Equity optimization strategies are a specific focus over here at Picture Perfect Portfolios. We’ve covered factors such as value, momentum, quality and…
Think growth and value can’t coexist? Think again.
Traditional value investors pick stocks that are trading below their fundamentals based on a wide variety of measures. As a result and by definition, many dismiss growth companies altogether. But one manager believes that ignoring growth stocks out of hand is “fundamentally flawed.”
Value investor Applied Finance, with $1.25 billion in assets under management, argues that traditional metrics such as low price-to-book and price-to-earnings multiples don t provide investors with a comprehensive framework and are inadequate in identifying stocks that are trading below their intrinsic value; in fact, companies that are trading on apparently high multiples may actually be undervalued in terms of their overall valuation, thus creating opportunities for large returns.
Rafael Resendes is the co-founder of Applied Finance. This story is available exclusively to Insider subscribers. Become an Insider and start reading now.
Rafael Resendes is the co-founder of The Applied Finance Group, which offers the $32.4 million Applied Finance Explorer fund, the only small-cap value fund on Charles Schwab s exclusive OneSource Select List.
Resendes believes that traditional value investing never really worked because of shortcomings including its reliance on noisy accounting data.
In an interview, he shared an alternative method of valuing companies based on adjusted accounting distortions and from an economic cash flow perspective.
Rafael Resendes grew up knowing the value of hard hustle.