We are quite used to the slicing of the securities universe into value and growth stocks made on the basis of rankings on valuation ratios like Price / Book or Price to Earnings. What is less common is the slicing of the securities universe into high- and low-quality companies where the valuations can be compared.
Therefore, we have been intrigued by a graph recently published by Bofa Merrill Lynch’s US quant team on the difference in valuation of the high-quality businesses in the US equity market compared
to the low-quality businesses.
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Léon Kirch, CIO & Partner