mik82

It is simple investing philosophy that one should discover an underpriced asset before the rest of the world does. Tobin Q would indicate that an investment is wise if the market has not yet realized that a company assets are undervalued , as indicated by a low market capitalization ( i.e. its shares are selling in the market at a price lower than its ( A-L) would indicate.

If an investor would buy into such underpriced shares , then when the fundamentals become more exposed to general public , they are going to bid up the shares , thus benefitting the early birds.

The suppliers of the firms are the ones that will benefit from overvaluation. They do have a claim on the assets of the firm at a liquidation value , so their interests are better covered when assets are valuable or total liabilities are lower than assets.

Investors of the common stock have the exact opposite viewpoint than suppliers