VALUE: After Hours (S07 E41): How to Avoid Value Traps Before They Blow Up

During their recent episode, Tobias Carlisle and Jonathan Boyar discussed How to Avoid Value Traps Before They Blow Up. Here’s an excerpt from the episode:

Jonathan: It’s difficult, if not impossible. I mean, part of it is just gut feeling from doing this for a long time. But if you can find a reason for a stock not to languish for over a reasonable period of time, that lessens the odds of it being a value trap. But any value investor that’s a hazard of being in the business, you have to really take a hard look and see is this a cyclical or a secular problem. We made our share of mistakes, especially with these content companies five, six, seven years ago, where we didn’t anticipate how the world would change with streaming. You learn from that, and that’s what you have to do.

I’m trying to now figure out a company like Comcast, which is statistically cheap. Is that a value trap? And that’s something that we wrestle with internally. So far, the answer is we don’t think so. But after what happened with the content companies five years ago or so, we’re open to the disruption theory.

Tobias: How do you know when something’s temporarily depressed versus structurally challenged?

Jonathan: I guess you have to look at why it’s challenged. The reasons people are saying what the company is saying, and that’s again, more art than science.

You can find out more about the VALUE: After Hours Podcast here – VALUE: After Hours Podcast. You can also listen to the podcast on your favorite podcast platforms here:

VALUE: After Hours (S07 E41): How to Avoid Value Traps Before They Blow Up

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