In his latest interview on The Business Brew Podcast, Dan McMurtrie explained why securities inherit characteristics of their holders. Here’s an excerpt from the interview:
Q2 2021 hedge fund letters, conferences and more
Securities inherit characteristics of their holders.
So examples like BlueLinx holdings is a great example. So everybody likes, I liked it, I own some of it, we all own some of it… but you know it was like eight value funds own the whole damn thing.
So that stock’s performance was those eight funds performance, and that’s not maybe the case for Apple but it’s really important to look kind of stock to stock because the market is not… it’s not really an aggregate, it’s maybe an aggregate for certain securities but for most individual securities there’s probably something unique about the holder base in their and their motivations or other things… and it’s going to really depend… that’s going to determine how the pricing mechanism works.
There are certain names where 80% of the float is owned by passive, so how are you going to argue to me that at any point that thing is going to be value based on intrinsic value. On the other hand if it’s overvalued and you’ve got like a psychopathically aggressive M&A guy that’s smart I’ve seen it work before.
You can listen to the discussion here:
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Article by The Acquirer’s Multiple
