"If I have a farm that's producing a million dollars worth of income for me every year, if somebody else comes to me and offers to buy that farm for $10 million that's a P/E of 10. If you offered to pay me $20 million, that's a P/E of 20. That's the price to earnings ratio."
Siddharth and I got together to chat about his non-traditional path to co-founding Ironhold Capital, a value based hedge fund based in Manhattan, New York that gives investors access to investment opportunities available in India as well as the US. Siddharth explained his methodology for finding companies that not only offer value, but are attractively valued.
He worked as the Lead Equity Research Analyst for Capital Ways Financial Advisors where he applied value investing principles to emerging markets of India. Siddharth also holds a Masters in Global Finance from Gabelli School of Business, Fordham University. He has been featured in leading business journals such as Business Insider and Wealth Advisor.
"We have analysts, and these are really smart kids from top business schools. And they already have a background in finance and economics and maybe accounting, but when they're faced with an annual report, you have to have a combination of accounting, economics, and then psychology. They're not able to synthesize those things because business valuation is not really taught in business schools. What they end up doing is to start applying formulas and ratios. You have to be able to understand accounting so fluently, that you can just glance at a financial statement and glean a story about the company. That takes a long, long time. I think a lot of people in corporate finance don't know economics and it doesn't really teach you a lot about investing." Siddharth
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