The Value Investing library

Webinar 12. EV/automotive companies analysis of Tesla, Nio, Li Auto, Mercedes & BMW. Data pack including latest annual reports, benchmarks & supplemental information sources

Since 2008, a massive shift has occurred from active toward passive investment strategies. The passive index fund industry is dominated by BlackRock, Vanguard, and State Street, which we call the “Big Three.” We comprehensively map the ownership of the Big Three in the United States and find that together they constitute the largest shareholder in 88 percent of the S&P 500 firms. In contrast to active funds, the Big Three hold relatively illiquid and permanent ownership positions.

This paper examines whether a simple accounting-based fundamental analysis strategy, when applied to a broad portfolio of high book-to-market firms, can shift the distribution of returns earned by an investor. I show that the mean return earned by a high book-to-market investor can be increased by at least 7.5% annually
through the selection of financially strong high BM firms, while the entire distribution of realized returns is shifted to the right.

The Quest for Yield - The Roles of Dividend and Interest Income

Many natural competitors are jointly held by a small set of large institutional investors. In the U.S. airline industry, taking common ownership into account implies increases in market concentration that are 10 times larger than what is presumed likely to enhance market power" by antitrust authorities. Within-route changes in common ownership concentration robustly correlate with route-level changes in ticket prices, even when we only use variation in ownership due to the combination of two large asset managers. We conclude that a hidden social cost - reduced product market competition - accompanies the private benefits of diversification and good governance.

This paper sets out to examine the relationship between capital intensity and stock returns both across and within industries. The paper proposes that greater capital intensity impairs returns on capital and depresses long-term stock returns.

Investors adopt many different approaches that offer little or no real prospect of long-term success and considerable chance of substantial economic loss. Many are not coherent investment programs at all but instead resemble speculation or outright gambling. Investors are frequently lured by the prospect of quick and easy gain and fall victim to the many fads of Wall Street. My goals in writing this book are twofold. In the first section I identify many of the pitfalls that face investors. By highlighting where so many go wrong, I hope to help investors learn to avoid these losing strategies.

Exchange-traded funds (ETFs) are hybrid investment vehicles that track an index or a basket of assets, combine features of open-end and closed-end mutual funds, and are continuously traded on liquid markets. They are one of the most popular financial innovations in recent decades: ETFs have grown greatly in size, diversity, scope, complexity and market significance.
Drawing on the growing literature in this area, this report assesses possible channels through which ETFs may affect systemic risk. The increasing availability of ETFs can affect investors’ behaviour, by allowing them to pursue new strategies to seek return, manage risk and access new asset classes. Such changes in investors’ behaviour may in turn impact the functioning of financial markets, particularly in times of market stress. Empirical research has so far identified three effects.

Growing evidence shows that biological factors affect individual financial decisions that could be reflected in financial markets. Testosterone, a chemical messenger especially influential in male physiology, has been shown to affect economic decision making and is taken as a performance enhancer among some financial professionals. This is the first experimental study to test how testosterone causally affects trading and prices.

I will speak about some of the ideas I used when I was an amateur, when I ran Magellan, and which I still use today. They can make sense for investors.
It’s a tragedy in America that small investors have been convinced by the media – the print media, radio, television media – they don’t have a chance. These media giants have convinced many small investors they can’t compete with big institutions – with all their computers and degrees and money. It just isn’t true.

Companies shouldn’t confuse the value created by returning cash to shareholders with the value created by actual operational improvements. Buybacks aren’t without value. It is crucial, however, for managers and directors to understand their real effects when deciding
to return cash to shareholders or to pursue other investment options. A buyback’s impact on share price comes from changes in a company’s capital structure and, more critically, from the signals a buyback sends.

A financial crisis is a disturbance to financial markets, associated typically with falling asset prices and insolvency among debtors and intermediaries, which spreads through the financial system, disrupting the market's capacity to allocate capital. In this paper we analyze the generation and propagation of financial crises in an international setting.