth and innovation?
😢International Stagnation
🐢Intangible Underinvestment
🏅Intangible Leaders
📈Factor Backtest
⚖️Foreign Dilemma
(h/t @MebFaber, not investment advice, see full disclaimer in paper)
2 | International Stagnation 😢
International stocks have stagnated, primarily due to a lack of fundamental growth.
3 | Intangible Underinvestment 🐢
This slower growth is related to underinvestment in the intangible assets that drive growth today (i.e., 72% correlation).
Can factor investors benefit from an allocation to the “Intangible Value Factor?”
6️⃣ The Six-Factor Model
📈 Factor Returns
🎨 Model Portfolios
🦕 Fixing the Anti-Innovation Bet
✅ An Improved Factor Portfolio
Election Special: What is the return on investments in political influence?
📈Return on Influence
💰Lobbying
🗳️Campaign Donations
⚔️Partisanship
✨Intangible Value
What to do about bombed out "innovation stocks"?
🪦Death of Innovation
📜Two Centuries of Patents
🏭Investing in Innovation
🍱Innovation as an Asset Class
💬Avoiding Bubbles
Using social media to measure brand strength:
🗽Democratizing Influence
🥳Brand Personality
💎Strong Brands
🎇Brand Networks
🌎Sustainable Brands
🧘Millennial Brands