Investors Voice Category: Value Investing

To understand where we are, it is important to be in possession of two frameworks: the first is how booms begin and turn into bubbles that burst; the second is to understand the maths of valuing assets.

NXT’s equity story is at the epicentre of two of the most powerful forces driving share prices over the past couple of years – the structural growth thematic of the move to cloud computing and falling/low-interest rates that have inflated the valuation of long duration asset business models like NXT.

In the past year, one of the best in the market, Steve Johnson from Forager, has publicly written about the problems the fund is having in Australia, where the WAAAX trade (Wasatch, Append, Afterpay, Altium, Xero) reigns supreme.

Downer is a compelling investment opportunity because of the high-quality nature of the business, an un-demanding valuation, and some clear catalysts for a valuation re-rating.

Just to be clear: owning a few bad apples in portfolio is not something that happens to inexperienced, unlucky or lesser informed investors only. It happens to all investors of all colors, shapes, and levels of experience.

The terms ‘growth’ and ‘value’, however, have had more staying power and are used extensively in financial market commentary. Frequently we read that ‘growth is outperforming value’, a particular investment firm is a ‘value manager’, or a certain company is a ‘growth stock’.