Thanks Paul for the note. Here's another article by Glassman in today's Washington Post on how value investing should make a comeback - I like his columns more and more - maybe I just like his value based style :)
washingtonpost.com
Yeah, as a value investor the LSGI portfolio has been hurt by Asia - but I've been picking companies like those in that portfolio for some time now and a quote in Glassman's article sort of explains the concept - buy misunderstood and out of favor stuff and just hold - if your sector and business analysis is anywhere near the mark some will be discovered.
When it is out of favor it is cheap, and can get cheaper before it runs. LSGI selections were cheap when we found them, and are cheaper now. But with tech stocks, when they get discovered and begin to run they can run big. So I'm still happy with the "dogs" I've bought - some day they will grow and I'll bet at least half will "hunt."
Joe
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The fund was launched in April 1993 but did not start posting eye-popping numbers until 1995. Every year since then it has beaten the S&P and, according to the Value Line Mutual Fund Survey, has finished in the top quintile (or 20 percent) of its peers.
For the past 12 months, Hickory has returned 65 percent, compared with 29 percent for the S&P and 17 percent for the Dow Jones industrial average.
How does Lawson do it? "We try to find stocks that are forgotten or out of favor or misunderstood," he told me. "I'm trying to answer this question: 'What should a reasonable person pay for a company if he's willing to hold it forever?' " If the answer is significantly more than the market price, then Lawson may buy it.
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Here's another article on how value mutual fund managers are finding stuff to buy:
detnews.com
"Even with U.S. stocks at record valuations, mutual fund managers who look to buy stocks on the cheap say they're finding plenty of bargains. "It's amazing that this market is concentrating a lot on the favorites," said David Dreman, 62, whose Red Bank, N.J.-based company manages about $6 billion in customers' assets. "There's no price too high, but you can still use good value standards, say, on a tobacco stock."
ÿ ÿ "Value" investors such as Dreman seek to buy stocks that are cheap as measured by the ratio of their price to their expected earnings per share. The style has been frustrating this year because investors have preferred to bet on growth stocks, even as those stocks have rocketed ahead. |
