In his latest column for Forbes.com, Validea CEO John Reese looks at the implications of new research from renowned finance professors Kenneth French and Eugene Fama that turns conventional thinking about value stocks on its head.

In a working paper, French and Fama found that value is a “redundant factor” in terms of accounting for stock returns when profitability and capital investment levels are also considered. “The fact that French and Fama are finding that valuation in and of itself doesn’t determine future returns didn’t come as a big surprise to me,” Reese says. “For over a decade, I’ve been studying the strategies used by some of history’s greatest investors, including Warren Buffett. And, as I discussed a couple months back, Buffett really is mislabeled as a ‘value investor;’ he in fact tends to be more of a ‘high-quality investor,’ targeting profitable firms with low debt and low capital requirements. While he always wants to get the best price that he can, he’d rather pay a little more for a really good company then get a mediocre company whose shares appear to be trading on the cheap.”

Reese says he doesn’t think these new findings mean that investors should ignore value metrics. “But I do think that it is further proof that you should always consider a multitude of fundamentals and financials when analyzing a stock,” he says. He looks at five stocks that currently get approval from his Buffett-based Guru Strategy, including NetEase.