The Future is Now – October 2017
Which is more important: what a company has done in the past, or what it might accomplish in the future? Evaluating how a company’s management has dealt with past challenges while strategizing for the future are equally important. It is sometimes suggested that value investors rely on historical data to buy traditional (read: boring) companies, while growth investors look forward and buy innovative (read: exciting) companies of the future. At HCM, our value-oriented investment process employs a Profitable-Growth1 framework. For an investment to fit our framework it must have both a history of solid returns, as well as the ability to grow by investing capital in profitable future ventures. Additionally, we must be able to purchase those assets at a discount to intrinsic value. Intrinsic value is deeply influenced by changes in a company’s competitive environment and management’s response to it. The competitive landscape is always shifting for all companies, but the speed and degree of that change varies. The most extreme form of change is Disruption. In this Investment Perspectives we will highlight how competition affects our intrinsic value calculation, and describe the disruptive influences impacting our portfolio, our lives, and the financial markets overall.
Read Entire Issue