No. of Recommendations: 2
Today's FOTH about value stocks becoming growth stocks reminded me of the Swiss Bank Julius Baer. With a tradition of being one of the most conservative Swiss banks for over one hundred years, catering exclusively to customers with assets over CHF 1 million (about USD 600,000; the treshold has recently been lowered to CHF 250,000 if all you want is to chose between three strategy funds. The average account is valued a bit above CHF 2 million), it has always been a very obvious value stock.

However, last year the stock has gone up more than 90% (the Swiss Market Index has gone up about 10% during the same time). What happened? Management has been the same for years, they didn't offer any revolutionary new products. They simply were able to cash in on years of brand development. when the larger Swiss banks became absorbed in mergers, restructering etc. over the last few years, they're customers became fed up with constantly changing staff and products. They started looking for a bank which offers continuity and personal attention, and that's exactly the image Bank Julius Baer has built over the years.

I guess it's almost a Rule Maker theme - the company with the strongest brand wins. However, the question is, how do you spot the next such company? In this case, Julius Baer still is a niche player, though a large one, and there are many other similarly positioned banks. How can you find the next value stock which will become a growth stock?

-Simon
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