Value Investing

Strategy Type

Public & Private Equity

Typical Stage

Mature

Return Profile

Long-Horizon, Lower Variance

What It Is

Value investing buys securities priced below what analysis suggests they are intrinsically worth, on the expectation that price eventually converges toward value.

It requires a view of intrinsic worth independent of market price, and the patience to hold while the market disagrees — sometimes for years.

Typical Approach

Estimate intrinsic value from cash flows and asset values
Require a margin of safety between price and value
Concentrate in a limited number of well-understood positions
Hold for extended periods
Prefer businesses that are comprehensible over those that are exciting

Return Drivers

Convergence of price toward intrinsic value
Cash generation and dividends during the holding period
Purchase discipline creating downside protection
Compounding within high-quality businesses
Mispricing created by short-term market sentiment

Key Risks

Value traps — assets cheap for sound structural reasons
Convergence may take longer than expected, or never occur
Intrinsic value estimates can simply be wrong
Structural decline can outpace apparent cheapness
Concentration increases the cost of individual errors

What Founders Should Know

Value-oriented buyers assess businesses on demonstrated cash generation rather than projections. For founders considering a sale, that means historical performance carries far more weight than the forward story.

These buyers typically pay less than growth acquirers but offer greater certainty of close.

Looking for the right kind of capital?

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