A case for value investing?

Posted: May 13, 2016 in Uncategorized

In the last years the Growth stocks were the best and value managers got battered.

Even if I do not like this distinction…a manager should be able to pick up a switch in the market between the two styles…..how can you pick it?

Let’s see (US Data) .

In 2015/2016 companies have beaten their EPS targets *Earning per shares) relatively easily (68%). But the revenue have been a miss (only 46%) .

It is every hard to justify this (recently happened only in 2009 just post GFC).

Naturally one would think the BUYBACKA are the culprit…but raw data do not support this thesis.

It is actually more likely to be the Margins. Margins are always bigger in Growth Stock (make it easy…Apple can charge whatever he wants for its iPhones).

If you dissect in 2015/16 only 39% of the Value shares beat their revenue targets, while Growth shares beat it by 68%.

In the last data set there is a shift where the Value shares are growing their Margins (and sales) and Growth are lowering their Margin.

A bit early to call…but YES there could be a shift going on.

Is your adviser able to pick it?


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