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Why Fundamental Analysis with public market peers can help you improve the quality of your private market portfolio?

Fundamental analysis is an investing methodology that attempts to estimate the intrinsic value of an asset by looking at various external factors. The core principle behind this is that any asset does not operate in isolation. Rather, it finds itself as a component nested in wider systems, such as industries, sectors, countries, and global supply chains. By understanding these factors and how they relate to a particular investment, we can estimate the long-term price implications and thus the investment potential.

There is abundant and vast fundamental information available for thousands of publicly traded companies, such as Profit & Loss Statements, Balance Sheets, Cashflows, Earnings per Share and other relevant data that allows to do fundamental analysis and perform valuations for publicly traded companies.

The challenge lies in the ability to effectively and efficiently being able to create Peer Goup Baskets of comparable companies that can be used as proxies for and benchmarked against privately held companies in order to assess the intrinsic value of the underlying private company asset.

Being able to dynamically create comparable peer groups to benchmark key performance indicators, such as revenue and EBITDA growth rates or valuation multiples like EV/EBITDA or EV/Sales are key to allow for more transparency and better portfolio management of your private market investments.

The Challenges of Fundamental Analysis

While fundamental analysis is a very powerful methodology,
there are a number of challenges that make it difficult to implement successfully:

Disparate Data

Robust fundamental analysis requires the consolidation of various data sets to make decisions. Pulling these together in a way that makes sense can be time-consuming and prone to error if you aren’t using the right tools.

Information overwhelm

There is an infinite amount of information out there and you need to be able to prioritise what truly matters and ignore that which doesn’t. If you don’t do this you risk facing analysis paralysis.

Scenario planning

It’s often not sufficient to just look at what things are like right now. Ideally, you want to project into the future and use scenario planning to assess future impacts across your portfolio.

Siloed decision-making

If your analysis doesn’t encompass all the components of your information gathering, then you’re leaving value on the table.  Too often investors make siloed decisions because they don’t have a holistic view of their data.

Lack of timely data

Time is of the essence when it comes to investment analysis so you need to ensure that your data is timely and accurate. Without the right technology, this endeavour can be exhausting and resource-intensive.

Lack of comparable peer group benchmark

Not being able to easily create peer groups with key performance indicators and valuation metrics hinders portfolio managers of private market portfolios to get a better understanding of the intrinsic value and risks they are managing.

How Apliqo can help

Our latest product LP Portfolio Management is a powerful reporting and analytics solution built with these challenges in mind. By unifying your investment data into one easy-to-use platform you can leverage the power of fundamental analysis with ease.

  • Automating data collection and processing for faster turnaround.
  • Projecting various scenarios dynamically, allowing for sophisticated planning and decision-making.
  • Benchmarking investments – both on an asset and fund level – against other assets and funds and understanding your portfolio in the wider context of its industry. 
  • Leveraging best-practice processes and workflows to simplify your analytics without compromising on quality
  • Reporting on your fundamental analysis findings easily and efficiantly.  

Are you ready to give fundamental analysis a seat at the table?

Try LP Portfolio Management today.

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Learn how Apliqo can help you and your business
Learn how Apliqo can help you and your business
Learn how Apliqo can help you and your business