Value Stock Picks in an Elevated Market

Although today’s market is a bit pricey, it still offers some values if you shop around and properly evaluate a company’s operations and financials. This according to Validea CEO in a recent article for TheStreet. The article underscores the investment mantra of Warren Buffett–“It is far better to buy a wonderful business at a fair price than a fair business at a wonderful price” – as well as the strategy of the late, great Benjamin Graham that focuses on stocks with a high “margin of safety” between the stock price and a company’s intrinsic value. Reese identifies the following value […]

Contrarian Picks Based on David Dreman’s Philosophy

The famous investor David Dreman, who Kiplinger once referred to as the “consummate contrarian”, follows a strategy which capitalizes on the emotional, knee-jerk reactions that make unpopular stocks underpriced, writes Validea CEO John Reese in TheStreet. This is no coincidence, given Dreman’s knowledge and experience in the area of behavioral finance. Dreman identifies such undervalued companies, Reese explains, by comparing their share prices to four different financial variables that gauge the strength of the underlying business: earnings, cash flow, book value and dividend yield. Reese describes the findings of studies conducted by Dreman from 1970 to 1996 and elaborates on […]

On Becoming Warren Buffett and Some Fat-Pitch Picks

As explained by the legend himself in the recent HBO documentary “Becoming Warren Buffett”, the Oracle of Omaha stays within what he calls his “Circle of Competence” when investing. This according to a recent Forbes article by Validea CEO John Reese. This includes, writes Reese, “knowing what you know, and steering clear of what you don’t.” He quotes a comment Buffett offers in the film: “Having an edge is enormously important. With that, however, comes the onus of brushing off that which fails to serve you.” Reese recounts other anecdotes and quotes from the film that reinforce what we already […]

Warren Buffett on “Free Money ” Plus Four Picks

In one of his many interviews, Warren Buffett explained how the insurance industry offers the opportunity to “invest in other people’s money and keep all the earnings on those investments,” writes Validea CEO John Reese in TheStreet. The article discusses the evolution of Buffett’s penchant for the insurance business as well as the industry outlook. Using his guru-based stock screening models, Reese identifies four high-scoring, small-cap financial picks: INTL FCStone (INTL), a financial services company (market cap of $687 million) that provides advisory services and products, earns high marks for its price-sales ratio and relative strength (price performance compared to […]

Three Picks that Benjamin Graham Would Approve

The difference between a company’s actual value (net working capital minus debt) and the value at which its shares sell in the market describes what Benjamin Graham called the “margin of safety.” In a recent article for The Globe and Mail, Validea CEO John Reese offers insights regarding the metric and findings of research concerning its credibility. The article cites Warren Buffett’s explanation of the margin of safety: “You don’t try to buy businesses worth $83 million for $80 million. You leave yourself an enormous margin. When you build a bridge, you insist it can carry 30,000 pounds, but you […]