- Introduction: Creating Constructive Outcomes from Kailash’s Beta Breakdown
- Revisiting The Collapse
- The Long of It: The Value of Volatility
- The Short of It: The Value of Humility
- Exhibits
Introduction: Creating Constructive Outcomes from Kailash’s Beta Breakdown
Kailash’s last two papers focused on what we view as the untenable and unsustainable disconnect between perceived risk as measured by price action in Beta calculations and actual business fundamentals. In our first paper, The Collapse of Common Sense we documented that firms with the lowest EBITDA/net-debt ratios and low free-cash-flow yields and poor returns on assets were showing up as being less risky than firms with the highest levels of EBITDA relative to net-debt which had atypically high FCF yields and returns on assets. In our follow-up paper The Collapse of Common Sense II we worked on how best to utilize the Kailash ranking methods to try and exploit the best and worst of these “Durable” and “Fragile” firms.1
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