The Best Investment Writing Volume 5: Greg Obenshain, Verdad Advisers – Sales and Distributions: How revenue growth and distributions drive equity returns
The Meb Faber Show - Better Investing
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How Do Value Creators and Profitable Growth Companies Perform Differently?
These four types of companies perform very differently. Profitable growth has much higher revenue growth, but that is offset by multiples contracting and no contribution from distributions. Low growth value creators only grows at three%, but it has net distribution returns of four%. The unprofitable growth segment is e most interesting. It has companies with extremely high revenue growth in multiples. On average, these valuations fall dramatically, and the return on astrategy they continually invest in is negative.
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