The Future of Investment Research
Learning in Public
30th June, 2021
The Future of Investment Research: Learning in Public
There is a revolution happening in investment research. Twenty five years ago, only a minority practiced fundamental analysis. Staring at the Value Line tear sheet for a company counted. Call up the company to talk to them? That was a deep dive. Analysts who actually had a good analytical grounding were rare.
Today, this has been inverted. MBA’s, CPA’s and CFAs abound. Barriers of access to public information about a company have disappeared. Anyone with the intelligence, curiosity a little bit of time and a good internet connection can become an analyst. And they do. From all over the world. — including many places that were, until recently, effectively off the grid. An analyst as far away as Hyderabad, in India, Wellington New-Zealand or Lima, Peru has access to the same online information as I do in Zurich or London.
And the sources have exploded. Not only do we have public filings and the corporate websites themselves. In addition sources like Bloomberg and CapitalIQ, there are expert networks – like GLG, Tegus and InPractise which are expensive, But here are others which are far more reasonable and sometimes even free: SumZero, SeekingAlpha, and Value Investor’s Club for example. That we have not even gotten to sources of scuttlebutt like Reddit, Glassdoor or Twitter. And, over and above that there are potential sources of insight via machine learning and artificial intelligence.
It’s my intuition that the volume of data and information that the world is generating is expanding at a faster pace than our ability to analyse and make sense of it. I can’t prove it, but this feels intuitively right. And if that is true, it’s good news for humans and for fundamental analysts – because it means that there will always be an opportunity – via human intelligence – to close the gap between the information that’s out there, and our understanding of it.
But if that is the case, then the premium should be on human insights. That’s the reason why I work so hard, and invest so much in developing the deepest and broadest network of relationships. It’s also th reason why I’m enthusiastic about my VALUExconference – which brings a group of investment practitioners together in a way that maximizes opportunities to learn.
But I’m also experimenting with other modes of drawing on human intelligence. Twitter, for example is an extraordinarily useful tool. And I’m also experimenting with a couple of friends and fellow investors, Hermann Peterscheck and Jeff Gilbert on putting together ad-hoc discussion groups – a bit like a book club – but for a particular industry or group of companies.
Our most recent discussion was on the elevator business – for which we created some reading materials that you can access here:
If you are interested to participate in one of those discussion groups, you should feel free to engage with
Hermann, Jeff or myself via Twitter or elsewhere. With a little bit of serendipity we may find ourselves
together in a Zoom conversation.
