MarketFox columnist Daniel Grioli speaks with Allison Fisch, a Portfolio Manager and Senior Analyst at Pzena Investment Management, about how you can apply a value strategy in emerging markets. Is it possible in the first place? Fisch believes so, but some adjustments are necessary to make it successful.
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 buch in developed markets, but in emerging markets it does
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 terminal
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 there something 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.
About the [i3] Podcast
The [i3] Podcast is a conversation with some of the leading institutional investors around the world, discussing their philosophy towards investing, in particular towards portfolio construction and investment strategy. The [i3] podcast is available on iTunes, Google Podcast, Spotify, Stitcher or your favourite podcast platform.