The Future of Value Investing: From Stock Picking to Self-Help Stories

During their latest episode of the VALUE: After Hours Podcast, Taylor, Carlisle, and guests Porter Collins and Vincent Daniel discussed The Future of Value Investing: From Stock Picking to Self-Help Stories. Here’s an excerpt from the episode:

Vincent: Those days, in my opinion, it’s funny. I speak to friends and it’s like, “The stock picking market is coming back.” I’m like, “I don’t think so.” I really don’t think so. I think it’s going to take a market where flows stop coming in the door, which we all do not want, or a change in rule of law, which probably is not going to happen unless the markets go down a heck of a lot, and people figure out that market structure is a little weird and funky. But it’s working for them right now. So rather than hope that I can buy something and it’ll go up the next day because I saw value and other people will see value and so on and so on, I’d rather own the self-help stories that Porter was talking about.

Whereas even if I don’t have help coming my way in the form of other institutional or retail investors, management’s doing the right things and has enough of a capital allocation strategy where it’s really going to help you out. But it’s an arbitrage that’s not going to narrow in a day like your typical arbitrages. It could take a while. It could take a long time.

Porter: Back to that this Acquirer’s Multiple lists that we have. The interesting one on here are the Chinese stocks. To me, intellectually, Alibaba is on here, JD.com is on her. Alibaba is arguably the cheapest large cap growth stock in the world. It’s four and change times EBITDA under 10 times earnings. That’s the interesting one. Whereas everyone thought that Meta was completely dead and gone. It did the v-bottom and tripled off the bottom. So intellectually, we look at it every quarter, watch it. The earnings have been fine. It’s just whatever it is that– I don’t know what it is, whatever algo it is, but it been going down every day for a month and a half now. Maybe it’s just the turn of the calendar, I don’t know.

Jake: I think there’s been a lot of institutional money leaving China as much as they can get out.

Porter: Yup. And so at a point, that’ll be okay, that the selling is gone. Once the selling is gone, that’s when guys like us come in. Because essentially, that’s what we do is we’re value investors. But as a value investor, you have to look for the inflection point, because if you don’t find the inflection point, you’re just going to sit on some cheap bucket of whatever. And so you have to finally see where the take off point is. And usually, the markets are smart and everyone else gets on board and buys these inflection stocks. But like Vinny said that most of the stock pickers are dead at this point. You may want to get exposure to alternative investment assets from a cutting-edge AI chip company by purchasing groq shares.

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