Value Investing Research

//Value Investing Research

Value Investing

Value Investing: Never Buy Expensive Stocks. Period.

By | 2017-08-18T16:53:45+00:00 July 1st, 2014|Research Insights, Key Research, Value Investing Research|

We did a recent internal simulation study on the performance of cheap and expensive stocks based on a variety of valuation metrics. We looked at all our favorites from our Journal of Portfolio Management paper, [...]

The Quantitative Value Investing Philosophy

By | 2017-11-06T16:25:14+00:00 October 7th, 2014|Research Insights, Key Research, Value Investing Research, Introduction Course|

Benjamin Graham, who first established the idea of purchasing stocks at a discount to their intrinsic value more than 80 years ago, is known today as the father of value investing. Since Graham’s time, academic research has shown that low price to fundamentals stocks have historically outperformed the market. In the investing world, Graham’s most famous student, Warren Buffett, has inspired legions of investors to adopt the value philosophy. Despite the widespread knowledge that value investing generates higher returns over the long-haul, value-based strategies continue to outperform the market. How is this possible? The answer relates to a fundamental truth: human beings behave irrationally. We are influenced by an evolutionary history that preserved traits fitted for keeping us alive in the jungle, not for optimizing our portfolio decision-making ability. While we will never eliminate our subconscious biases, we can minimize their effects by employing quantitative tools.

How Portfolio Construction Affects Value Funds

By | 2017-08-18T17:03:34+00:00 May 13th, 2016|Value Investing Research, Active and Passive Investing|

Value investing is an investment philosophy that has been extensively discussed and examined at least since the days of Ben Graham, who popularized it as a discipline in the 20s and 30s. While there are [...]

Value Investing Research: Simple Methods to Improve the Piotroski F-Score

By | 2017-10-16T16:33:17+00:00 May 5th, 2015|Research Insights, Value Investing Research|

Executive Summary In this article, we identify how we can improve the performance of the F-Score and enhance a generic value investing approach. In a 2000 study, “Value Investing: The Use of Historical Financial Statement [...]

Value Investing in a Honda Civic–and proud of it…

By | 2017-08-18T16:53:52+00:00 May 29th, 2015|Value Investing Research, Yahoo Tickers, $syld, $iwd|

Last week I had the privilege of being on CNBC to talk about value investing. A big shout out to Josh Brown, who introduced me to the Halftime Report producer. (video is below). [iframe src="http://player.theplatform.com/p/2E2eJC/nbcNewsOffsite?guid=c_qualitysto_150522" [...]

Expensive Junk Stocks are Killing High-Quality Value Stocks, YTD

By | 2017-08-18T17:05:18+00:00 August 4th, 2015|Value Investing Research, $vlue, $iwd, $qual|

In general, investors focused on affordable stocks with strong fundamentals have been taken to the cleaners year-to-date. Meanwhile, expensive stocks with poor fundamentals have been rocking! Some Basic Statistics: Below we  document some core performance [...]

A Live Lesson in Value-Investing: The Energy Meltdown

By | 2017-08-18T17:11:21+00:00 July 10th, 2015|Value Investing Research, $xle, $xlv|

We sat down and did a quick and dirty analysis of the S&P sector ETFs on a YTD basis and over the past 2 months. Here are the sector portfolios we used for our analysis: [...]

Value Investing Research: O-Score and Distress Risk

By | 2017-08-18T16:53:50+00:00 July 7th, 2015|Value Investing Research, Yahoo Tickers, $vlue, $syld, $iwd|

Book-to-Market Equity, Distress Risk, and Stock Returns, by Griffin and Lemmon (2002 Journal of Finance) investigate the relationship between value premiums and distress risk.  There are two schools of thought on the value premium, or [...]

How to Make Money in Markets: Understanding Expectation Errors

By | 2017-08-18T17:03:19+00:00 June 24th, 2015|Behavioral Finance, Value Investing Research, $SPY, Yahoo Tickers|

A new working paper from Gennaili, Ma, and the one-the-only Andrei Shleifer. Expectations and Investment Using micro data from Duke University quarterly survey of Chief Financial Officers, we show that corporate investment plans as well [...]

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High Dividend Stocks and Value Investing

By | 2017-08-18T17:03:50+00:00 June 18th, 2015|Value Investing Research, Uncategorized, $syld, $iwd|

Barron's recently ran an article (written by Research Affiliates), which is titled "Get Smart About Picking Dividend-Rich Stocks." The article highlights that high-quality high-dividend-paying stocks outperform low-quality high-dividend-paying stocks. The quality of the firm is measured [...]

Book Review – Competition Demystified: a Radically Simplified Approach to Business Strategy

By | 2017-08-18T17:09:13+00:00 May 12th, 2015|Value Investing Research, Book Reviews, $iwd|

We've spent a lot of time these days thinking about how to identify economic moat, or a firm's ability to defend against competitive forces in the marketplace. In our search for better understanding we ran [...]

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Is Passive Perfect? High Active Share Long-Term Investing Works Better

By | 2017-08-18T17:01:40+00:00 April 30th, 2015|Research Insights, Value Investing Research, Active and Passive Investing, $iwd|

Patient Capital Outperformance Cremers and Pareek A version of the paper can be found here. Want a summary of academic papers with alpha? Check out our Academic Research Recap Category. Abstract: This paper documents that among high [...]

International Value Investing: Looks Like a Reasonable Bet

By | 2017-08-18T17:02:50+00:00 April 27th, 2015|Research Insights, Value Investing Research|

A Value Investing Premium, Everywhere? A rich body of literature has shown that value investing, or buying stocks that are "cheap" based on a variety of valuation metrics, is robust across different markets. For example, Fama and French [...]

The Most Important Decision When Selecting a Value Investing Fund

By | 2017-08-18T16:55:26+00:00 April 23rd, 2015|Value Investing Research, $vlue, $voe|

The Best Investment with the Worst Performance We are huge believers in value investing. I personally started off as a fundamental value guy, spending twenty-plus years trying to pick stocks. I eventually ran into Wes, [...]

Are Value Investing and Momentum Investing Robust Anomalies?

By | 2017-08-18T17:10:04+00:00 April 21st, 2015|Value Investing Research, Momentum Investing Research, $mtum, $vlue|

Beating a Dead Horse: Value investing and momentum investing work At this stage in our lives we've essentially memorized the CRSP/Compustat database. Name an anomaly and we can probably tell you the stats on it fairly quickly. [...]

Attention Value Investors: How to Predict Accounting Trickery

By | 2017-08-18T17:09:54+00:00 April 20th, 2015|Research Insights, Value Investing Research, $vlue, $voe|

Predicting Material Accounting Misstatements Dechow, Ge, Larson and Sloan A version of the paper can be found here. Want a summary of academic papers with alpha? Check out our Academic Research Recap Category. Abstract: We examine 2,190 [...]