Why Use One Value Factor When You Can Use Many

By Justin Carbonneau (@jjcarbonneau)—-Interested in chatting with Justin – let him know.—- Suppose you wanted to find the value stocks in today’s market using common value ratios. Which would you use and why? Would you lean more heavily on the price-to-book ratio, which is largely used in academic testing and originates out of the world of Graham & Dodd? Or would you rather use something like the price-to-earnings ratio, which is more common and uses… Read More

Buffett Protégé Starting Her Own Firm

One of Warren Buffett’s inner circle is leaving Berkshire Hathaway to start her own firm, according to a recent article in The Wall Street Journal. Tracy Britt Cool, who the article describes as one of Buffett’s “key lieutenants in recent years,” joined Berkshire in 2009 at the age of 25 as his financial assistant, a role he reportedly created for her. In 2014, the article notes, she became chief executive of Berkshire-owned company Pampered Chef.… Read More

“No-Name” Managers Deliver Winning Pitches at Sohn

Many little-known hedge fund managers who presented pitches at this year’s Sohn Investment Conference in New York identified stocks that rose more than 30 percent over the ensuing 12 months, according to a recent article in Institutional Investor. “Sohn began introducing next wave investors in 2014, setting the stage for the hedge fund industry’s rising stars to share their actionable ideas alongside high-profile managers like billionaire Leon Cooperman. After several years of lagging hedge fund… Read More

Hedge Funds for the Masses Missed the Mark?

A recent article in Morningstar highlights the debate surrounding what it describes as the “general-public version” of hedge fund—replication funds. Ten years ago, the article explained, hedge funds were “the glamorous investment” because they were accessible only to the wealthy. Enter replication funds–developed in 2007 by two MIT professors who recreated hedge fund strategies using data from 1,600 funds over the previous 20 years. These “clones” made the hedge fund investing concept accessible to the… Read More

Passive Have Surpassed Active Funds

In August, assets in U.S. index-based equity funds and ETFs topped those in active stock funds for the first time. This according to an article in Bloomberg. “Stock picking isn’t dead,” the article reports, “But the development marks the official end of money managers’ position as the guiding force in the American stocks market—and the seemingly inexorable rise of low-cost index-driven investing.” If the shift keeps gaining steam, it adds, the implications for both industry… Read More

The Revival of Value Stocks Could Be the ‘Real Deal’

Some signs are pointing to a value-stock rotation, according to a recent article in Barron’s that says, “value stocks are acting like a tightly wound spring that has started to uncoil.” The article reports that value has outperformed momentum by 9 percentage points in September, the “widest divergence in performance between the two factors (for stock attributes) since 2010, wrote Bank of America Merrill Lynch head of U.S. equity and quantitative strategy Savita Subramanian in… Read More

Profile: David Swensen and How He Made Yale Rich

A recent article in Bloomberg profiles David Swensen, who has overseen the Yale University endowment for 34 years and has become something of a legend—as well as the school’s highest-paid employee. When Swensen began his tenure at Yale, the article reports, the endowment was worth $1 billion. Today, it stands at $29.4 billion. “Harvard’s stash is bigger, at $39 billion,” the article says, “but Swensen’s reputation is more than a matter of returns and asset… Read More

Sudden Shift for Value Stocks Unnerving Some Investors

The outperformance of value stocks that occurred on September 9th is “unnerving to investors because a rotation away from growth could “result in a downturn for the broader market, some fear.” This according to an article in CNBC. Growth stocks, the article notes, “have blown their value counterparts out of the water over the past five years,” and outperformed the S&P 500 over the same period. The article reports that some investors see the sudden… Read More

“The Fed is Clueless” says Bob Rodriguez

A recent article in Advisor Perspectives offers highlights of an interview with Robert Rodriguez, award-winning fund manager and former managing partner at Los-Angeles-based asset manager FPA. Here is a summary of his comments: “Monetary policy has gone from the ridiculous to the absurd. The Fed, in my opinion, is clueless and is driven by theories with little basis in reality.” He believes that the central bank has been “consistently on the wrong side of economic… Read More

Why Return Skewness Offers Some Hope for Value Investors

By Jack Forehand, CFA (@practicalquant) It is no secret that value investing strategies have struggled for a long time now. The extended period of underperformance has tested the patience of many value investors and has led some to abandon the approach entirely. Adding to the frustration have been the frequent calls from some well-known value investors that we are at or near the end of this period of underperformance and that value is about to… Read More