Nikhiljog,ni think we have discussed this before. Many in this thread, as well as Graham in his days bought without catalyst,if they felt the value was there. Do not think that Buffet looks at catalysts either, although in the early days, he was also an activist and control type investor and provided the catalysts himself. But during the last 30 years, I am not aware, that he has looked at catalyst at all in his investments.
Hedge funds have very short time frames for their investments, typically less than 12 month and mostly 3-6 month. Often, they just look at catalysts and entirely ignore value metrics (the trend follower/ quants that I posted about are an example). They get paid by their last annual return, so that is turns out that way. as Munger said,understand the incentives and you know why people do what they do.
I certainly like to see a catalyst if I found a cheap stock, that might unlock value in a short timeframe,but i do not restrict myself to those stocks. I am perfectly happy with having some "dead money" in stocks as long as I don't loose significant amount of money on them. I found I can do well with them, provided my fundamental analysis is right.
The problem with insisting on catalysts is imo, that it restricts the investment universe, especially with respect to small mid caps, too much for my liking. |
