Arnott: Emerging Markets Hold Promise

Although EM stocks have taken a beating in recent years, things may be looking up, writes Validea CEO John Reese in this week’s TheStreet. Reese offers insight from Research Affiliate’s Rob Arnott, who thinks that, notwithstanding swelled valuations (based on Shiller PE ratios), “emerging-market stocks offer an attractive combination of depressed currencies, low valuations and strong momentum.” Using his guru-based stock screening models, Reese identifies the following five picks that could be poised for growth: Companhia Paranaense De Energia (ELP) generates, transmits, distributes and sells electricity in the Brazilian state of Parana, and scores highly based on its favorable revenue […]

Pushing the Envelope Has Paid Off for Select Hedge Funds

On the whole, the past year hasn’t been great for hedge funds, but those who “ventured far afield” seemed to do better, according to a recent article in The Wall Street Journal. Specifically, the article says that some of the biggest profits materialized in “areas less frequently traded” including: Russia and Central Asia: One of the world’s biggest Russia-focused hedge fund firms, Moscow-based Prosperity Capital Management (approximately $3.3 billion in assets), reported a 57% gain in its flagship fund (as of December 22, 2016). The article quotes their Chief Investment Advisor, Alexander Branis, who said he has been “encouraged by […]

Rob Arnott is Pro-Emerging Market Investment

Countries don’t have to be great to see significant market growth, according to Research Affiliates’ CEO Rob Arnott as explained in a recent Investment News article. In fact, the article says, since Arnott first recommended emerging markets in January, the “average diversified markets fund has gained 7.8%, and 17.8% since the February low.” He believes the asset class offers “an unusual three-way combination of low valuations, depressed currencies and strong momentum.” Here’s how: Low valuations: Arnott uses the Shiller PE ratio (which uses 10-year historical inflation-adjusted earnings) as a basis for his argument and says that, by that measure, emerging […]

More Upside in International Stocks

The continued grind of the bull market may not be justified, according to an article in this week’s Investment News. In fact, the article, written by Joe Smith, senior market strategist at CLS Investments, argues the positive data points currently baked into the market—a dip in unemployment, improved corporate sales and earnings, additional consumer spending—don’t necessarily indicate a “positive view for investors in the U.S.” Domestic stocks, it asserts, look expensive compared to those overseas, and management initiatives to cut costs and increase share buybacks (rather than focusing on operating growth and/or reinvestment) have driven improvements in corporate earnings. “With cheap […]

Emerging Markets on The Rise

After a run of disappointing performance, emerging market stocks are perking up, says Validea CEO John Reese in a recent article for Nasdaq. Since January, this class of securities has gained more than 34% and the upward trend is expected to continue. Reese advises, however, that while the trend is a welcome change for yield-starved investors, investing in emerging markets should be based on the sort of fundamental business analysis inherent in our guru-based stock screening models. He offers the following high-scoring picks: NK Lukoil Pao ( LUKOY ), one of Russia’s largest energy concerns, is engaged in oil exploration, […]