A Portfolio Perspective on Fortune Magazine’s “World’s Most Admired” Companies

Abstract

We examine Fortune Magazine’s “World’s Most Admired Companies” for information content among the highest-ranked 50 companies from 2006 through 2018. We use one-year out-of-sample tests across the top three, top five, top ten, top 25, and all 50 stocks in the search for information content. We also examine an application of Modern Portfolio Theory (MPT). With the exception of the MPT application, we are unable to find convincing statistical evidence of information content, especially when considering taxes, brokerage fees, and asset-under-management charges, results that stand in contrast to those in the literature.