Excess Returns Redefining Value Investing in a Magnificent Seven Dominated World | Jacob Pozharny
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Dec 27, 2024 Jacob Pozharny, a partner at Bridgeway Capital Management, dives into the world of intangible assets and their critical role in modern investment strategies. He explains how elements like intellectual property and brand value complicate traditional valuation metrics. Jacob highlights the growing importance of sentiment analysis for high-intangible companies and discusses the implications of AI on valuation methods. He also shares insights on long-short investing, the importance of humility in investing, and opportunities in international markets.
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Intangible Assets and Their Importance
- Intangible assets are hard-to-measure assets like intellectual property, brand value, and customer relationships that significantly influence a company's market value.
- These assets are increasingly important in modern investing, challenging traditional valuation approaches.
Measuring Intangible Intensity
- Intangible capital intensity is measured by analyzing capitalized intangible assets (excluding goodwill), innovation capital (R&D), and organizational capital (SG&A).
- These metrics are ranked and averaged to categorize industries from high to low intangible intensity.
Intangible Intensity Across Industries
- Intangible intensity growth is not limited to the technology sector; it's prevalent in various knowledge-based industries like biotech, financials, and telecom.
- This growth impacts traditional valuation metrics like ROE and book value, especially for high-intangible companies.
