Don’t pay too much for quality

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Livewire Markets

Kevin Beck, Portfolio Manager at Paradice Investment Management, sees investors lowering their hurdle rates for returns in this environment of low interest rates. As investors search for returns, they are taking on more risk and driving multiples higher. “The perceived safer businesses trade at multiples we haven’t seen in our careers in some cases.” Overpaying for quality assets is a risk they’re not prepared to take. “Risk, to us, is permanent loss of capital, and that can come from paying too much for an asset. People are moving out on the risk curve. We continue to believe that you have to be valuation-sensitive; if you take that argument to the extreme, you pay any price for something that’s perceived as safe.” Watch the full interview below.

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