Author Topic: Any value investors?  (Read 1806 times)

Alchemisst

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Any value investors?
« on: July 22, 2020, 07:37:42 PM »
Anyone use value investing for all or some of their portfolio? How have you performed, have you beaten the index, has it been worth your time overall?

tooqk4u22

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Re: Any value investors?
« Reply #1 on: July 23, 2020, 10:38:08 AM »
Anyone use value investing for all or some of their portfolio? How have you performed, have you beaten the index, has it been worth your time overall?

I don't do individual stocks but and have mainly relied on Vanguard Total Market and S&P 500 index funds.   With big tech exploding and accounting for an ever greater % of the indexes, and accounting for much of the rise in the indexes I have recently been researching some large cap value indexes to move some funds into. 

I don't know if I will do it, but my logic is that bc big tech/big 5 have run so much and multiples are in the stratosphere where as 70% of S&P 500 is still down 20% the large cap value funds essentially carve out the big winners - kind of like buying an S&P 500 fund then shorting the big 5 or so in corresponding percentages to bifurcate the risk - doesn't exactly work that way but its close. 

Obviously those big techs have done all us well, but there comes a point, right?

Some may see it as timing the market, I look at it more as a hedge or diversifying company risk a bit more - just not sure how a feel about 20% of my stock holdings being in just 5 companies.

Probably won't do anything different but still thinking.

bacchi

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Re: Any value investors?
« Reply #2 on: July 23, 2020, 11:28:58 AM »
Makes sense. ^^^^

We've seen it before. When cars started to sell to consumers, there were a shit-ton of car manufacturers (and a lot of motorcycle manufacturers in England). Invest in the right one and you become rich. Invest in the wrong one and you lose it all.

We're in a similar situation with tech. Twenty years ago, there was euphoria and a LOT of dot-coms. After a shaking out, and some market maturation, we're left with a handful of tech companies that are driving growth. Eventually, the exciting companies of today will become the stalwarts of tomorrow.

tooqk4u22

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Re: Any value investors?
« Reply #3 on: July 23, 2020, 01:11:07 PM »
CNBC just showed this chart that basically sums up my point. 


Buffaloski Boris

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Re: Any value investors?
« Reply #4 on: July 23, 2020, 09:03:39 PM »
Yup, Iím one of them. I donít put a huge portion into US value stocks, actually not much at all, but I do invest in some value ETFs. Also, international tends to be tilted toward the value end of the spectrum and I do a LOT of international (to the US).

Vanguard offers some value ETFs that scratch the itch.

lemanfan

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Re: Any value investors?
« Reply #5 on: July 24, 2020, 01:22:21 AM »
When I do pick individual stocks, the value mindset is hard encoded in me.  These days, I hardly pick any invidual stocks though.  Index funds FTW.  :)

Edubb20

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Re: Any value investors?
« Reply #6 on: July 24, 2020, 07:36:11 AM »
As far as Vanguard ETF's are you value buyers looking at VTV or something else?

https://investor.vanguard.com/etf/profile/portfolio/vtv

vand

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Re: Any value investors?
« Reply #7 on: July 24, 2020, 08:59:06 AM »
Value investing means different things to different people.  I consider myself a value investor, although not really in the Buffett mold. I think there are very few people left who select securities while adhering strictly to the Graham/Dodd "margin of safety" principle. I tilt all my investments towards sectors and asset classes that I think are cheap and neglected. 

As an example I've been adding commodities to my portfolio in the last 6 months - the most disappointing asset class of the last decade or so. I feel the time is right to do so, as commodities have never been cheaper on a comparative basis to every other major asset class than they are today. Sure, there are lots of reasons why you shouldn't own commodities, but the simple fact that they are cheap and unloved is a good reason to buy some.


bthewalls

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Re: Any value investors?
« Reply #8 on: July 24, 2020, 05:00:22 PM »
I pick an odd one using screening criteria and reviewing financials.....for trial and error learning.....a few up 30 and 40percent since March but itís only play money

Buffaloski Boris

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Re: Any value investors?
« Reply #9 on: July 24, 2020, 05:26:59 PM »
As far as Vanguard ETF's are you value buyers looking at VTV or something else?

https://investor.vanguard.com/etf/profile/portfolio/vtv

Nope.  Not much into large caps.  Looking at VOE, IVOV, VIOV, and VBR.  I own one or two, I can't remember which ones off the top.  But mostly I'm just buying international because of better valuations and to diversify out of the dollar. 

Steeze

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Re: Any value investors?
« Reply #10 on: July 24, 2020, 07:00:26 PM »
I started picking up Vangaurdís small cap value fund in March - will continue to do so for the foreseeable future. Maybe about 10% of my contributions each month right now - makes up less than 2% of my portfolio currently.

hodedofome

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Re: Any value investors?
« Reply #11 on: July 25, 2020, 10:52:10 AM »
Value investing has been sucking wind for years. Perhaps because the cheap stocks keep getting cheaper as the companies are getting replaced by technology. Maybe itíll turn around soon but I doubt it. I think the cheap is getting cheaper for several more years before it changes.

Oil and gas is cheap because those companies were over leveraged and now oil is getting replaced by batteries, electricity and clean energy. So their growth is gone, perhaps permanently, and the industry will become a shell of itself.

Disruption is happening faster than ever and Iíd rather be in the companies that are growing than the ones who are shrinking.

tooqk4u22

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Re: Any value investors?
« Reply #12 on: July 25, 2020, 11:51:18 AM »
Value investing has been sucking wind for years. Perhaps because the cheap stocks keep getting cheaper as the companies are getting replaced by technology. Maybe itíll turn around soon but I doubt it. I think the cheap is getting cheaper for several more years before it changes.

Oil and gas is cheap because those companies were over leveraged and now oil is getting replaced by batteries, electricity and clean energy. So their growth is gone, perhaps permanently, and the industry will become a shell of itself.

Disruption is happening faster than ever and Iíd rather be in the companies that are growing than the ones who are shrinking.

O&G (actual commodity) is cheap bc there is a crap ton of supply not so much reduced demand (immediately prior to the pandemic which caused reduction in demand).  Electric/clean energy is not as much a factor yet.

O&G stocks are cheap bc of above AND bc of significant uptick in ESG bias in investing, that is the reason to stay away from O&G stocks. 

KBecks

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Re: Any value investors?
« Reply #13 on: July 25, 2020, 11:55:32 AM »
Value investing has been sucking wind for years. Perhaps because the cheap stocks keep getting cheaper as the companies are getting replaced by technology. Maybe itíll turn around soon but I doubt it. I think the cheap is getting cheaper for several more years before it changes.

Yes, high revenue growth all the way.

vand

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Re: Any value investors?
« Reply #14 on: July 26, 2020, 01:34:50 AM »
Value investing has been sucking wind for years. Perhaps because the cheap stocks keep getting cheaper as the companies are getting replaced by technology. Maybe itíll turn around soon but I doubt it. I think the cheap is getting cheaper for several more years before it changes.

Oil and gas is cheap because those companies were over leveraged and now oil is getting replaced by batteries, electricity and clean energy. So their growth is gone, perhaps permanently, and the industry will become a shell of itself.

Disruption is happening faster than ever and Iíd rather be in the companies that are growing than the ones who are shrinking.

O&G (actual commodity) is cheap bc there is a crap ton of supply not so much reduced demand (immediately prior to the pandemic which caused reduction in demand).  Electric/clean energy is not as much a factor yet.

O&G stocks are cheap bc of above AND bc of significant uptick in ESG bias in investing, that is the reason to stay away from O&G stocks.

Rising prices -> higher profits -> oversupply -> falling prices -> increasing losses -> undersupply -> rising prices

Rinse and repeat. Guess where we are at in this cycle.

MustacheAndaHalf

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Re: Any value investors?
« Reply #15 on: July 28, 2020, 11:50:31 AM »
I started picking up Vangaurdís small cap value fund in March - will continue to do so for the foreseeable future. Maybe about 10% of my contributions each month right now - makes up less than 2% of my portfolio currently.
Before the crash, "Vanguard Small-Cap Value ETF (VBR)" was over 50% mid-cap stocks.  According to morningstar, it holds 43% mid-caps now.  The median market cap is $3.5 billion, and it costs 0.07%/year.
https://www.morningstar.com/etfs/arcx/vbr/portfolio

A better ETF for small cap value is "SPDR S&P 600 Small Value ETF (SLYV)", with 98% small cap stocks according to morningstar.  The median market cap is $875 million, and it costs 0.15%/year.
https://www.morningstar.com/etfs/arcx/slyv/portfolio

effigy98

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Re: Any value investors?
« Reply #16 on: August 01, 2020, 12:04:38 AM »
Value is dead. There are 5 stocks that are worth investing in. Rest will go bankrupt. Only time to buy value is when they go bankrupt and fire up the RobinHood app and start buying options to make your 750k.

MustacheAndaHalf

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Re: Any value investors?
« Reply #17 on: August 01, 2020, 12:48:55 AM »
Value is dead. There are 5 stocks that are worth investing in. Rest will go bankrupt. Only time to buy value is when they go bankrupt and fire up the RobinHood app and start buying options to make your 750k.
You're making a sweeping claim with no evidence.  Take Vanguard Value, which has 349 value stocks.  What is your evidence that 98% of those stocks will go bankrupt?

hodedofome

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Re: Any value investors?
« Reply #18 on: August 03, 2020, 10:27:58 AM »
Value is dead. There are 5 stocks that are worth investing in. Rest will go bankrupt. Only time to buy value is when they go bankrupt and fire up the RobinHood app and start buying options to make your 750k.
You're making a sweeping claim with no evidence.  Take Vanguard Value, which has 349 value stocks.  What is your evidence that 98% of those stocks will go bankrupt?

I think what he's saying is that tech stocks will take over the world and we won't need the rest of the companies out there. There is a shade of truth to that belief.

MustacheAndaHalf

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Re: Any value investors?
« Reply #19 on: August 05, 2020, 07:01:26 PM »
Value is dead. There are 5 stocks that are worth investing in. Rest will go bankrupt. Only time to buy value is when they go bankrupt and fire up the RobinHood app and start buying options to make your 750k.
You're making a sweeping claim with no evidence.  Take Vanguard Value, which has 349 value stocks.  What is your evidence that 98% of those stocks will go bankrupt?
I think what he's saying is that tech stocks will take over the world and we won't need the rest of the companies out there. There is a shade of truth to that belief.
effigy98 did not say that, but said "Rest will go bankrupt".  I'm asking for evidence.

shinn497

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Re: Any value investors?
« Reply #20 on: August 06, 2020, 01:34:08 PM »
I value invest as I have my Roth IRA in a betterment portfolio. It is underperforming but the value premium has been down for 10 years. I am not worried about this as it is a risk premium and this behaviour is expected.

I always love following Cliff Asness of AQR as he rants about the return of value all the time on twitter.

If I were to pick a single value ETF, I would go with IJS. As mentioned earlier in this thread. It gives more small cap value exposure than VBR
« Last Edit: August 06, 2020, 01:36:01 PM by shinn497 »

MyOtherBrotherDarryl

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Re: Any value investors?
« Reply #21 on: August 06, 2020, 10:03:03 PM »
Value is dead. There are 5 stocks that are worth investing in. Rest will go bankrupt. Only time to buy value is when they go bankrupt and fire up the RobinHood app and start buying options to make your 750k.
You're making a sweeping claim with no evidence.  Take Vanguard Value, which has 349 value stocks.  What is your evidence that 98% of those stocks will go bankrupt?

I think what he's saying is that tech stocks will take over the world and we won't need the rest of the companies out there. There is a shade of truth to that belief.

How broadly/narrowly are we defining "tech" here?

ice_beard

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Re: Any value investors?
« Reply #22 on: August 17, 2020, 10:55:00 PM »
I was a strict index investor until the pandemic and then like so many others, had time on my hands and started looking into individual companies, learning how to read earnings statements, all the various acronyms, etc. 
Apparently I am a "value investor" in that I have been trying to find companies that appear to have reasonable costs and are usually off the cool stock radar. 

I have been digging through probably the most un-loved sector of the stock market, energy since April.  I have seen nice returns (nothing like those 1:25,000 PE ratio "tech" stocks though, I'm looking at you TSLA) and suspect there are still some gains to be had and in some instances, quite significant gains, if you've got the stomach for it. 

None of this is investment advice.  I am a nurse by trade.  These are simply personal observations.  Do your own research.

This market has many ups and downs and these are mostly LONG term plays with some occasional swing trades thrown in for fun.  If you cannot stomach large swings, this might not be a good market for you.   

My first-timer oil bull thesis of 2h 2020/2021...

Everyone knows oil cratered along with everything else back in March.  It even traded negative briefly, something that had never happened.  Fast forward to now and oil has essentially reached a plateau price point around $40-42 for West Texas Intermdiate crude (WTI) the N. American standard for trading.  It has been trading roughly at this level for a couple months.  Most US companies have either adjusted to this new norm through hedges, slashed capex budgets, shutdown of production, or have gone BK or will be doing so soon.  $40 is not good, but it's a lot better than $20 or $30.  Nobody really wants $40 oil, not US oil cos and certainly not Saudi Arabia, Russia or any of the other Middle Eastern and African countries whose national budgets are entirely dependent upon the price of oil.  There has been and will continue to be a balancing act where all players will try to find that sweet spot for production and price.  Some countries can produce for incredibly cheap prices (Saudi Arabia) while others cost a lot more (Canadian tar sands, offshore deep water) for examples. 

In North America, the big players with the best balance sheets, like CVX, will/have weathered this crappy price storm reasonably well and will pick up valuable assets at pennies on the dollar.  Chevron already has, they bought Noble Energy a few weeks ago and Noble apparently has some pretty valuable assets.  Problem is, everyone has known since the beginning of this shitshow that Chevron was probably the best situated of the majors and hence, their price has reflected this knowledge, i.e. there isn't as much room for gains compared to some others... 

Second tier companies that have solid balance sheets offer what I believe is strong value too.  DVN is a company I follow.  This stock was trading at 2x+ its current value pre-Covid and in some circles is considered a strong contender for being bought out.  It was trading for as low as $5 in March.  There are smaller players too and not all are dangerously leveraged.  PVAC is my personal favorite.  It traded for as low as $.99 back in March but now trades in the $13 neighborhood but was trading for $8 less than a month ago.  Their 52w high is $37 and their PE ratio is 1.63.  It has a small float so when it runs it runs, also fun to swing trade.  Ooooh to have some of those $0.99 shares!!! 

Then there are the seriously leveraged (in debt) companies...  Leverage isn't a bad thing if your assets are valuable.  If the land you own rights to has questionable quality for drilling, then your assets aren't as good as having well sites in known profitable plays.  When debt repayments are due is also of critical importance to oil/gas companies.  Imagine generating debt-killing cash flow with $42 barrel oil vs. $75/barrel oil (when your cost per barrel is running around $35/barrel).  Most oil cos have been trying best they can to get their debt repayments either refinanced or moved back a year or two.  Smaller players with shakier finances (again think about the value of a companies assets, how many barrels a day can they produce at what price, the banks and analysts know this information!) are having a much more difficult time getting these debt payments moved back.  CPE is an example here.  They have reportedly some quality assets but they acquired a company last year that cost them a lot.  Their stock is trading at a massive discount right now.  If they make it through the next year or so and the price of oil eventually makes it back up to $75 or greater, this stock could be a multi-bagger.  Or they could go bankrupt or you could sell after watching your cash evaporate.  How long can you wait and how strong is your stomach??  ;-)

Now for some real leverage... I was critical of Occidental Petro (OXY) back when I started a dumpster diving thread in April.  They had an untimely acquisition in 2019 that is now worth significantly less than what they paid for it.  Again, price of oil is EVERYTHING, it is a commodity after all.  OXY has roughly 40b(!) in debt with a current mkt cap around 13b.  They released incredibly terrible 2Q earnings last week (nearly every oil co. had a terrible 2nd q, imagine that) and their stock has been/is getting hammered.  It has been trading around $13-14 the past few days and has traded as high as $87 in the past few years.  They wrote off 8b in assets last quarter and are in the process of selling off some of their current assets which might net them 4-5b to cover some debts.  There largest debt payments aren't due until late 2021, hence the asset sales.  OXY says they are profitable at $35 right now.  They slashed CapEx spending, management pay and their sacred cow dividend is now down to 1 cent. 
This is where that plateaued price of ~$40 comes back into play...  Assets are now being re-priced at this critical level of $40-45 oil and even at that price, OXY has a LOT of assets that are worth a lot of money and because of their size, they generate a lot of cash flow.  The next couple quarters are going to make or break OXY.  Institutional investors have been buying and selling their stock recently.  I have been buying while it is in the $13-14 neighborhood.   

But, but batteries and E-cars you might say!!  I'm all for a less carbon dependent future, but in the United States and in developing nations, there will be a lot of oil and natural gas that will be consumed over the next few decades.  I would even be fine with this investment going south if I am completely wrong about electrification of transportation because I think it would be better for the environment and life on earth in general.  I just don't think it's going to happen in the time frame a lot of people are thinking.  And yes, I know Norway has like 60% electric vehicles....that's Norway, possibly the wealthiest country on the planet.  Do you think people in India will be buying an electric cart that costs twice what a gas or diesel burning tuktuk does and count on an unreliable electric grid to be sure it's charged every day??  I'd actually love to be wrong.  I'm convinced there will be a (long) transitional period and during that time there will be a need for oil and gas. 

Which conveniently brings me to perhaps the most important component of this thesis.  There is increasing discussion regarding an upcoming supply crunch on oil.  Look at rig counts across North America (there are usually 500+ rigs out completing new wells during "normal" development times.  The rig count is down to something like 75 right now.  This is the case internationally as well.  Exploration and opening of new wells has ground to a standstill the past four months.  The pipeline, if you will, of oil ready to be delivered is limited.  It takes time and money to bring new sources of oil online, it doesn't happen immediately. 

If oil use continues its steady increase and draws on current supplies continue to grow (US weekly draw is released every Tuesday after market close).  Eventually usage will be outstripping existing supply and production and prices will rise.  This was eluded to earlier in this thread, O/G follows a rather familiar pattern and we are in the production trough where prices are depressed and production is down. 

Then there is the whole cyclical rotation within the stock market thing... How long can tech stocks continue to carry the market?  Some speculate that as investors cool on currently hot sectors (tech, other potentially overbought Covid favored sectors) investors will be looking for areas of opportunity and oil and gas/commodities actually look better than some of the other out of favor segments.  Remember that $40 price floor?

There are several segments within Oil and gas as well, I won't go into all of those specifics, but another, possibly safer option for some O/G exposure is to own a services firm like SLB , BKR or HAL.  I like SLB and their stock is trading at a significant discount now.  There are midstream providers (think pipelines and distribution services) like ET, OKE and MMP.  There are pure natural gas companies and then there are the TANKERS!!

If you have been in O/G for a long time, you are probably like oh, no thank you!  But if you've never owned oil or gas companies, there have probably been much worse times to get in. 

Maybe tomorrow I'll write up my oil tanker thesis... actually it's not my thesis, but there are some compelling arguments for owning oil tanker stocks over the next year or longer.  If you want to do homework, start by looking up DHT, EURN, FRO, STNG (but not NAT). 

 
« Last Edit: August 18, 2020, 12:09:21 AM by ice_beard »