Next year's long/short experiment
Last year, I had the simple premise that a long large cap SW basket would significantly outperform an industrial basket given the relative valuation dislocation. See:
More Thoughts on the Long Large Cap SW / Short Industrial Trade
The valuation gap between large cap software and industrials has been evident for awhile now and only recently began to close a bit. Below is a snapshot of the divergence. This is just a templated run so im sure some figures are not perfect but is directionally accurate.
This year, lets up the ante. There is a number of ex-growth software and internet players who have seen multiple compression levels that are cheap by any measure. I would surmise that the market is ultimately proven wrong in the growth prospects of several. I also suspect that the market is also placing too much confidence in the durability of growth in many large cap tech (the reasons dont matter as much as the end result).
Lets see how the following would perform over the next year:
No Expensify or ZoomInfo?