East Coast on Transformation Investments: Union Pacific, Colfax & WABCO (Q4 Letter)

From market folly
January 24, 2013 - 12:49pm

Christopher Begg's East Coast Asset Management is out with their Q4 letter.  Last time, we highlighted their letter on investment process and this time around, they focus on examples of 'transformations' that they invest in. East Coast defines transformations as businesses that often have average or below-average economics and they are focused on seeking the cause that will produce a 'meaningful inflection point of change' on the economics of the business. Begg writes, "Our investment process becomes considerably more important when we try to ascertain if a business is truly transforming and emerging toward greatness.  Every business is either getting better or worse with change, and we feel the market tends to value businesses on a one-point perspective by inferring the status quo.  This can lead to mispricings for those transformations that we identify prior to change...

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