It's not always valid to ask how a business would be valued if it were "publicly traded." Financial businesses like this should not be valued on the basis of return on capital. The capital is the partners. You cannot buy and depreciate a human brain. For example, Goldman Sachs should have always remained a partnership. The benefit of listing as a public company is only to the partners who get a cash payday. The vast majority of the gross margin goes to compensate the operators, who are free agents, not captive capital. Let them invest your money, OK. But don't buy common stock in an asset management company, especially a leveraged one. Book value?? Means nothing in firms like this. The very proposition of listing a financial company like this is an indicator of a market top.
This reminds me of an method that invested in the lowest P/E stocks and generated outsized returns. I took a look at the details of the companies in the list and they almost made me throw-up. :( Evidently a few would recover and the gains would be huge, but many would languish and even disappear - they were either in declining industries and/or had crap management. This is probably why the emphasis in buy-backs - it means the company at least has positive cash flow or an owned asset base to finance it. Likely an attempt could be made on Mr. Kupperman's 'Magician' approach which could be applied to an Expert System methodology to try and find combinations of hard markers for investment candidates - what is often called intuition is often just the brain making connections between small facts that individually go unnoticed. (note: do not categorize AI as things like ChatGPT. This is a gross exaggeration of what is simply a really fast Expert System with a good vocabulary generator. It is *not the same as Machine Learning.)
Looking at YTD performance on nasdaq MARA and RIOT, one wonders if the bitcoin miners are being priced ahead (front running) a big upcoming move in btc?
It's not always valid to ask how a business would be valued if it were "publicly traded." Financial businesses like this should not be valued on the basis of return on capital. The capital is the partners. You cannot buy and depreciate a human brain. For example, Goldman Sachs should have always remained a partnership. The benefit of listing as a public company is only to the partners who get a cash payday. The vast majority of the gross margin goes to compensate the operators, who are free agents, not captive capital. Let them invest your money, OK. But don't buy common stock in an asset management company, especially a leveraged one. Book value?? Means nothing in firms like this. The very proposition of listing a financial company like this is an indicator of a market top.
Thanks Raven, Kuppy is great. If I could waive a magic wand, it would be great to have him and Spiegel on a podcast.
This reminds me of an method that invested in the lowest P/E stocks and generated outsized returns. I took a look at the details of the companies in the list and they almost made me throw-up. :( Evidently a few would recover and the gains would be huge, but many would languish and even disappear - they were either in declining industries and/or had crap management. This is probably why the emphasis in buy-backs - it means the company at least has positive cash flow or an owned asset base to finance it. Likely an attempt could be made on Mr. Kupperman's 'Magician' approach which could be applied to an Expert System methodology to try and find combinations of hard markers for investment candidates - what is often called intuition is often just the brain making connections between small facts that individually go unnoticed. (note: do not categorize AI as things like ChatGPT. This is a gross exaggeration of what is simply a really fast Expert System with a good vocabulary generator. It is *not the same as Machine Learning.)
Looking at YTD performance on nasdaq MARA and RIOT, one wonders if the bitcoin miners are being priced ahead (front running) a big upcoming move in btc?