Greenblatt on Gotham’s New Fund

Guru investor Joel Greenblatt—Columbia University professor and co-founder of Gotham Asset Management–has consistently made a strong case for value investing and created a series of hedge funds and mutual funds that would go long cheap stocks and short expensive stocks. However, in a recent interview with Barron’s, Greenblatt explains how underperformance and investor frustration led his firm to launch an index fund (Gotham Index Plus), which has been outperforming the S&P 500. The reason? Investors don’t adhere to investment styles that underperform. “While value investing works over the long term, and in the vast majority of cases within two or […]

Is Value Investing Getting Short-Changed?

A report published last month by investment management firm Research Affiliates, LLC addresses the question of why value investing (a smart-beta strategy using value indicators such as CAPE or price-earnings ratios) has “fallen out of favor in institutional portfolios,” according to an article in Chief Investment Officer. The authors of the report argue that value investing is increasingly overlooked and that the “average” portfolio’s stock and bond holdings are comprised of 60% buy-and-hold in the S&P 500 and only 20% of value-based securities. The team compared the performance of the two components over a 53-year period and found that the […]

Investing Principles Part IV: Buying Stocks That Have Declined in Price

As our discussion of the Tweedy Browne publication What Has Worked In Investing continues, we’re going to look at the strategy of investing in poorly performing stocks both domestically and globally. The concept of value investing lives at the core of our stock screening strategies inspired by gurus Benjamin Graham, David Dreman, John Neff and Warren Buffett (who subscribes to the notion that “Price is what you pay; value is what you get.”). Each of these legends has earned fortunes by investing in companies whose stocks were selling on the cheap relative to the underlying values of their businesses. Such […]

John Neff: Bargain Hunter

Unloved but promising stocks were just the ticket for Investment guru John Neff. While managing the Windsor Fund for more than 30 years, his conservative approach earned an average 13.7% annual return and beat the market by an average of 3.1% per year. In his article for this week,  Validea CEO John Reese describes this Low P/E Investor’s philosophy and offers some fundamentally solid stock picks. Scripps Networks Interactive, Inc. (SNI) is a developer of lifestyle-oriented content for linear and interactive video platforms including television and internet brands. Our Neff-based strategy likes the company’s EPS growth of 9.7%, which […]

Oakmark’s Bill Nygren Talks Value

“Value is relative to something else,” says Bill Nygren when asked where to find it in today’s market. Manager of the Oakmark Select Fund since 1996, Nygren offers his perspective in a recent interview with Investment News. “In a period when you have short-term investments such as Treasuries with zero risk that pay zero, an average-risk equity that’s paying more than 2% a year in dividends and growing earnings 5% to 6% a year…. that’s a pretty attractive holding.” As far as where to find it, Nygren identifies the banking sector as “unusually attractive.” Banks, he says, are selling for […]