120: Why Do Companies Die? Value Creation in Public Equity Markets - With Michael Mauboussin, Head of Consilient Research at Counterpoint Global, Morgan Stanley Investment Management.

Money Maze Podcast

Business, Investing, Management, News, Business News

4.8 • 216 Ratings

🗓️ 23 November 2023

⏱️ 20 minutes

🔗️ Recording | iTunes | RSS

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Summary

In his report ‘Birth, Death, and Wealth Creation’, Michael Mauboussin observes and then claims that corporations are surviving longer and winning more.

This week, we welcome Michael Mauboussin, Head of Consilient Research at Counterpoint Global, Morgan Stanley Investment Management, to discuss the unique patterns of wealth creation in public equity markets.

After explaining the similarities between ice hockey and investing, Michael discusses why corporate ‘death rate’ is higher than firms’ ‘birth rates. He describes why firms are increasingly choosing forgo IPOs, opting to stay private for longer.

He also covers Hendrick Bessembinder’s theory of wealth destruction, the distinction between value investing and value factors, and why investors may want to look beyond the headlines when it comes to tech.

Michael Mauboussin was interviewed by Simon Brewer at the Quality-Growth Investor Conference in London. The next in-person event to be held by the organizers of the conference will be Value Invest New York on December 12. Use this link and enter “MONEYMAZE_VINY” at checkout to enjoy a 40% discount on tickets (worth $600; offer valid until 30th November 2023).

The Money Maze Podcast is kindly sponsored by Schroders, Bremont Watches, IFM Investors and LiveTrade.

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Transcript

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0:00.0	So in 1976, there were just under 4,800 public companies in United States.
0:05.2	In 1996, using our reckoning, it peaked at north of 7300.
0:10.8	And 2022, we're down to a little over 4,200.
0:14.9	So not only do we have 40% fewer companies that we did at the peak in 1996,
0:19.4	we actually have fewer companies we had in
0:20.9	1976. Welcome to the Money Maze podcast. I'm Simon Brewer, and Will Campion and I have created
0:28.2	this show to explore and unravel some of the mysteries surrounding the investment business.
0:33.1	You can keep up to date by visiting MoneyMayspodcast.com and please sign up to our newsletter
0:38.3	to ensure you won't miss a release. If you enjoy the show, please subscribe and we'd love you to
0:43.5	tell a friend or colleague about it. Thank you for listening. This episode is kindly brought to you
0:48.7	by our sponsors, Schroeder, Live Trade by Bordeaux Index, IFM investors and Vermont Watches.
0:57.7	You should need no introduction, but author of some absolutely fabulous work. You do great work
1:03.5	at the Santa Fe Institute. You obviously read your consulate research here at Morgan Stanley,
1:08.8	and there's a particular document that everybody has
1:11.0	seen, and which we'll be referring to in a minute, which is a fascinating, eye-opening piece of
1:15.6	work. So welcome again. I think it's a real treat for everybody to have a chance to listen to you.
1:20.9	Thank you very much. Really great to be with you again, Simon. So always fun to talk to you.
1:24.6	Okay. Now, very seriously, according to your book,
1:28.2	the success equation,
1:29.5	untangling skill and luck in business,
1:32.1	sports and investing,
1:33.4	you write,
	...

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