We compare the Model Price for each stock to its current market price to determine whether it is over- or under-valued, and if so, by how much. On this rational and consistent basis, companies are ranked from most under-valued to most over-valued. Companies are screened further to confirm their solvency and the accuracy of the balance sheet and earnings inputs used to perform the analysis.
Although our strategies for Canada and the US are customized for the characteristics of the two markets, the overriding theme at Acker Finley is to purchase stocks with the highest upside to Model Price for its portfolios, applying a systematic, active investment process to achieve superior risk-adjusted returns.
While there is a bias to outright “value” in the sense that stocks are, for example, trading at low price-to-book ratios, the strength of our approach is in the way it adapts to changing market conditions – using a broad set of variables to arrive at a distilled, objective conclusion on where the best value lies. Sometimes it is in the stocks other investors would also consider “cheap”. Sometimes it isn’t.
For more information about the concepts behind Acker Finley’s valuation measures, please contact us for a copy of our White Paper.