Portfolio Manager Nick Schommer discusses the importance of understanding a company’s business model to assess value and risk in an investment.

Key Takeaways

  • While valuation is clearly an important factor in assessing an investment, we think focusing on the quality and durability of a company’s business model is perhaps even more critical in the current environment.
  • Amid the pandemic, some companies that may appear attractive on a valuation basis have significantly disrupted business models, creating the potential for permanent loss of capital.
  • Moving forward, we think identifying business model advantages across the market will be important, particularly as the economic recovery broadens outside of narrow, mega-cap tech leadership.