Backing Disrupters is a Dangerous Game

To be frank, I'm sick of hearing the word. Listen to today's business leaders and you would think that, before the internet came along, the business world had been in a steady state since the industrial revolution began some 250 years ago. "Disruption" is nothing new. In fact, a recent article in the Economist suggested that, thanks to mergers and acquisitions at the big end of town, today's business world is less competitive than that of 20 years ago. Still, disruption is the buzzword of the day and many investors are out there looking for the next "disrupter" from which to make a fortune. But will the new world be as profitable as the old? That's an important question that not enough people ask. Five years ago, free-to-air TV station Channel 10 was making $180m of operating profit with just $80m of tangible assets. As I explain in this (VIEW LINK) that is an absurdly profitable business. New competition might steal some of that profitability, but it is far more likely to destroy it.


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Steve Johnson
Founder & Chief Investment Officer
Forager

Steve began Forager Funds in 2009, and now manages approximately $470m across two funds. Offering a listed Australian Shares Fund (FOR) and an unlisted International Shares Fund, Steve focuses on long-term investing in undervalued companies.

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