web analytics

We focus on identifying stocks that are trading at a discount to intrinsic value and more compelling valuation relative to sector peers. The firm generally focuses on identifying opportunities at a company level and avoids macro or sector bets. The firm uses sector and industry diversification to mitigate single position risk and ensure that the stocks in the portfolio are not highly correlated.

Each holding represents a relatively small portion of the total portfolio.

Valuation 50:

 Sector Neutral
 Market Cap Equal Weighted
 Unlevered
 Holdings uncorrelated

Valuation Dividend:

 Sector Diversified
 Equal Weighted
 Unlevered
 Holdings uncorrelated

“The greatest risk to your stock portfolio is owning overvalued equities.”
– Applied Finance

  • The Gross Profitability Trap

    The Gross Profitability Trap “But this time, it’s different!” More foolish words are rarely spoken in the financial industry, but they always seem to find their way back into the stock market lexicon. A firm’s [...more]
  • Intrinsic Value Factor®

    February 4, 2019 Applied Finance

    Valuation Driven™ Investing begins and ends with calculating the intrinsic value of every stock in a benchmark against which a portfolio is constructed, and comparing those values against traded prices. All of Applied Finance’s portfolios are Intrinsic Value Driven™, which differs significantly from a “value” perspective. To gain a better understanding into Applied Finance’s Intrinsic Value Driven™ approach, let’s first review traditional approaches to “Value”.

    The traditional approaches to finding undervalued stocks use a simple ratio such as P/E or P/B, or a mix of them. These common approaches to value come with many shortcomings: […more]

  • Then and Now: Buyers Remorse Versus Sellers Loss

    October 31, 2008 Applied Finance
    Over the past couple months, worsening macro economic conditions, declining corporate profitability and a bottomless stock market have investors longing for the good old days when the economy delivered steady increases in GDP growth with [...more]
  • Economic Margin®

    A corporate performance metric should provide insights into what a firm is worth. Most money managers utilize common earnings-based measures of corporate performance and value, which are suspect and easy to manipulate. Applied Finance developed the Economic Margin (EM) framework to remove the noise inherent in accounting data.

    Traditional accounting-based valuation methods provide an incomplete view of a company’s value by not accounting for the investment needed to generate the earnings, cost of capital, inflation or cash flow. […more]