By Andrew Pastor
Three years ago, I went to one of my favourite events – a value investing conference in New York. I have attended it annually for over a decade and it brings together some of the best investors in the world.
The 2020 conference felt different. Unlike other years, I didn’t recognize many of the panelists. The highlight of the day is always the Best Ideas Panel. The first investor came on stage and presented an online food delivery company. The next pitch was an online marketplace to purchase vehicles. The pitches were compelling. They laid out the case for how the companies were delighting customers, stealing share from the incumbents and were destined to grow for a long time.
I left the conference feeling uneasy. Was I the only one in the room that didn’t own any unprofitable disruptors? More importantly, I found myself wondering if I was even equipped to evaluate these businesses. Despite already being valued in the tens of billions of dollars, there was no financial history to review, they were losing a lot of money (“profit for later” companies) and you needed to be precise on what the business economics will be in 10 years. Investors seem to be using new math to value these types of businesses – return on capital and free cash flow were replaced by revenue growth and total addressable market (TAM).
I felt like I was being left behind.
Read the rest of the article online: New Growth?
Download the full article: Q4 2022 EdgePoint Commentary – New Growth?
Comments are closed.