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Value Investing

Value investing in practice

ACATIS - A pioneer of value investing in the German-speaking world since 1994

Value investing in practice

When it was founded in 1994, ACATIS brought value investing from the United States to Germany and established it as an investment style here in Germany over the years. ACATIS has always maintained and developed the model of Berkshire Hathaway with its founders Warren Buffett and Charlie Munger. This has given Dr Hendrik Leber the additional name of ‘Germany's Warren Buffett’ in the press, which he has (somewhat smirkingly) adopted. Dr Hendrik Leber is thus regarded as a pioneer of value investing in Germany.

The investment style of value investing means ‘value-orientated investing’. The theoretical foundations go back to Benjamin Graham. However, the strategy became known primarily through the US billionaire Warren Buffett, who put the theory into practice and thus became one of the world's richest people.

The basic assumption of value investing is that the capital markets are inefficient. This means that share prices do not always reflect the actual value of a company. In order to determine this actual value, a value investor uses fundamental figures, for example from the company's balance sheet and income statement. This analysis is known as fundamental or bottom-up analysis. 

If the stock market value of the company is higher than the value determined from the fundamental analysis, the share is overvalued. Accordingly, it is fairly valued if the two are equal. However, a value investor looks for undervalued companies. According to the analysis, these are worth more than the price at which they are traded on the stock exchange. A value investor buys such shares in the expectation that over time the mispricing will be recognised by other market participants and the share price will rise in the direction of the actual value.  

Buffett 2.0

ACATIS has further developed the classic, very number-driven value investing approach. In addition to analysing fundamental figures, the modern ACATIS “Buffett 2.0” approach also includes an assessment of the future viability of a company's business model. This adjustment is important because digitalisation and innovation are making traditional business models obsolete and shortening the lifespan of many companies.

In the video, Dr Hendrik Leber explains what is meant by the term Buffett 2.0 and why ACATIS Investment has further developed the value investing style.