Case in point: Buffet recently sold all their IBM holdings.
“Buffett’s stake in IBM plunges 94% to about 2 million shares”
https://www.bloomberg.com/news/articles/2018-02-14/warren-bu...
“Buffett’s stake in IBM plunges 94% to about 2 million shares”
https://www.bloomberg.com/news/articles/2018-02-14/warren-bu...
The problem with value investing is that it works great for traditional companies with normal products, but many of the fundamental analysis models fall apart with "tech" companies who's largest asset may be the brand itself.
For example Uber, they own few vehicles, have few employees, and no exclusivity. How do you run a fundamentals analysis on that? A lot of traditional models would tell you that company is worth near nothing.
Don't forget almost no barrier to entry. It's relatively easy to go from nothing to be a local player dispatching cars in a small neighborhood which your friends drive.
The folksy pure value investor that we know today didn't appear until much later, in the mid 1970s. To be fair though, this is what made him the most money.
The fundamental analysis models don't fall apart with tech companies, it's just much harder to project revenues for a new, volatile, growing business than an old mostly stagnant or slow growing company.
"Largest asset may be the brand itself," isn't that the definition of a reputation bubble? Sounds like a bubble to me, just a very long term one. There are some who say that the Bay Area/SV startup scene is a combination of real innovation and a bubble caused by ready availability of investment capital, which in turn is the result of governments injecting huge amounts of liquidity into the economy to kick the can down the road on the natural cycles of economic recession.
Pretty clearly Buffett understands brand values.
They have about the same exclusivity that Facebook does, or any social network. It ain't easy to create a two-sided marketplace.