%0 Journal Article %A Sanne de Boer %T Practical Applications of Intangible Ironies: Investor Mispricing of Company Assets on and off Its Balance Sheet %D 2022 %R 10.3905/pa.2022.pa514 %J Practical Applications %P pa.2022.pa514 %X In Intangible Ironies: Investor Mispricing of Company Assets on and off Its Balance Sheet, from the February 2022 issue of The Journal of Investing, Sanne de Boer of Voya Investment Management examines common errors in the valuation of intangibles. He proposes new metrics for valuing intangible items that better reflect future performance. De Boer notes that expenditures toward certain types of intangibles—like R&D, advertising, or human capital—have typically been undervalued because they are recorded as current-period expenses even though they produce long-lasting stakeholder value. By contrast, intangibles that are booked as assets on a company’s balance sheet—like goodwill—are generally overvalued.Building on prior research, de Boer explores how modernizing the treatment of non-balance-sheet intangibles might enable investors to gauge enterprise value more accurately. He examines how a hypothetical intangible-adjusted value-driven portfolio might outperform a more traditional value portfolio. He also explores how diversification through allocation to growth assets potentially boosts value-investing performance, as in the recent “quant winter” from June 2018 to August 2020. He closes by admitting that the proposed metrics are simplistic and that further refinement using newly available organizational data, on matters like patents and employee satisfaction, may continue to shape the future of value investing. %U https://pa.pm-research.com/content/iijpracapp/early/2022/09/20/pa.2022.pa514.full.pdf