Quants say they can fix value’s broken ratio

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

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