Money and Finance
- The Tenets Of Capital Cycle Analysis
From Ed Chancellor in his introduction to Capital Returns: Investing Through the Capital Cycle: A Money Manager's Reports 2002-15: The essence of capital cycle analysis can thus be reduced to the following key tenets: Most investors devote more time...
- More From Ed Chancellor On Focusing On Industry Supply...
From his introduction to Capital Returns: Investing Through the Capital Cycle: A Money Manager's Reports 2002-15: FOCUS ON SUPPLY RATHER THAN DEMAND Given that the future is uncertain, why should Marathon’s approach fare any better? The answer...
- Focusing On Expected Returns Instead Of Intrinsic Value…
Just tying a few related comments together from some recent things… From Sanjay Bakshi:I think it’s important for investors to think in terms of expected returns instead of fuzzy concepts like intrinsic value even though they may be functionally equivalent. There...
- Not A Normal Cycle: Apollo Asia Fund: The Manager's Report For 3q2011
The outlook, however, seems much trickier now. Too many western economies, having hurled taxpayers' money indiscriminately at the banks without allowing normal bankruptcies and restructuring, have catapulted themselves into a debt trap from which...
- Bruce Greenwald On Value Investing
What's the current environment like for a value guy?- I'll tell you the one really nice reason to be a value investor: When things like this happen, you cannot help but go nuts at the opportunity. What this looks like is the end of 1974, where...
Money and Finance
Apollo Asia Fund: the manager's report for 4Q2008
After observing in our last quarterly report that the Asian news for the third quarter had been benign, the climate worsened suddenly and dramatically in October. Asian exports fell precipitously, as did the revenue of many other businesses. Some orders will have been postponed due to inventory adjustments; some cancellations will have used trade finance as an excuse of convenience; but end-demand has clearly contracted in a wide range of industries, and in many cases the sustainable level of demand has yet to become clear. Trade finance remains a problem, according to recent comments by Victor Fung, who would have broad input. Whether this is because of capital constraints as the banks deleverage, or the usual cyclically indiscriminate tightening of lending criteria, credit is scarcer, and for many companies much more expensive - even as the returns on cash shrink.
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Assessing sustainable demand for many industries now seems difficult. When, if ever, will global construction activity regain the levels achieved in a worldwide synchronised boom, assisted by a credit bubble, coinciding with what may have been the most construction-intensive stage of China's recovery? Thinking of the excesses of the Middle East, and of the conviction with which many individuals around the world have accumulated multiple properties "for investment" without any regard to the rental yield and maintenance costs, I would guess this will not be for many years. This may be just as well for the planet, but I am not sure how one should currently evaluate the manufacturers of steel or construction machinery. Riding out a couple of bad years against a rising global demand trend is one thing: assessing the costs of adjustment to lower demand and the profitability thereafter seems more difficult. Of more immediate interest to us are those Japanese companies with world-leading technologies and reasonable 'normal' returns, for which valuations are cyclically depressed but with identifiable limits to how far a replacement cycle can be stretched and where it may therefore be possible to estimate sustainable demand with sufficient reliability to invest with a margin of safety. My sense is that there are significant opportunities here, and suggestions would be appreciated.
Assessing sustainable demand for many industries now seems difficult. When, if ever, will global construction activity regain the levels achieved in a worldwide synchronised boom, assisted by a credit bubble, coinciding with what may have been the most construction-intensive stage of China's recovery? Thinking of the excesses of the Middle East, and of the conviction with which many individuals around the world have accumulated multiple properties "for investment" without any regard to the rental yield and maintenance costs, I would guess this will not be for many years. This may be just as well for the planet, but I am not sure how one should currently evaluate the manufacturers of steel or construction machinery. Riding out a couple of bad years against a rising global demand trend is one thing: assessing the costs of adjustment to lower demand and the profitability thereafter seems more difficult. Of more immediate interest to us are those Japanese companies with world-leading technologies and reasonable 'normal' returns, for which valuations are cyclically depressed but with identifiable limits to how far a replacement cycle can be stretched and where it may therefore be possible to estimate sustainable demand with sufficient reliability to invest with a margin of safety. My sense is that there are significant opportunities here, and suggestions would be appreciated.
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At present, I am uncertain how to prioritise various different types of equity opportunity - for example the steady cashflow generators which may still command PEs in the high teens, versus capital goods makers which may be on fractions of book and less than 4 times historic earnings, but with no certainty as to when earnings, or in some cases even revenues, may resume.
At present, I am uncertain how to prioritise various different types of equity opportunity - for example the steady cashflow generators which may still command PEs in the high teens, versus capital goods makers which may be on fractions of book and less than 4 times historic earnings, but with no certainty as to when earnings, or in some cases even revenues, may resume.
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Despite the fall in market value of the portfolio during the year, intrinsic value (as measured by earnings, dividends, and book value) appears to have increased. Despite the evident risks, current valuations offer the possibility of compounding intrinsic value, our long term goal, at a reasonable pace. Errors are costly: a tortoise pace has caused us to miss many opportunities, but may be worthwhile if we can avoid most of the landmines.
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- The Tenets Of Capital Cycle Analysis
From Ed Chancellor in his introduction to Capital Returns: Investing Through the Capital Cycle: A Money Manager's Reports 2002-15: The essence of capital cycle analysis can thus be reduced to the following key tenets: Most investors devote more time...
- More From Ed Chancellor On Focusing On Industry Supply...
From his introduction to Capital Returns: Investing Through the Capital Cycle: A Money Manager's Reports 2002-15: FOCUS ON SUPPLY RATHER THAN DEMAND Given that the future is uncertain, why should Marathon’s approach fare any better? The answer...
- Focusing On Expected Returns Instead Of Intrinsic Value…
Just tying a few related comments together from some recent things… From Sanjay Bakshi:I think it’s important for investors to think in terms of expected returns instead of fuzzy concepts like intrinsic value even though they may be functionally equivalent. There...
- Not A Normal Cycle: Apollo Asia Fund: The Manager's Report For 3q2011
The outlook, however, seems much trickier now. Too many western economies, having hurled taxpayers' money indiscriminately at the banks without allowing normal bankruptcies and restructuring, have catapulted themselves into a debt trap from which...
- Bruce Greenwald On Value Investing
What's the current environment like for a value guy?- I'll tell you the one really nice reason to be a value investor: When things like this happen, you cannot help but go nuts at the opportunity. What this looks like is the end of 1974, where...