Can a stock priced at 100 times earnings be “cheap?”
Old-school value investing consider that absurd.
Of course, old-school value investing techniques were developed a century ago, in a world where wealth was generated largely from capital spending on hard, tangible assets.
Today’s leading companies – think the Magnificent 7: Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG), Amazon (AMZN), Nvidia (NVDA), Tesla (TSLA), and Meta Platforms (META) – are mostly capital-light, infinitely-scalable, money-printing machines.
Their tangible assets are little more than the office furniture and easily replaceable hardware.
It’s their intangible assets – their intellectual capital, branding, and network effects – that matter.
But in a world of multi-trillion-dollar valuations, is there still value to be found?
To answer that, I sat down with Kai Wu, the Founder of Sparkline Capital and the manager of the U.S. Intangible Asset ETF (ITAN) and the International Intangible Value ETF (DTAN).
Kai worked side by side with Jeremy Grantham, a living legend among value investors and one of my heroes in the industry.
Today Kai’s using AI tools to quantify intangible assets that traditional value investing simply can’t capture.
His models told him Nvidia was cheap in 2021, when it was trading at 100 times earnings and traditional value managers wouldn’t touch it.
We know what happened next…
The stock went on to create trillions of dollars in value for its investors.
So, where is the value today?
Watch our interview to find out.
We cover:
How to measure value in a world where a company’s worth is determined by technology, network effects and human capital.
The evolution of Warren Buffett from traditional value investing to growth at a reasonable price.
Some of Kai’s war stories working with legendary investor Jeremy Grantham.
