Over the past few years, we have interviewed hundreds of value investors, and among those interviews, we have also gleaned insights into the topic of value investing in technology. We bring you some of the most pertinent, timeless wisdom below.
Jeff Auxier, Auxier Asset Management
In 1983, they had thirty or forty new initial public offerings in personal computers. Today you can hardly find one that’s left. You see there are certain enduring type qualities in businesses and then there are others like technology — generally it’s been better to rent those than to buy and hold those.
You’re trying to determine the consistency of demand for those products, and that’s the trick. You’ve got to start with the balance sheet and the accounting, because without a good balance sheet, it’s very difficult to endure. A lot of it’s the nature of product and the commitment to continue to build. The management — do they love the business or are they’re in it for money?
Things are always changing, but you’ve got to determine, can this problem be fixed and can they recover? Or is it hopeless? And look at newspapers – look at what’s evolved there in terms of that, that digital transformation has been very painful.[…]
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