Beyond fund selection: Building genuine diversification in a concentrated market

By: Tone Varmann When I began my career as an equity analyst in 1990, the job was to answer a simple question: what is this company worth? We analysed market trends, cycles, business models, cash flows, funding requirements and balance sheets. We looked for asymmetric return profiles and undervalued cash flows. Put simply, our job was to put a price on equity relative to the cost of capital, accounting for both market and company-specific uncertainty. Most capital was actively managed. A large and differentiated investor base reacted to prices and fundamentals, and one could reasonably argue that the stock market