Page 29 - Waterfall City August Issue 2023

INVESTMENT

PHILOSOPHY

How a focus on valuations helps to drive long-term returns

By Anet Ahern, CEO of PSG Asset Management

A sk any shopper if they highest valuations on this measure.

prefer to buy an item at a
premium, at fair value or
In the same way as you think about
at a discount, and you’d
expect they’d (logically) opt for the the physical health and wellbeing
of your loved ones, you also need
discounted price. But in markets, to consider their financial security.
investors don’t behave in a similar Simply put, family investing is
way. At times, investors are willing strategic planning to ensure financial
to pay a premium for shares, and at peace of mind for generations. Shares
other times seem reluctant to invest, can be used as a way to support this.
even when the discounts are steep.
The graph below shows price to book In short, while there are sometimes
ratio for a selection of markets, with good reasons for markdowns, markets
the most popular markets at the often misprice assets – and we believe

Price to book ratio

this offers opportunities to patient
investors. Just like in the real world,
paying less to acquire a quality asset
makes sense. But unlike with real-
world consumer goods, we aim to buy
shares that increase in value over time,
rather than depreciate due to wear
Sources: MSCI fact sheets, PSG Asset Management, 28 April 2023
and tear!

Waterfall City Issue 8 2023 27