MICHEL PIREU: Are rumours of the death of value investing vastly exaggerated?
Momentum investors dominate but stockpickers say the pendulum will swing — sometime
Given the performance of certain stocks, we wonder if the market has adopted an alternative paradigm for calculating equity value, writes David Einhorn in the latest Greenlight Capital letter to clients. Einhorn, who cemented his reputation by successfully picking undervalued and overvalued stocks, complains that a value-investing strategy is challenging in this market climate. So much so that it leads to questions over whether it’s still a viable strategy. "What if equity value has nothing to do with current or future profits and instead is derived from a company’s ability to be disruptive, to provide social change or to advance new beneficial technologies, even when doing so results in current and future economic loss?" Einhorn asks. The question is specifically aimed at Tesla and Amazon, both of which Greenlight has been shorting and whose shares are up nearly 60% and 30%, respectively, in the year to date compared with the S&P 500’s increase of 15%."Our view is that just because...
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