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Welcome to the latest edition of Value Investor Digest.
In this instalment we feature an FT Alphaville article titled ‘Never, ever make predictions’, ‘Charts from the Vault’ by Mauboussin’s Counterpoint Global Insights, a Kopernik Global Investors commentary, a Business Breakdown on Interdigital with Jenny Wallace – plus articles and reports from Andrew Wellington from Lyrical Asset Management, Merryn Somerset-Webb, Brown Brothers Harriman, an FT interview with Eugene Fama and the latest memo from Howard Marks titled ‘Ruminating on Asset Allocation’.
Judging by his latest ‘diary of a quant’, Man AHL’s Russell Korgaonkar is as exhausted by the end-of-year investment outlook blizzard as we are. And as he points out, strategists aren’t, umm, great at predicting the future.
The Consilient Research team spends a lot of time on, well, research…As a change of pace, we have decided to publish some of our favorite charts that went unused or got lost in the shuffle. Most of these exhibits explain themselves, but we add a little commentary in each section to set the tone.
I view the story of this Egyptian royal family, admittedly like too many other things, as an investment analogy. Value investing has been the staple of investors for centuries. It merely means that one strives to buy things for less than they are worth. How can that ever be a bad strategy? It never is. But periodically, society searches for a new “God,” a new sense of values, and sets forth in search of more exciting stories. “Growth” rules the day. But growth only makes sense when it is undervalued. When it gets crazy, bad things eventually follow. That is when the crowds stampede back toward more traditional values.
My guest is Jenny Wallace, co-founder and CIO of Summit Street Capital Management. We discuss InterDigital’s five decades of history, what it takes to maintain its patent portfolio of 30,000 patents, and much more. Please enjoy this Breakdown on InterDigital.
Money managers can – and do – beat their benchmarks more often than you think.
The bar graph shows the year-to-year performance of the S&P 500 relative to the S&P 500 EW back to 1990, when S&P created the equal weight index. In many of these 35 years, the two indexes have diverged quite meaningfully…After over 12 percentage points of outperformance in 2023, the S&P 500 is outperforming by more than 10 percentage points in 2024 YTD. In fact, if the first half of 2024 were a full year, it would rank as the third highest annual outperformance in this 35-year history, bested only by 2023 and 1999.
In the feature article of this issue of Women & Wealth Magazine, we sit down with BBH Partner and former Chief Investment Officer Suzanne Brenner to learn more about her journey from classical music to finance, her investment philosophy, and how she’s helping to pave the way for more women in investing.
Fama is surprisingly phlegmatic when it comes to defending his life’s work, echoing the famous British statistician George Box’s observation that all models are wrong, but some are useful. The efficient market hypothesis is just ‘a model’, Fama stresses. ‘It’s got to be wrong to some extent.’
Ever since coming up with my sea change thesis regarding interest rates two years ago, I’ve been talking about the increased utility of credit investments. And the more I’ve done so, the more I’ve thought about the difference between credit investments and equities. Thus, the first thing I want to mention about my “Australian epiphany” is the unconventional idea that, at bottom, there are only two asset classes: ownership and debt. If someone wants to participate financially in a business, the essential choice is between (a) owning part of it and (b) making a loan to it.
© Value Invest 2021
