This site uses cookies to improve your experience. To help us insure we adhere to various privacy regulations, please select your country/region of residence. If you do not select a country, we will assume you are from the United States. Select your Cookie Settings or view our Privacy Policy and Terms of Use.
Cookie Settings
Cookies and similar technologies are used on this website for proper function of the website, for tracking performance analytics and for marketing purposes. We and some of our third-party providers may use cookie data for various purposes. Please review the cookie settings below and choose your preference.
Used for the proper function of the website
Used for monitoring website traffic and interactions
Cookie Settings
Cookies and similar technologies are used on this website for proper function of the website, for tracking performance analytics and for marketing purposes. We and some of our third-party providers may use cookie data for various purposes. Please review the cookie settings below and choose your preference.
Strictly Necessary: Used for the proper function of the website
Performance/Analytics: Used for monitoring website traffic and interactions
Owner’s opinions of their business value can be influenced by inherent biases, flawed valuation methodologies, and factors lurking beyond their control. Owners often seek valuations from CPAs or similar entities for purposes such as insurance, estate planning, or internal events.
But when you look at emerging markets and when you look at value, the opportunity for alpha is much, much greater than it is in traditional large cap growth stocks in the US And a lot of managers in that space actually beat their benchmark. So value, growth and core has outperformed the benchmark or passive strategies over the last decade.
But there’s always gotta be some element of the valuation really being compelling. But even in the book I wrote in 2014, you could see that the focus on competitive advantage can never be absolute, you always have to take valuation into consideration. But maybe second to valuation as a primary consideration.
Its index and its benchmark. And speaking of the.com implosion, like Microsoft via a case study where we, in previous strategies, we held Microsoft for a very long time, that’s where the valuation could help us in the.com bus. a year, way over both. It’s in the top 1% of its peers. Morningstar five star gold rated.
They create the benchmark. So when there’s a major turnover like that that happens, you always have the option, “Hey, can you do it exactly on the time that it enters the benchmark? And 87% of our active fixed income funds have outperformed their benchmarks on a three year basis against their benchmarks.
And how do we think about them from a valuation perspective? And actually, that sweet, that collection of strategies, which is in the Morningstar alternatives fund is where a lot of our portfolio managers were turning to at the end of last year when, you know, fixed income is so poor on a prospective basis, equity, valuations are really high.
SEIDES: If the S&P is your benchmark, which it isn’t for these pools of capital. RITHOLTZ: What should be their benchmark? So the proper benchmark for those pools has to look a little bit like the underlying assets they’re investing in. So what do you use for a benchmark? What’s the valuation?
And the advice that he gave to David Einhorn about it that helped lead Einhorn to start really kicking the benchmark’s butt again for the past couple of years. We built a company that was focused on valuation, initially, actually targeting corporate strategic planning departments. Peter is unbelievably brilliant, right?
The fact that you’ve got declining risk appetite, declines are prolonged, deep and valuations mean revert. The second, and what’s interesting about that period, is the fact that valuations actually peaked in 1961. MIAN: Valuations are ebb and flow. What’s entertaining the family?
One, when people have asked me to compare and contrast today versus 2007, 2008, what you hear from a lot of people is, yes, there’s some fairly heady valuations. What’s been keeping you entertained? We’ve seen a couple of these events now. There were some fairly aggressive kind of investment strategies being pursued.
And they also have a unique approach to feeds when they’re generating alpha, when they’re outperforming their benchmark, they take a performance fee. Some people look at a casino as entertainment and hey, we’re gonna spend X dollars, pick a number, 500, 2000, whatever it is. For 50 years. Or they just did well, right?
CONROD: I — I think the — in this low interest rate environment people are looking for yield and income, and how do they — they have a — they have a benchmark. RITHOLTZ: Is that valuation issue ongoing? What — what’s keeping you entertained? And I — I think there — maybe some of them overpay for some of those assets.
The best example I always love to give is that Amazon’s last private round was at a $60 million post money valuation. Post money valuations until the market has changed dramatically. 00:15:29 [Speaker Changed] That’s your benchmark, correct? So, so let’s talk a little bit about valuation. All right.
Their benchmarks were down. Now the, the V on the LTV loan to value the value oftentimes is a disparity because when you ask a tech person, what’s this company worth, generally it’s, it’s very, very high numbers, which we don’t always support from our valuation. What’s been been keeping you entertained?
And because remember, Lehman had the Lehman Agg and that was the benchmark. There is above benchmark returns to be generated by active selection of credit quality duration and specific bonds. Now, we’re shifting to more international places like China, Europe, et cetera, that are really growing, and that valuations are cheaper.
He has absolutely crushed his benchmark over that period. He’s crushed the Russell 2000, whatever benchmark you want to talk about. You’re 34th, you’re retiring after 34 years and you trounce what’s really the more appropriate benchmark, I would assume the Russell 2000. a year since 1989. Much better.
RITHOLTZ: And last question about the various teams, does everybody have a different benchmark? And last market question, so we’ve seen equity valuations come down. I get the sense you’re expecting cheaper valuations, if not much cheaper valuations. How do you track performance? TROPIN: Yeah.
Everybody wants to sell a company when they get a good valuation. Obviously, profits, very important to company valuation — BERNSTEIN: Absolutely. The other thing we do, Barry, is we group valuation as a sentiment indicator. So we do a lot of valuation work. BERNSTEIN: Correct. RITHOLTZ: Right. RITHOLTZ: Right.
00:18:13 [Speaker Changed] When markets are going up, the benchmark is either an index like the s and p 500 or you know, someone you know that’s making even more money than you are. But it’s amazing how quickly the benchmark turns into cash or a positive return when markets are going down.
And one of the worst performing factors has been valuation. So we’re now in an environment where all the 45-year-old portfolio managers out there have been, have worked their entire careers in these momentum fueled markets, and they’ve been trained to believe that valuation doesn’t matter. I loved White Lotus.
You know, I think of like a Mike Spies or at Sutter Hill, you know, a Martine Cado and Andreessen, you know, Gurley when he was at Benchmark. It was about $170 million valuation. It’s 00:52:47 [Speaker Changed] A tough benchmark to beat. What’s keeping you entertained these days? I’ll give you that much.
And, and since then, you, you’ve gone on to do some work reforming L-I-B-O-R as the benchmark for rates. Starting with what’s keeping you entertained these days? You know, Lee Child’s entertaining. 01:17:31 [Speaker Changed] Le Lee Child is entertaining. And I thought, oh boy, we’re in big trouble.
We organize all of the trending information in your field so you don't have to. Join 39,000+ users and stay up to date on the latest articles your peers are reading.
You know about us, now we want to get to know you!
Let's personalize your content
Let's get even more personalized
We recognize your account from another site in our network, please click 'Send Email' below to continue with verifying your account and setting a password.
Let's personalize your content