| Think growth and value can’t coexist? Think again. Applied Finance & co-founder Rafael Resendes, were recently featured by Institutional Investor. In the article, Value Investors Don’t Need to Avoid Growth Companies. In Fact, Doing So Can Hurt Returns, Ms. Chung outlines how Applied Finance is redefining Value Investing & how traditional value metrics are inadequate in identifying stocks trading below their intrinsic value. Much has been said about the long-term underperformance of stocks with many “value” managers explaining away the poor performance and exhibiting a hopefulness for a big “value” turnaround. Ignoring growth companies and relying on valuation shortcuts (price multiples) that don’t truly get to the heart of a company’s underlying value is not “value” in our definition. “We’re redefining what value is. The term has been tortured and confused with cheapness.” Mr. Resendes says. In our view, growth and value can coexist and regardless of what a price multiple/cheapness indicator might imply, high multiple companies can be undervalued in terms of their overall valuation. Blindly dismissing these firms will lead to missing countless opportunities for large returns. Applied Finance partner, Derek Bergen, CFA, delivered an insightful piece of research on Intrinsic Value’s potential role in passive indexing. Derek highlights how intrinsic value weighting stocks in the S&P 500 drastically improves risk-adjusted returns compared to a market value proxy derived from efficient market assumptions. John Holt, CFA, identifies some unloved yet undervalued pockets of the market as he provides a valuation analysis of the energy and utility sectors and how he finds value in large and small cap Energy stocks, and large cap Utility stocks. Mr. Resendes also sat down to discuss how growth & value stocks are equally attractive from an intrinsic value perspective while reviewing the merits of our intrinsic value & wealth creation factors with Julie Hyman, Myles Udland & Brian Sozzi on Yahoo Finance. Remember, there are no shortcuts to understanding valuation. |
June 2021
Value Investors Don’t Need to Avoid Growth Companies. In Fact, Doing So Can Hurt Returns.
Our firm & Co-founder, Rafael Resendes, were recently profiled in Grace Chung’s Institutional Investor article. Grace outlines how we’re redefining Value Investing & how traditional value metrics are inadequate in identifying stocks trading below their intrinsic value.
Intrinsic Value in Passive Indexing
Our latest research studies the role of intrinsic value in passive indexing. Intrinsic value weighting stocks in the S&P 500 improves the risk-adjusted return compared to a market value proxy derived from efficient market assumptions.
The State of Value Investing vs. Value Rotation
Our Co-founder, Rafael Resendes, discusses how growth & value stocks are equally attractive from an intrinsic value perspective and Applied Finance’s approach to measuring intrinsic value & wealth creation with Julie Hyman, Myles Udland & Brian Sozzi on Yahoo Finance.
Valuations in the Energy & Utility Sectors
Energy and Utilities sectors have dominated news cycles over the past few months. Applied Finance will highlight recent events, their impact on the market, and review current Valuations in Energy and Utility.