Seven Patterns Of Inefficiency In Pricing Of Quality Businesses

Seven Patterns Of Inefficiency In Pricing Of Quality Businesses by Fundoo Professor

Here are some of broad patterns of inefficiency that I have encountered over the last few years of practicing value investing in better quality businesses:

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1. The market’s inability to appreciate the probable future value of higher quality businesses with very long runways (something I covered here);
2. A niche business which is doing something remarkable but it belongs to an unremarkable, largely unprofitable, commodity-type industry and the market is failing to make the distinction;
3. Mispriced B2B businesses which are enormously profitable but remain below the radar because, unlike B2C businesses, their output doesn’t show up in the final product or service;
4. The market’s inability to spot an emerging moat that is growing slowly...
   

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