“Buy low, sell high” is the classic investor’s tactic and one used by Wilson Asset Management’s investment team when hunting for undervalued and under-researched growth companies.
Recently however, we have witnessed a very different tactic. Investors are instead purchasing fashionable shares, which are trading at premiums. Why is this happening?
A possibility is that the market has found itself short of investment options. Many Australian businesses are facing a combination of operational restructuring, soft demand, high capital expenditure requirements, and flat revenues. This has perhaps resulted in slim pickings amongst a handful of companies that have performed favourably over the last year and have displayed resilient business models. The problem with this is that the market is already aware of most of these opportunities.