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The Momentum Reversal: A Cautionary Tale

August 25, 2021

Historically, High momentum stocks have done quite well, with the top quintile outperforming the bottom in many years. In 2020, the High momentum group did significantly well in the early part of the year, while that trend reversed in the second half and into 2021. YTD, we’ve seen the largest reversal in the momentum factor since 2016, with High momentum companies underperforming Low firms by over 15%. […more]

How to Value a Value Stock – Barron’s Feature

August 24, 2021

Our Co-founder, Rafael Resendes, has been featured by Sarah Max in Barron’s discussing the history behind our flagship Applied Finance Select Fund. Sarah explains why valuation distinguishes the Select Fund from most large value funds and why in the past three years it has performed better than 96% of its peers […more]

Tactical Valuation Update – July 2021

July 20, 2021

The notable tactical valuation themes we observe in the current marketplace indicate that large cap stocks are slightly more attractive than their small cap peers. We also observe that investors can improve a portfolio’s intrinsic value characteristics by allocating towards highly profitable, growing stocks away from low profit, dilutive peers. […more]

Looking Back, Looking Forward – 2021Q2

July 16, 2021

Corporate America is chugging along and reporting strong earnings. For the SP500 index, 87% of its members have reported actual 21Q1 EPS above estimates, well above the five-year average of 74%. In aggregate, SP500 companies’ […more]

FAAMG Stocks: Valuation & Concentration

July 14, 2021

US market returns in Q2 were once again dominated by the top 5 market cap stocks following blockbuster earnings reports in April. In 2020, AAPL, MSFT, AMZN, GOOGL and FB (FAAMG) combined to represent nearly […more]

Intrinsic Value in Passive Indexing

June 15, 2021

While Applied Finance has long advocated for investors to consider the strategic advantages from incorporating a valuation-based discipline in portfolio construction and stock selection, this study provides compelling evidence that even passive allocations benefit when index weights are formed on intrinsic value characteristics instead of using market cap as a proxy. […more]

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