For over 30 years, Burgundy’s approach has been to own quality businesses while being mindful of the price paid. When both these attributes are considered carefully, we believe the result is excess returns for long-term investors. In recent years, however, the market has rewarded investors for owning quality but has been indifferent to price. What does this mean for investors like Burgundy? Does value matter anymore?
In this panel, which was featured during the 2022 Burgundy Forum, members of our Investment Team discuss the nuances of a quality/value discipline and offer insight into how they balance the two considerations when buying a business.
For an alternate format, access the transcript via the “Download PDF” link at the top of this post. The transcript has been edited for clarity.
VIDEO #1: NO, VALUE ISN’T DEAD
In the last few years, amid a changing environment of globalization, technological advancement, and digitalization (all of which has been accelerated by the pandemic), value has been largely out of favour. Anne Mette explores why value isn’t dead, breaks down Burgundy’s fundamental investment process, and shares how Burgundy’s research approach aims to reveal where the real quality lies.
VIDEO #2: MISTAKES AT THE EXTREMES: VALUE & GROWTH TRAPS
Using case study examples, Anne Mette, Andrew, and Oliver offer insight into the perils of value traps and growth traps. They share tips for avoiding paying up for hopes and dreams and going beyond the usual financial screens to spot company red flags.
VIDEO #3: THE QUALITY/VALUE SWEET SPOT
Oliver explores the “sweet spot” between value traps and growth traps. From this vantage point, he uses a case-study example to show how company characteristics like network effects and a strong management team, combined with strategic timing, can provide investment opportunity.
VIDEO #4: BURGUNDY’S APPROACH IN AN UNCERTAIN ENVIRONMENT
Anne Mette looks back at the past few decades, which have all experienced bouts of instability, and shares how quality, value, and a focus on the long term all act as risk controls when navigating a volatile and uncertain world.
This post is presented for illustrative and discussion purposes only. It is not intended to provide investment advice and does not consider unique objectives, constraints or financial needs. Under no circumstances does this post suggest that you should time the market in any way or make investment decisions based on the content. Select securities may be used as examples to illustrate Burgundy’s investment philosophy. Burgundy funds or portfolios may or may not hold such securities for the whole demonstrated period. Investors are advised that their investments are not guaranteed, their values change frequently and past performance may not be repeated. This post is not intended as an offer to invest in any investment strategy presented by Burgundy. The information contained in this post is the opinion of Burgundy Asset Management and/or its employees as of the date of the post and is subject to change without notice. Please refer to the Legal section of this website for additional information.