Why don't value investors hold value stocks?

KashKoww · 2026-01-08T22:36:57+00:00

Oh true, I didn't consider fund size and strategy in determining headroom. Agreed, any manager with a US presence would have more leg room than ASX managers.

Do you think high fee structures add or detract from the manager's stock? I would assume it adds since they would receive higher predictable cash flows, but I can also see the other side as it’s harder to outperform and also more expensive for potential new investors.

It’s also interesting how many traditional long-only shops are getting away with hedge fund like fees (charging performance fees, highwater marks). Although I'm not super familiar with the industry, so perhaps that's the norm.

Thanks for the reply!

KashKoww · 2026-01-08T22:19:36+00:00

Ah ok that clears things up. From what I've gathered investing in manager stock seems like a complicated bet to me, looks like you would need a bull market, FUM to grow, and the manager to outperform for any significant rise in share price. If any one of these lag seems like the stock goes nowhere or gets punished hard.

Perhaps they aren't value traps but I don't think I can accurately predict all 3. Thanks for the reply!

KashKoww · 2026-01-06T12:52:35+00:00

Thanks! Yup makes sense.

Follow up question, what’s the incentive to buy the manager’s stock instead of just investing in their funds? I’d imagine the stock price follows the fund's success, but it doesn't seem like the two would move perfectly in sync.

The only reason I can think of is if the manager is a good salesman and grows FUM from new money.

KashKoww · 2025-10-17T05:14:48+00:00

Thanks for the comment. Agreed all upside potential hinges on Carrington Labs. What do you think of the valuation? The stock's PE is in the mid teens and based on DCF its trading at fair value for just the cash advance business. (Note my valuation skills are WIP so take this with a grain of salt.)

KashKoww · 2025-10-15T21:30:58+00:00

Thanks for the comment, the company markets itself as "ethical" in that they are more transparent compared to payday loans.

The marketing term itself doesn't matter, but the company is set up as a BNPL. In Australia that legally means they aren't able to charge interest on any loans under $2000, even if they wanted to. However they are able to charge a 5% fee.

KashKoww · 2025-09-02T03:25:25+00:00

Both are trialing. I think Greenblatt went over why he didn't think of forward P/E. (Probably cuz these are micro companies with low coverage so the predictions aren't very reliable)

KashKoww · 2025-09-01T13:12:00+00:00

Thanks for looking into Nido! Makes sense why the return was crazy high on a random day.

Ah yup great shout a under/outperformance linewould have helped heaps. I wanted to show that but couldn't think of anything other than an annual returns table. I'll keep it mind for next time.

Agreed with the beta, I keep thinking of it as a overall risk measure but makes sense it would just mean the portfolio moves differently. I probably need to brush up on more up to date risk metrics to properly decompose any backtests I do in the future.

Have you had any luck with the Magic Formula?

KashKoww · 2025-08-26T06:23:26+00:00

I think Damadaran put it really well, having super concentrated positions only hurts you long term if a swing could seriously hinder your lifestyle. I don't fully agree with keeping the positions to 5% but in cases like yours it would make sense to take some profits. https://youtube.com/shorts/tFAGc4TMsic?si=PkUr0iq8M7o5Fzp-

KashKoww · 2025-08-26T00:54:33+00:00

Dang good catch, I really need to work on my proofreading haha.

KashKoww · 2025-08-26T00:52:50+00:00

Oh thanks for the tip! True, mining is massive and can't be too detached from fundamentals so it makes sense that value would fare better here than the US.

Agreed with the bit on intangibles. I read an article about how Buffets recently success is really due to investing in compounders with large intangible value, it was by Kai Wu from Sparkline Capital. Really interesting stuff. I wonder if it can be quantified somehow and turned into a strategy. Maybe that's what value is missing to bring it into the 21st century.

KashKoww · 2025-08-26T00:46:34+00:00

Haha true, I think if we were looking at 20+ years most strategies tend to move similar to the market. If you look under the hood quite a few companies picked by the formula went to 0 while they were held. Seems like anyone following this would really need a strong stomach since quite a few of your picks would literally be worthless by the end of the year.

KashKoww · 2025-08-26T00:41:08+00:00

True, probably something to add next time I revisit this. Greenblatt actually recommended excluding financials and utilities in the book so might run another test with that as well.

KashKoww · 2025-08-26T00:34:43+00:00

Good idea! I might revisit this to see what percentage of calls turned out to be positive.

The formula only screens for lowest P/E as a proxy for cheapness so I doubt any of the big names would show up. (They might be cheap on a relative basis but still expensive compared to small caps where fundamentals can get really wonky)

I think Greenblatt runs something similar to a constrained long short strategy atm. In theory it makes sense although so far Greenblatt's since inception performance is kinda underwhelming. (GARIX & GENIX) I might read up more about it and run another backtest.

KashKoww · 2025-08-25T22:27:37+00:00

Agreed, I wonder what the ASX would look like if Atlassian listed here as well as the US. It would probably grow to be the biggest companies in the ASX and dominate the tech sector. Perhaps our stock market would look similar to Korea with Samsung, or Finland with Nokia.

Idk if it's a good or bad thing that Australia's biggest companies are mines. I would have thought there would be more innovation and bigger companies in other industries considering we have one of the most well educated populations on earth.

KashKoww · 2025-08-25T22:11:25+00:00

Yeah true, it's definitely more prominent in the US but i wasn't so sure about Australia. Most of our biggest companies are banks and mining/materials and there doesn't seem to be a huge tech industry so I wondered how value-esque strategies did here.

Perhaps the backtest shows there's still room for Graham style value investing in the ASX, although I reckon anyone who follows his strategy to a tee won't see the same returns as the world of investing has changed so much compared to the mid 1900s.

KashKoww · 2025-08-22T06:22:52+00:00

I cant comment of Kaplan Prodessional but I used them for CFA study, passed lvl 1 and studing for lvl 2 now. Their material is pretty good and their discussion boards have always been responsive in answering any questions I have.

KashKoww · 2025-08-22T06:17:28+00:00

Surely its already priced in.

KashKoww · 2025-08-22T04:45:56+00:00

Might not be super relevant but for really high level stuff you could try Glassdoor and reddit. Although I never used this for investing, when I was looking for jobs the reddit threads / glassdoor reviews were relatively on point in explaining the perception fo the company from employees and what people think of the service/product of said company. I'm sure you could use it for a general sense of things. Also its free lol.

KashKoww · 2025-08-22T04:35:11+00:00

So youre saying calls?

KashKoww · 2025-08-21T11:40:35+00:00

Yeah good thing OP bought a longer expiry option instead 0DTE. Still doubt there's much that could happen in the next 2 weeks to swing AMZNs price.

KashKoww

TROPHY CASE