What is the Endowment Effect and how does it relate to these stocks?

The Endowment Effect is a psychological principle where people place higher value on things they own compared to identical items they don't own. In investing terms, companies in this portfolio benefit because their customers develop such strong emotional connections that they feel a sense of ownership with the brand. This translates to customers who are willing to pay premium prices, consistently return for new products, and enthusiastically promote the brand to others.

What makes a company qualify as having "superfans"?

Companies with superfans go beyond just having satisfied customers. Their products or services become part of their customers' identity and lifestyle. Signs include customers who willingly display brand logos, eagerly await new product releases, participate in brand communities, defend the brand against criticism, and prioritize purchasing from the brand even when cheaper alternatives exist. Think of Apple users who won't switch to Android, Tesla owners who become brand advocates, or Disney fans who plan annual pilgrimages to theme parks.

How do direct-to-consumer channels help these companies?

Direct-to-consumer (DTC) channels allow companies to build deeper relationships with their most enthusiastic customers. Instead of selling through middlemen like retailers, DTC lets brands communicate directly, gather valuable data, personalize experiences, and create exclusive offerings for their biggest fans. This approach typically results in higher profit margins and stronger customer loyalty. Companies can use email, social media, apps, and their own websites to strengthen these direct connections.

Are these stocks more resistant to economic downturns?

While no stock is completely recession-proof, companies with superfans often show greater resilience during economic downturns. Their dedicated customers may continue prioritizing these brands even when cutting back elsewhere. For example, Apple fans might delay other purchases to afford the latest iPhone, Disney enthusiasts might still prioritize their annual theme park visit, and Starbucks regulars might consider their daily coffee an affordable luxury they're unwilling to sacrifice. This customer behavior can provide more stable revenue streams compared to companies without such devoted followings.

15 handpicked stocks

Superfan Portfolio

Back companies that inspire more than just customer loyalty—they create passionate brand evangelists. These carefully selected stocks represent businesses with cult-like followings, where emotional connection translates to predictable revenue and strong competitive advantages.

Han Tan | Market Analyst

Updated 2 days ago | Published at June 18