Drew's Views

In our view, Porsche SE, with a recent 14 billion euro market cap (and trading over €40 billion a day), is one of the most underpriced, liquid, listed assets available to investors.

The impact of flows on security pricing, and investment opportunities.

Drew and Toby chat about narrative-driven investing, Ben Graham's voting machine, behavioral explanations for stock mispricing, and managing a concentrated portfolio of investment ideas.

Most of us in the finance world are well aware of the evolution of “passive” equity investing over the years, and have witnessed its tremendous growth. Some of us have asked questions about it. We’ve asked is it all good? Is it mostly good? Are some aspects perhaps bad? Are some really bad?

I’d like to think that prices can get out of whack for some period of time, and in that window, the nimble, unbiased, fundamental stock picker can take advantage of overreactions and underreactions. If they don't, then the M&M propositions truly hold, and I don’t have a meaningful job. However, if this paper is right, and it is only flows that matter, then while the M&M theorems are overturned, I don't have a meaningful job either. If it is all about flows, then I shouldn't play the game.

I know, these are weird and trying times. It all makes you wonder what the point of stock-picking is. What is the purpose of kicking the tires, looking under the hood, and doing our jobs?

Last week, Finance Twitter erupted over a Bloomberg article about Michael Burry [i] and how he likened passive investment in equity markets to the bubble in the synthetic CDO market back in 2007, which he famously – thanks to Michael Lewis and Christian Bale – identified.

Some of you may remember the quant crash of August 2007.

Presented without comment.

As the investment community embraces data science, we should not be blind to the reality that many of our active-management peers are

A nightly sort of the most active US names is usually dominated by ETFs. Earlier this month, we took a peek at the most heavily traded names on one particular day.

The trend from active to passive (or systematic) investing is now well-entrenched.