My chat with Allison Fisch, a Portfolio Manager and Senior Analyst at Pzena Investment Management, about value investing in emerging markets. Is it possible in the first place? Fisch believes so, but some adjustments are necessary to make it successful.
We also discuss disruption and what it means for value investors.
Allison Fisch podcast overview:
4:00 – Value investing is really all about psychology, the psychology of markets.
8:00 – Can you use value strategies in emerging markets? Yes, but with some differences.
11:00 – Country selection hasn’t mattered much in developed markets, but in emerging markets it has.
13:00 – Using quant tools to screen the universe.
15:30 – You are looking for companies that are sick and you want to know whether they are having a cold or whether they are terminally ill.
16:00 The sweet spot is where there is something bad going on in a company, but they have the ability to recover from it.
17:00 – We look at the 20 per cent cheapest companies.
21:00 – We are in the worst cycle for value strategies. Is value broken?
22:00 – The bigger the high, the worse the hangover.
25:00 – How do you deal with technology stocks in a value strategy?
29:30 – The biggest change in emerging markets in the last 10 years is the make-up of the market.
32:00 – State-owned enterprises are trading at a discount. How do you get comfortable with these companies?
34:30 – Disruption and value strategies, do they mix? And the ‘Death by Amazon’ index.
35:30 – In emerging markets you don’t have incumbents, so it is just the disruptors getting more expensive.
38:00 – Today’s environment is like a bathtub; which company gets flushed down the drain?
41:30 – The moat of brand is not what it used to be.