Value in 60 Seconds: What is an intrinsic value investor - 15 September 2023

21 Sept 2023 · 1 min

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1:18

John explains intrinsic value investing: researching a business and its industry to estimate fair fundamental value. For predictable companies the valuation range is narrow, but for fast-growing early-stage firms it widens. He sees intrinsic valuation as separate from the value versus growth divide.

So, John, talk to us a little bit about your investing process.
I consider myself an intrinsic value investor, which just means that after I research a business and the industry that it operates in, I want to try to estimate a fair fundamental value based on the business. If it's a more predictable business in an industry I really understand, maybe that range is going to be more narrow. If it's a faster growing earlier business, the range of outcomes is going to be wider. Regardless of how fast the business is growing, it can be valued intrinsically. So I don't consider myself value or growth. I consider myself an intrinsic value investor.
I think the whole value growth thing is just a, it's a misdirect.
Exactly. Growth is a component of valuation and companies that have high ROIC are worth more if they're growing faster. And so intrinsic value is how I would describe myself.