In direct equities, we run a QGARP-type process. The RP part is usually a “final” consideration, e.g. emphasis on the first two parts, first. However, there are some now insane prices being paid for Growth, and to a lesser extent Quality. IT is triple digit. 30x for Disc.


The earnings can, at times, be misleading, so better to use a range of multiples when assessing value, or lack thereof. People are, to our mind, simply overpaying for defensive staples, as they are for comm services type companies (CAR, REA)…


It pays to recall the Sun Microsystems quote, about c10x for sales (google it if you’ve never read it – it’s great). Well, people are happily doing it for an entire sector, at present.


The other interesting thing about this value dispersion framework, is the earnings story. It’s not that great. Ignore the super-cyclicals (mats, energy) and just note that the backdrop is more earnings-recovering-to-pre-pandemic levels, than it is shooting-the-lights-out.


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