Value Investing has long been postulated as holy grain of investments in public markets. I come from PE (Private Equity) background, where they don't give any weight-age to traditional value investing parameters such as
- Book Value
- P/E Ratios
I was always thinking that there is a disconnect between the real economy and market. However, offlate, it has been observed that the analysts in institutional investment funds are more focussed on traditional PE concepts such as
- EBIDTA
- De-risking of Cash flows
- Stakeholder Analysis (eg. Power Plant, Mining)
- Impact - Influence Matrix Analysis
It seems that Post COVID public markets investment is no different than the investment theme of Project Finance / PE Funds where they put in extra efforts to evaluate these parameter
Concepts like book value has totally lost relevance. I am not sure why these people on CNBC or market news media keep on shouting P/B etc.
Value Investment has moved ahead of traditional / bookish evaluation as we are amid a once-in-century kind of event.
Advisory post COVID public markets
- High Retail participation may have propelled the markets to unrealistic valuations, which are absurd
- Be focused on staples and tech story
- Don't use Value Investing (as it is taught or professed)
- Cut the crap and be focused on EBIDTA similar to PE/Project Finance
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