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DowDuPont takes top spot in IQ 100 Index after gaining 5% since megamerger

Reusable: Dow and Dupont split

from CNBC.

DowDuPont takes top spot in IQ 100 Index after gaining 5% since megamerger

The CNBC IQ 100 Index continued to outperform for the first three quarters of 2017, rising 15 percent and outpacing the S&P 500′s 13 percent gain.

As part of its rules-based methodology, the index has been reweighted for the fourth quarter. MCAM International, the firm whose proprietary algorithms power the CNBC IQ 100, executed the reweighting for CNBC.

Last quarter’s leaders, 3M and Oracle, have been dethroned by the product of inter-index M&A: DowDuPont, a combination of two previously separate IQ 100 members, takes the top spot.

The companies in the CNBC IQ 100 Index are weighted according to each one’s ability to invest in, develop, control and deploy intellectual property to achieve strategic advantage over competitors. Companies with the highest weighting maintain this type of advantage across multiple industries.

The IP advantage

The whole, according to MCAM, is indeed greater than the sum of its parts: “DowDuPont combines two excellent portfolios on agricultural science and advanced materials into a potent business model. The new entity is planning the optimization of the agricultural products, materials science and specialty components technologies into separate firms in 18 months, all of which will have scale and technology advantages in their sectors.” Indeed, shares of the DowDuPont have gained more than 5 percent since completing the merger early last month.

With the reweighting, Boeing also continues its steady climb, up from third to second place. MCAM believes Boeing remains best positioned to capitalize on the government’s proposed increases in defense spending: “Boeing has had a blowout year, and the beat goes on. Both its civilian and military aircraft and aerospace businesses are continuing their momentum, and its defense segment is very strong, all built on advanced Boeing technologies.”

With more emphasis on financial and health-care sectors, Xerox has moved to third place. After slipping last quarter, chipmaker Micron Technology holds firm in fourth place. Rounding out the top 5, HP has benefited from its first rise in PC sales in years. So-called “old HP” has also been making strides in modernizing and updating its operating systems, observes MCAM.

Further down the list but still within the top 10, Baxter is the newest company to join the IQ 100. It fills the vacancy created by the DowDuPont merger. MCAM cites the market dynamics of an aging U.S. population and the company’s deployment of “intelligent” medical devices, which are poised for accelerated growth.

The CNBC IQ 100 Index is reweighted quarterly, and components are rebalanced annually.

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The CNBC iq100 index it tracks big cap companies that get most of their revenue from their own intellectual property. Some of today’s leaders include Western Digital, DXC Technology, Bank of America and Broadcom. On the down side, Baker Hughes hitting a low not seen since April 2009.

Boeing leading the IQ100 after guidance hikes

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The CNBC IQ100 up more than twenty percent in one year. The index tracks big cap companies that get most of their revenue from their own intellectual property. Today’s leaders include Boeing, AT&T, Express Scripts, Texas Instruments and Broadcom. For more go to CNBC.com/iq100