Emerging Giants Newsletter – March, 2019

India has proved to be a graveyard for traditional value investing strategies. Almost always, companies with Low PE trade at those values deservedly so due to 1) Poor Accounting quality 2) Fraudulent Management and 3) Inefficient Capital Allocation. As shown in exhibit below earnings of value stocks (as measured by lowest PE ratio or the 4th quartile) remain the weakest over the long term.