Most banks in developed markets are trading at a steep discount to reported book values. Taking the UK market as an example, current market valuations for the listed banks are just c.40% of reported book valuations, a historical low. Indeed, the Irish banks trade at an even steeper discount, with market valuations sitting at just c.25% of book values. This article seeks to … [Read more...] about Why do bank stocks trade at a steep discount to book value?
Last year we saw a dramatic increase in concern over climate change, which was reflected in its prominence as an investment issue. Despite all this attention, however, climate change has only had a significant impact on the valuations of select sectors—specifically those facing extremely elevated transition risk, such as fossil fuel producers. We believe valuation dislocations … [Read more...] about Rising climate change risk not yet factored in by markets
The coronavirus crisis drew into focus the question of where investors should look for safety. This once had a simple answer. Safety lay with ‘risk free’ assets, essentially the bonds issued by the G5 governments, the US, Germany, Japan, France and the UK, supported to some degree by Switzerland. To what extent does that narrative still hold, at least in the relatively … [Read more...] about In search of safety
What is the zeitgeist of today? I’d like to refrain from commenting on politics and philosophical beliefs. Instead, let us focus on economics and markets. You might counter that in today’s world everything is dependent on the philosophies and belief systems that define society. Are we heading towards a utopian or an Orwellian world? To that, all I can say is nothing we witness … [Read more...] about What is the zeitgeist of today? Are we heading towards a utopian or an Orwellian world?
The last decade or so has not been kind to value investors. Not only are we that much older, we’re that much greyer as a result of performance that has left even the most hardened of us battered, bruised and battle-scarred. Value investing involves buying stocks that are undervalued (cheap relative to their true underlying value) in the hopes that share prices will recover … [Read more...] about What does value investing have in common with Forrest Gump?