In his recent interview on the Value Investing With Legends Podcast, David Samra, founding partner of the Artisan Partners International Value Team, was asked about his thoughts on the future of value investing and whether it will survive. Here’s his response:
I don’t think the value of a business as the present value of its future cashflows is ever going away, and I don’t think buying an A. H. Robins below what it’s really worth is ever going to go away as a very strong disciplined system to generate returns and manage risk over time. It’s financially and mathematically impossible for it to go away.
Now, what I would say is, getting back to your comments about people employing mathematical models in order to drive investment returns, that there is a mass market part of the investable universe. So getting back to what I do as a business man. Where the mass market is being sold passive products and ETF’s where decisions are made based on liquidity movements, and they’re not thinking decisions, and they’re being pushed out of active management.
Now I know active management hasn’t shrouded itself in excellence over the course of my career but of course there are active managers that have done very well, and removing your, whether it be your retirement fund or your kids education fund into a product that is driven by liquidity, seems to be unfortunate for that part of the market place. So I think value investing will survive, but that part of the marketplace is unlikely to comeback to active management.
You can listen to the entire interview here:
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