Five Picks for Investing in a Bull Market Without Getting Trampled

In a recent article for Forbes, Validea CEO John Reese discussed how investors can take advantage of the ongoing bull market without getting trampled. He refers to the strategy of Warren Buffett who, Reese writes, “would probably answer this question by advising investors to be prepared–to stick to business fundamentals rather than stock market trends when deciding what to buy.” Using the stock screening models he created based on the investment philosophy of Buffett and other legendary market investors, Reese identified the following high-scoring stocks: Tractor Supply Company (TSCO)is an operator of rural lifestyle retail stores in the U.S. that […]

John Neff and Five Picks for the Low P/E Investor

For legendary investor John Neff, who managed Vanguard’s Windsor Fund from 1964 to 1995, a stock’s price-earnings ratio represented a measure of what level of growth investors are expecting a company to achieve in the future. This according to a recent Nasdaq article by Validea CEO John Reese. The expectation factor, writes Reese, “was paramount for Neff, who found that high-flying growth stocks with high P/E’s were very sensitive to any disappointment compared to expectations.” But Neff saw the upside potential in this scenario if an investor was able to find those stocks that were unfairly beaten down. Reese outlines […]

Share Buybacks Down Plus Five Picks

Although share buybacks boost earnings-per-share for investors, companies are slowing it down of late, writes Validea CEO John Reese in a recent article for Nasdaq. Reese cites a recent Barron’s article that says: “As with many games, this one has gone on for too long, as companies borrowed heaps of cash not to fund future growth, but to reduce their share count even further.” One reason for the slowdown, Reese says, is that share valuations are higher. “The move only makes sense,” writes Reese, “if the shares are being repurchased at a reasonable price.” Using stock screening models he created […]

Buffett and Thorp, and Five Stocks to Consider

 In yesterday’s Forbes, Validea CEO John Reese profiles the mathematician and author Edward Thorp, describing him as “masterful at integrating his vast knowledge of probability and statistics into the world of investing.” In the article, Reese highlights how Thorp shared Warren Buffett’s penchant for gathering and using data to unveil market opportunities in the form of mispriced equities. Using the stock screening models he created based on the strategies of Buffett and other investing gurus, Reese identifies the following five high-scoring stocks: TJX Companies (TJX) is an off-price apparel and home fashions retailer in the U.S. and across the world. […]

Quant Strategies Are Not Magic

 The flow of funds into the quant investment strategies continues but, like most new ideas, this one doesn’t come without caveats, writes Validea CEO John Reese in a recent Forbes article. Reese argues how quant strategies shouldn’t be considered a magic bullet, but rather a tool to thwart an emotional approach to investing. He underscores the advantage of the type of blended approach used by Validea, and identifies the following picks identified using his stock screening models: Accenture PLC (ACN) provides management and technology consulting services. The company earns high marks for its predictable and stable earnings-per-share as well as […]

Investment Opportunities in Europe

European equities are back in favor with Investors, who pulled approximately $100 billion from the asset class in 2016, writes Validea CEO John Reese in a recent article for Nasdaq. The article explains that below average performance in oversea stocks over time has led to a big difference in valuations compared to the U.S. market, presenting opportunities for investors. The article also discusses mean reversion and the role it plays in market movements. Reese identifies the following five high-scoring international stocks: Vale SA (VALE) is a global producer of iron ore, iron ore pellets and nickel, and earns high marks for […]

Peter Lynch Style Investing: Simpler is Better

 In an article for this week’s Nasdaq, Validea CEO John Reese highlights the investment philosophy of guru Peter Lynch that centers on the importance of investing in what you know. “Hardly a pithy inside tip” writes Reese, “but very characteristic of the Lynch approach.” Lynch generated one of the most impressive track records of all time during his tenure as manager of Fidelity’s Magellan Fund from 1977 to 1990. Reese outlines the concepts that form the foundation of his common-sense investment strategy, including how Lynch categorizes companies. He also describes one of the most important metrics in Lynch’s methodology, the […]

Stock Picks for the Level-Headed Investor

When buying stocks, it is essential for investors to value process over outcome, says guru James O’Shaughnessy during a recent speaking engagement. This according to a recent Nasdaq article by Validea CEO John Reese. O’Shaughnessy shares a cautionary tale of a client who would knee-jerk when the market rose or dipped, often buying or selling based on emotion rather than on fundamentals. He stresses, writes Reese, how this practice will “get you into trouble, since by the time you want to buy in most of the easy gains have been made and, conversely, once you decide to sell most of […]

Robo-Investing is Gearing Up

As money managers allocate more resources to quantitative model-building, they are also amping up robo-advising services for clients seeking low cost investment alternatives, writes Validea CEO John Reese in this week’s Forbes. Since many of these strategies are outperforming actively managed funds, writes Reese, they are increasingly attractive to investors. He cites the example of BlackRock, the largest asset manager in the world (overseeing more than $5 trillion in assets), which announced last month that it will consolidate some actively managed mutual funds with “computer-centric peers.” Using guru-based stock screening models he created that rank stocks “based solely on their […]

Fundamentally Strong Picks for the Contrarian Investor

The Citigroup Economic Surprise Index, which measures how current economic data is comparing to expectations, is on the rise along with investor confidence regarding the expanding economy, writes Validea CEO John Reese in a recent article for Forbes. Historically, however, markets perform best not during times of economic expansion, but rather when the economy is improving despite lower expectations, writes Reese. When things are going relatively well, he argues, “forecasters tend to extrapolate forward using recent trends and assume the good news will continue.” Reese outlines the contrarian investment approach of guru David Dreman, who argues that investors can beat […]

Four Magic Formula Picks for a Stretched Market

While there are many that believe today’s stock market is “frothy,” Warren Buffett argues, “measured against interest rates, stocks actually are on the cheap side compared to historic values.” This according to a Nasdaq article by Validea CEO John Reese. Reese weaves this argument into a discussion about the investment strategy he created based on the philosophy of Joel Greenblatt–author of The Little Book that Beats the Market (2005) –that focuses on earnings yield and return-on-capital as the “magic formula” for picking stocks. He identifies four names that earn high marks based on these two metrics (along with their ranking […]

Buffett and 3G Capital Might Like These Picks

 While the private-equity firm 3G Capital and Buffett’s Berkshire Hathaway have teamed up on a few headline deals (such as the acquisition of H.J. Heinz and the subsequent merger of Heinz and Kraft), their investment portfolios look a little different, writes Validea CEO John Reese in a recent article for The Globe and Mail. The Berkshire portfolio is weighted heavily in stocks of consumer goods and companies (including a big bet on Apple), while 3G’s holdings include a substantial portion of energy, basic materials and telecommunication stocks. There are some overlaps, however. By looking at both portfolios, Reese identified some […]

Buffett Says Stocks are Relatively Cheap

Notwithstanding all of the buzz surrounding the “pricey” stock market, legendary investment guru Warren Buffett thinks it’s a still the best place to plant your money. This according to a recent Forbes article by Validea CEO John Reese. According to the article, Buffett believes “we’re not in a bubble territory or anything of the sort,” but Reese presents some opposing views including those of Nobel Laureate Robert Shiller. Describing Joel Greenblatt’s use of earnings yield and return-on-capital as evaluative tools, Reese identifies the following five stock picks that score highly based on his guru criteria: CVS Health (CVS) is an […]

The Trump Victory and the Small-Cap Reversal

While over the past ten years large-cap stocks have outperformed small-caps, the recent election upset caused a rally in the latter and added complexity to the relationship between the two. In a recent Forbes article, Validea CEO John Reese addresses implications related to this shift and offers the following small-cap picks: Sanderson Farms (SAFM) is a producer, processor, marketer and distributor of fresh and frozen chicken (market cap $1.94 billion) that earns high marks for its debt-free balance sheet, growth in earnings-per-share and liquidity. Smith & Wesson Holding (SWHC) manufactures firearms and accessories for the outdoor enthusiast (market cap $1.32 […]

Peter Lynch’s Strategy and PEG Ratio Picks

The legendary manager of Fidelity’s Magellan fund (1977 to 1990) and author of One Up on Wall Street subscribed to the investment philosophy of buying into companies you could understand and then analyzing their fundamentals. One of Lynch’s go-to metrics was the PEG ratio (an indicator of value), which measured the relationship between a stock’s price-earnings ratio and its earnings-per-share growth. In a recent article for TheStreet, Validea CEO John Reese explained his Lynch-based stock screening model and identified some picks that make the grade: Waddell & Reed Financial (WDR) is a mutual fund and asset-management company that earns high […]