Why Moving From Value Investing to Growth Is So Hard (And How to Do It Anyway)

Est reading time: ~15 min

Moving from a value investing seat to a growth investing seat is not straightforward. Let me explain why, and what you can do to improve your odds.

By value, I am referring to two kinds: 1) deep value, the likes of Pzena, Donald Smith & Co., and Third Avenue — firms buying businesses at 30 cents on the dollar of book value; 2) Traditional value, the likes of Baupost, Omega Advisors, or Harris Associates.

By growth, I am referring to hyper-growth public equity investing — firms such as Coatue, Whale Rock, Sands, and Baron — investors underwriting businesses tied to secular trends that often look expensive on traditional metrics.

Straddled between value and growth are the GARP (growth-at-a-reasonable-price) and wide moat investors.

This week’s article is sponsored by Endex

GPT-6 expected Q1 2026. What Will New Launch Mean For Finance

December’s GPT 5.2 launch brought significant improvements to the LLMs. Analysts, associates, and C-Suites are wondering how close to a true “AI analyst” will we come to in 2026.

Endex, OpenAI’s Excel agent, is already capable of generalist work such as building DCFs, comps, and sensitivity analysis.

Investment banks and PE firms are racing to bring AI agents into their workflows, as they prepare for future LLM breakthroughs.

To request access to Endex, click here.

Why value and growth don’t link up

Before getting into the main points, I want to address a mistake I see people make over and over: you only care about how you think the world works. I want to remind you: the world in most cases doesn’t work the way you think.

Investors are extremely opinionated about how investing should be done. And when you’re looking for a job, hiring managers are in a position of strength. You might believe value and growth are just two ends of the same spectrum because Warren Buffett says so — and Buffett is right about many things — but that’s not how institutional investing works in practice. Most investment firms care primarily about whether you fit their worldview. Their perspective is often tightly shaped by their investment style.

That’s why knowing which firm practices which style and where the founder used to work is so important, because it increases your shots on goal and more importantly, conversion to offers.

I’ve written recently about why moving into corporate roles is so difficult for sell-side equity research professionals. I’ve had Asian investors tell me how common it is in their markets for senior sell-side analysts to move directly into CFO roles. But this is the U.S., and that’s simply not how it works here.

The key point isn’t who’s right or wrong — it’s that decision-makers don’t care how things work elsewhere. They operate within their own world, and they hire based on that reality.

Past vs. future

Businesses with strong secular tailwinds don’t trade at 30 cents on the dollar of book value, and they usually don’t trade below 10x earnings either.

What value investors are really playing for is either selling 30 cent-dollars at 80 cents, or benefiting from a normalization of the multiple on normalized earnings. The fundamental work in value investing focuses heavily on how the business has grown historically, and what earnings or free cash flows used to look like. The bet is that the business can return to that prior state.

Growth investing focuses on the future.

Stephen Mandel once famously said, “I don’t need my analyst to tell me when a 10x P/E stock is cheap. I need an analyst to tell me when a 40x P/E stock is cheap.” That line perfectly captures the growth mindset. If earnings can grow exponentially, then 40x earnings today can look cheap just a few years out.

But underwriting that kind of outcome requires a completely different way of thinking. You have to ask: what are the company’s future optionalities? Can management execute on the next act? What unexpected good things could happen because of the company’s positioning? This is a bet on the future.

Some growth investors say growth investing requires imagination. Instead of betting on mean reversion to normalized earnings, growth investors are betting on a mispriced slope of earnings growth — and just as importantly, how durable that growth will be over time. That durability eventually shows up in the terminal multiple.

Here are some real-world examples that have played out:

• Shopify started as an e-commerce website hosting platform, then expanded into payments, and later layered on a wide range of value-add services it can upsell to SMB merchants to help them succeed.
• Carvana pioneered the no-store used car buying experience. Embedded in that model is the optionality to facilitate peer-to-peer car sales between individuals. That hasn’t played out yet, but it’s hard to imagine that optionality wasn’t on Ernie Garcia III’s mind.
• Amazon began by selling other vendors’ products (1P), expanded into selling individuals’ goods and eating into eBay’s lunch (3P), then launched AWS — a cloud platform originally built to support its e-commerce business — and later expanded into content, healthcare, devices, and who knows what next.
• MercadoLibre, Alibaba, and Sea Ltd followed similar playbooks in their respective regions, each with local differences, but all layered new businesses on top of an initial core platform.
• Airbnb is expanding beyond lodging into ancillary services.
• DoorDash evolved from a meal delivery app into a last-mile logistics provider across categories like cosmetics, pet food, alcohol, and more.
• Uber has become a logistics router for many forms of transportation, including autonomous vehicles.
• Even OpenAI, which monetized primarily through subscriptions and API usage fees, has begun monetizing its user base through advertising after aggregating massive demand.

Experienced growth investors have the intuition for what the next generation of nascent growth companies can become. They know they can still generate strong IRRs if the future unfolds the right way despite paying high multiples.

At the end of the day, much of the tension lies in that value investors anchor on the past (and the present), and Growth investors anchor on the future. And that disconnect creates bias when someone tries to cross into the other style.

Margin of safety

By now, everyone knows the concept of margin of safety.

The issue is statistical margin of safety is no longer the cool kid in the room. You might think a business is worth 12x earnings, see it trading at 10x, and convince yourself that buying at 7x protects you from major downside if you’re wrong. But then the business turns out to be a melting ice cube. Earnings deteriorate, and the stock ends up trading at 5x. Just like that, you had no “margin of safety” in hindsight.

That’s why value investors focus so heavily on what can go wrong. In many cases, the businesses they invest in lack strong secular tailwinds, which means valuation — not growth — becomes the main source of margin of safety.

Margin of safety still exists in growth investing, but it isn’t expressed quantitatively. If growth investors pay a reasonable multiple for the core business, and they believe there are one or two large optionalities ahead, they’re effectively getting those optionalities for free.

Meanwhile, the core business is still growing at a healthy rate. In that setup, downside risk can be just as well protected — if not better protected — than buying something at a statistically cheap multiple because the overall industry, for which the company is tied to, is growing.

There’s a well-known saying at Coatue: their idea generation often starts with high-valuation stocks. The logic is simple — the market is signaling who it believes the long-term winners are.

I have bad experience firsthand. I remember being asked to look at Elastic NV as an idea purely because a sell-side report showed it as one of the lowest-valuation names and highlighted its exposure to the under-penetrated trend of unstructured data growth. That low valuation was in reality the red flag.

I called the sell-side analyst who wrote the report. Since I had covered software on the sell side, I spoke the language. I started the call asking about open-source risk, how Elastic differs from other database players with different architectures, and where its real competitive edge was.

Meanwhile, the people I worked for were messaging me saying they were dropping off the call because they had no idea what we were talking about. The analyst, on the other hand, told me those were exactly the right questions to be asking.

That experience made one thing very clear to me: even successful value investors can be completely lost when stepping out of their circle of competence. You want to make Coatue money? Know how to pick tech stocks like them. Otherwise, stay in your lane.

Ironically, you can buy Elastic NV at a much lower valuation today — but for a good reason in the AI era. That’s the key lesson. In growth investing, you’re paying for the future. And the future can change very quickly.

Numbers vs. business

Value investing — depending on the sub-genre — can be extremely numbers-driven.

At the extreme end, you might go through a balance sheet line by line, apply haircuts to assets and liabilities, and hope to buy the company at a discount to what you think it could be liquidated for. That’s an oversimplification, but the work is still very accounting- and math-heavy.

If you’re more of a mean-reversion investor, the work often involves laying out historical free cash flow and asking what needs to happen for the business to return to its normalized earning power. In most cases, these businesses are sub-10% top-line growers.

Growth investing looks very different. Because so much of the value sits in the future — in how the terminal value is ultimately perceived — the work shifts away from spreadsheets and toward understanding the business and its market size. You will talk to people across the value chain to understand competition, product differentiation, regulatory dynamics, industry structure, and management track record. Most of this doesn’t show up in financial statements yet.

That’s the key difference. When you’re betting on the future, the work naturally becomes more qualitative. That doesn’t mean numbers don’t matter — they absolutely do — but a meaningful portion of the diligence is qualitative.

This is another reason the jump from value to growth doesn’t translate cleanly.

How to pitch your value investing experience

Given that 95% of questions I get are about moving from value to growth, that’s what I focus on. Below are some practical ways to improve your odds.

• Keep pitching growth stocks: There’s no better way to prove you can think like a growth investor than consistently pitching actionable growth stocks — either publicly online or directly to growth investors you network with. This is the most time-consuming approach, but also the most convincing. It shows you can do the job before you actually have the job.
• Reframe your experience:
  • Position your coverage as growth-relevant. If you are at a value shop covering declining or mature tech companies, you still specialize in tech — that’s not a lie. If you’re a generalist, frame yourself as having relative expertise in growth-heavy sectors like tech, consumer, or healthcare.
  • Speak like a growth investor. Say, “this is cheap on normalized earnings five years out,” instead of “this is cheap at 12x NTM EPS.” Emphasize your work on the product, management diligence, and competitive dynamics, and downplay idea generation driven purely by valuation screens.
• Tilt your coverage internally if you can. If you’re at a traditional value firm that has become more open-minded about growth-adjacent businesses, volunteer to cover names like Google or Expedia if you’re at a place like Harris Associates. That moves you closer to GARP or wide-moat investing. If you work for multiple PMs, build deeper relationships with PMs who prefer businesses with reinvestment runways and attractive ROIC, rather than PMs who live entirely in mean-reversion land.
• Build thought leadership around a growth theme. I have seen newsletter writers start to dominance single themes such as semi or big tech. There are still many themes that lack an independent voice — that could be you.
  • The key is picking a theme with enough publicly traded companies. Robotics might be early. Energy transition or vertical AI might be perfectly timed. The easiest version of this is own the growth themes within your coverage. Are you covering industrials? Know what Caterpillar and Deere are doing in industrial tech and smart farming. Cover energy? You already know the drill — get deep on energy transition.
• Consider a two-step move.
  The slower but less resistant path is moving from value to a GARP or wide-moat firm first, and then from there to a growth firm. GARP and wide-moat strategies still care about valuation, but they own businesses that grow moderately but sustainably. You bring valuation discipline, which the GARP/wide moat folks value, while learning to pitch compounders.
• Differentiate yourself from incumbent growth analysts.
  • Stand out by showing price discipline — for example, not paying 30x for a business that won’t compound fast enough.
  • Show you understand cyclicality. We saw plenty of secular growers over-earn during the pandemic with DoorDash, Zoom, Chewy, Peloton, Etsy, and others.
• Never lead by saying “value is dead.” Say good things about where you’re going instead of complaining about where you’ve been. Don't forget this basic etiquette in job hunting.

Moving from value to growth is doable. But you need to learn how to sell the story, understand who’s who in the style you’re trying to break into, and speak their language.

Have you successful made the transition from value to growth shop? Let me know your story. If I’m wrong or missing useful tips on the move, please tell me.

Thanks for reading. I will talk to you next time.

Serious about a career in public equity?

We unearth buy-side and sell-side research job leads that others don't see.

Never miss an equity research job again, use Equity Research Job Board

Read my other published articles:

• Public Equity Fund Intel
• Career Guidance
• Investing
• Investor Profiles
• Book Reviews

📇 Connect with me: LinkedIn | Instagram | Twitter | YouTube

If you want to advertise in my newsletter, contact me