Correct me if I'm wrong, but isn't value investing when you look at established businesses that have fallen out of favour with the market, for one or more reasons, but where the underlying fundamentals of the business are still very strong? An example of this would be directly following the GFC, or in March last year when COVID hit on a macro scale, and for when there was some bad news for an individual business on a micro scale. I'm happy to stand corrected here.
I'm a long-term holder of KTG for a few reasons, but probably for two main reasons. Firstly, the potential application of the technology in a number of areas of industry, must obviously defence and nuclear decommissioning, at this stage. Secondly, the quality of the board and the financial backers of the company.
In terms of a value investment, if you want to look at it that way, I would point to the years of research and millions of dollars invested by the Australian government via the CSIRO. It is difficult to put a figure on what this investment is worth, but my understanding is that you are looking at 15-20 years of development to have reached the maturity that we are now seeing. Development being done not just by a single individual, but by a team of engineers. There are listed shares that are worth far more on paper, that don't even have a working prototype, and yet are valued based on the potential of the technology. KTG is well beyond that stage. It is well worth asking the question why KTG isn't priced according to it's true maturity, the maturity of the KTG technology and product. Potentially, it is because the market doesn't understand the application of the product, it doesn't fit neatly into one of the trendy sectors such as biotechnology, financial services, or health care. Understanding the value of KTG takes a little bit more of a nuanced understanding, and this may be why the market is holding back, not due to reasons around "value". Comments?
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