MS Global Franchise Fund

MS Global Franchise Fund

Last Update: 2014-12-02

Number of Stocks: 28
Number of New Stocks: 0

Total Value: $554 Mil
Q/Q Turnover: 1%

Countries: USA GBR CHE SWE JPN ITA FRA DEU
Details: Top Buys | Top Sales | Top Holdings  Embed:

MS Global Franchise Fund' s Profile & Performance

Profile

Morgan Stanley Institutional Fund Global Franchise Portfolio Class I (MSFAX) was established on 11/28/2001. The net assets are $488.09 million and the turnover rate as of 12/31/2012 is 34%. The fund seeks long-term capital appreciation by investing primarily in equity securities of issuers located throughout the world that they believe have, among other things, resilient business franchises and growth potential.

Investing Philosophy

The team follows a distinct and disciplined investment process based on bottom-up stock selection, with sector, industry and stock weightings driven by the team's assessment of each stock's quality and valuation characteristics.

(1) Investable universe:
Companies are screened based on financial metrics that the team believes are associated with strong franchise businesses. The key financial characteristic of these companies is that they enjoy sustainable, high unlevered return on invested capital (ROIC), which is generated by a combination of recurring revenues, high gross margins and low capital intensity. This combination helps support strong free cash flow generation, which, crucially, must be either reinvested at similarly high returns or distributed to shareholders.

(2) Security selection:
The team looks for high-quality businesses with the following characteristics: difficult-to-duplicate intangible assets that protect the durability of the franchise; a sustainable, high ROIC on an unlevered basis; high gross margins and low capital intensity; a reliably recurring revenue stream; and financial strength and capable management.
The team monitors signs of franchise abuse, including failing to re-invest capital in high ROIC businesses, preventing compounding by retaining excessive cash and earnings-per-share targets having precedence over ROIC, which rewards short-sighted behavior.

Historical Allocation of Stock, Bonds, Cash

Total Holding History

Performance of Morgan Stanley Global Franchis

YearReturn (%)S&P500 (%)Excess Gain (%)
201319.731.55-11.8
201215.3815.4-0.0
20119.382.087.3
3-Year Cumulative51.1 (14.7%/year)55 (15.7%/year)-3.9 (-1%/year)
201014.0715.06-1.0
200929.6526.463.2
5-Year Cumulative123.4 (17.4%/year)125.5 (17.7%/year)-2.1 (-0.3%/year)
2008-28.88-378.1
20079.585.614.0
200621.615.795.8
200511.914.917.0
200413.77121.8
10-Year Cumulative169.6 (10.4%/year)104.1 (7.4%/year)65.5 (3%/year)
200327.9228.7-0.8
20028.1-22.130.2

Top Ranked Articles

MS Global Franchise Fund Comments on Admiral Group PLC
The team became more wary of Admiral (LSE:ADM) after the 2011 turbulence in the stock price, after a scare about the potential for large personal injury claims. While the 2011 claims ratio eventually turned out to be fine, it caused a revision in our view of the quality of the name. The combination of the stock’s recovery, and long-term concerns about the effect of autonomous driving on the motor insurance industry, caused us to reduce and then exit the position. Read more...
MS Global Franchise Fund Comments on Publicis Groupe SA
Publicis (XPAR:PUB) is one of the world’s leading global advertising services companies. We believe it is the most forward thinking of the large advertising players in the way it has positioned itself for the digital age. Unlike peers, the company balance sheet is run with low financial leverage and the return on investment in acquisitions is closely monitored. This focus on unlevered returns is likely to be because of the strong influence of Chairman Elizabeth Badinter, owner and daughter of the founder. Whilst it is a little cyclical, the high focus on return on operating capital, together with its leading strategic positioning, make this business attractive, as is the valuation, with the company trading on a free cash flow yield of over 8%. Read more...
MS Global Franchise Fund Second Quarter 2014 Commentary
Performance Review Read more...
MS Global Franchise Fund Comments on Time Warner Cable Inc
During the quarter, we initiated a position in Time Warner (TWC)(3.0%), which is one of the largest U.S. cable network businesses and parent company of Warner Brothers film and TV studios. Time Warner networks include CNN, HBO and Turner Networks. Return on operating capital at the cable networks is currently over 50% and closer to 15% at the film studios. We believe Time Warner is one of the best run cable network businesses in North America as it offers almost pure exposure to high return businesses where other networks companies often do not. The company is the leader in original scripted content in North America and also has a leading film franchise. It has an extensive film library and is able to monetize its content not just in the U.S., but globally. The stock is trading on a free cash flow yield of about 7%, with free cash flow expected to grow over 6% per year for several years to come. Read more...
MS Global Franchise Fund First Quarter 2014 Commentary
Performance Review Read more...
» More MS Global Franchise Fund Articles

Commentaries and Stories

  • Currently 0.00/5

Rating: 0.0/5 (0 votes)

MS Global Franchise Fund Q3 2014 Commentary
Performance Review More...

  • Currently 0.00/5

Rating: 0.0/5 (0 votes)

MS Global Franchise Fund Comments on Admiral Group PLC
The team became more wary of Admiral (LSE:ADM) after the 2011 turbulence in the stock price, after a scare about the potential for large personal injury claims. While the 2011 claims ratio eventually turned out to be fine, it caused a revision in our view of the quality of the name. The combination of the stock’s recovery, and long-term concerns about the effect of autonomous driving on the motor insurance industry, caused us to reduce and then exit the position. More...

  • Currently 0.00/5

Rating: 0.0/5 (0 votes)

MS Global Franchise Fund Comments on Publicis Groupe SA
Publicis (XPAR:PUB) is one of the world’s leading global advertising services companies. We believe it is the most forward thinking of the large advertising players in the way it has positioned itself for the digital age. Unlike peers, the company balance sheet is run with low financial leverage and the return on investment in acquisitions is closely monitored. This focus on unlevered returns is likely to be because of the strong influence of Chairman Elizabeth Badinter, owner and daughter of the founder. Whilst it is a little cyclical, the high focus on return on operating capital, together with its leading strategic positioning, make this business attractive, as is the valuation, with the company trading on a free cash flow yield of over 8%. More...

  • Currently 0.00/5

Rating: 0.0/5 (0 votes)

MS Global Franchise Fund Second Quarter 2014 Commentary
Performance Review More...

  • Currently 0.00/5

Rating: 0.0/5 (0 votes)

MS Global Franchise Fund Comments on Time Warner Cable Inc
During the quarter, we initiated a position in Time Warner (TWC)(3.0%), which is one of the largest U.S. cable network businesses and parent company of Warner Brothers film and TV studios. Time Warner networks include CNN, HBO and Turner Networks. Return on operating capital at the cable networks is currently over 50% and closer to 15% at the film studios. We believe Time Warner is one of the best run cable network businesses in North America as it offers almost pure exposure to high return businesses where other networks companies often do not. The company is the leader in original scripted content in North America and also has a leading film franchise. It has an extensive film library and is able to monetize its content not just in the U.S., but globally. The stock is trading on a free cash flow yield of about 7%, with free cash flow expected to grow over 6% per year for several years to come. More...

  • Currently 0.00/5

Rating: 0.0/5 (0 votes)

MS Global Franchise Fund First Quarter 2014 Commentary
Performance Review More...

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