Intermede Investment Partners on the source of company value

Funds Management

by Clive Tompkins

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Intermede Investment Partners, Investment Analyst, James Kim talks about how company values have changed over the decades from being based tangible assets to intangible as the digital economy takes centre stage. Intermede Investment Partners Limited is the manager for the Intermede Global Equities Fund issued by Antares Capital Partners Ltd ABN 85 066 081 114 AFSL 234483.

Stephen Barbarich: Today I'm joined by James Kim, co-founder and investment analyst at Intermede Investment Partners. Thanks for your time today, James.

James Kim: Thank you.

Stephen Barbarich: You've been covering stocks and companies for a number of years now, both at Intermede and in previous roles. What are some of the trends that you're currently seeing in the market that you find quite interesting?

James Kim: One of the kind of macro economic topics that we've been thinking about a lot at Intermede has been the rise and importance of intangible assets as a primary source of value that's being generated by the businesses dominate the marketplace today. If you take a look at businesses that are the largest in terms of market capitalization, you'll see companies like Microsoft, Facebook, Amazon, and Google. Each of these businesses uses intangible assets as its primary driver to generate economic value going forward. That's very different than what the world looked like even just 30 years ago, where the leading companies in the world were all based, or all built upon the value of the tangible book of assets that they were able to accumulate on their balance sheets.

In an intangible oriented world like we faced today, the dynamics can be very different. The choices that managers have to make in terms of how they spend their capital, how they make investment decisions about the measuring, the amount of spending today versus the amount of value that they can create from those investments in the future. That calculus has to be different. And when we think about investing in an intangible world, that very much speaks to the heart of trying to identify the best businesses that are going to be able to grow successfully in the new digital emerging economy, and generate real profitability and return from those investments. That's where we like to spend our time. That's our primary focus for our investment philosophy across sectors and across geographies.

Stephen Barbarich: Alright, thank you, James. That was really interesting. Thanks for your time this afternoon.

James Kim: Thank you.