Quants say they can fix value’s broken ratio

Price-to-book metric can be tailored to the new economy, researchers believe

Value tags FAANG

The growing dominance of tech behemoths in global equity markets has given value investors a problem, summed up neatly by the head of a specialist investment fund:

“Google doesn’t own many machine tools.”

Put another way: how do investors relying on price-to-book ratio, the classic metric for assessing a company’s worth, gauge the value of companies whose assets are largely intangible?

Quants say they have an answer. They’ve tweaked the metric to include qualities like brand strength, human

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Risk.net? View our subscription options


Want to know what’s included in our free membership? Click here

This address will be used to create your account

Most read articles loading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here