High-performance Value Investing | Our Approach | IntelligentValue.com

   




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The IntelligentValue Approach
"All intelligent investing is value investing." 
- Charlie Munger, Co-CEO (with Warren Buffett), Berkshire Hathaway, Inc.

 

GET EXCEPTIONAL RETURNS FROM A
MODERN APPROACH TO VALUE INVESTING


Investing based on the purchase of undervalued equities is an approach that has created thousands of millionaires, dozens of billionaires and several mega-billionaires, including legends such as Seth Klarman, Whitney Tilson, Joel Greenblatt, James O'Shaughnessy, and Warren Buffett. While not everyone has the desire to become incredibly wealthy as a full-time investor, smart individual investors know it makes sense to compound their hard-earned money using the same safe and high-return investment approach used by investing billionaires.

The value approach to investing has proven itself over many decades to be both the safest and the most profitable path to investing success. It's the safest approach because it involves purchasing good companies when they are selling at a bargain price. In fact, Warren Buffett characterizes value investing as "buying a dollar bill for 50 cents," and says the concept is either immediately logical and appealing or you may never grasp it at all.

Benjamin Graham, known as the godfather of value investing, labeled the gap between a stock's current price and its intrinsic value as a "margin of safety" that both protects investors from loss and maximizes the likelihood of profit when a stock's price inevitably returns to a fully valued status. This arbitrage between price and value is the basis of value investing's unfair advantage over other approaches, and is the foundation of IntelligentValue's investment process.

After first making sure the company has a healthy future, it's unlikely the price of that $1 bill will decline much more than the current 50¢. It's the most profitable approach because at some point in the near future, you will be able to sell that dollar bill for its full face value.

Today's popular approach of extrapolation of temporal facts far into the future and investing with a large dose of optimism is foolhardy and extremely risky. It's an approach that thrives on the industry's rapid dissemination of news that manipulates your emotions, prompting investors to buy stocks based on hope one day and selling based on fear the next, which only enriches Wall Street and empties your pockets.

If you are already attracted to the clear and compelling logic behind the value approach to investing and may soon be able to count yourself among the group of investors who have grown wealthy from its application. Here's how...

WHY A FOCUS ON VALUE IS THE SAFEST, MOST PROFITABLE APPROACH TO INVESTING


Following the -87% market crash of 1929-1932, Benjamin Graham and David Dodd, professors of Finance at Columbia University, published a book that would change investing forever. 'Security Analysis' would establish an entirely new profession, provide a framework for a consistent approach to investing, and inspire one young man to embrace value-based investments as his life's work.

Starting with just $500 of his own money, Warren Buffett, a student of Graham's at Columbia, became the richest man in America and is worth more than $75 billion today. Buffett followed a very disciplined, consistent approach to the value-investing principles he learned from Graham to achieve his incredible wealth. IntelligentValue applies those same principles that have created many billionaires and hundreds of millionaires and provides you with the resulting stock recommendations.

Many people understand the value approach intuitively once they hear the basic philosophy. Nevertheless, most investors remain stuck in the speculative 'forecasting-of-future-earnings' trap with its constant search for growing companies, even when they know and understand that value investing is a far more productive approach.

But if you can recognize and ignore speculative temptations and stick with a value  approach to investing, you will be handsomely rewarded. Even if you aren't interested in being the next Warren Buffett, with our system a disciplined individual can turn their nest egg into a small furtune when they need it.

HOW DO WE FIND UNDERVALUED STOCKS?


Value investors seek to identify stocks that are currently selling at a discount to their inherent value. In other words, buying something for less than what it's worth. This inherent value can be based on a variety of methods of analysis. Investors can compare the current price of a stock to...

- The value of certain portions of a company's most liquid assets, such as its cash-on-hand or quality accounts receivables, and sometimes the value of its real-estate or buildings, otherwise it should not be included in the asset approach to value assessment;

- A company's liquidation/break-up value can be considered should the company be worth more by going out of business and the parts be sold to liquidate the debts and pay back shareholders; or...

- A company's takeover value as an ongoing operation. This value can vary depending on the desirability of the industry, the company's cash flow, assets, and earnings power.  However, there are some other aspects that can limit a company’s appeal, such as regulatory issues, problems with collectibles, history of customer problems, lawsuits, accounting troubles, etc. The value investor adjudicates these variables and determines which ones matter and which ones don't for calculation of the company's inherent value.  For this reason, Warren Buffett recommends that you should never invest in a business that you don't clearly understand; and...


- The most common, modern approach of finding 'value' stocks in the investment world is a multi-facetted approach.  Using this balanced method, value is represented as the price of the stock compared to a set of value-oriented measures of the stock, such as Price-to-Book Value, Price-to-Earnings, Price-to-Cash-Flow and Free-Cash-Flow, and other value-oriented assessment criteria. The combination of these ratios, with various weightings and configurations create ranking systems that form the basis of our stock selection methods.

Through many tens-of-thousands of backtests of these ranking systems, we find the ones which work the best in different economic environments and feature the ranking systems that excel in producing alpha (outsized returns) in our model portfolios.  What isn't included in the value analysis are estimates of future growth or earnings.  These are rarely considered in the value analysis by true value investors because any attempt at forecasting the future is speculative.  Value investors seek to find assets that are currently selling for less than today’s fair value.

WHAT INTELLIGENTVALUE DOES FOR YOU:


IntelligentValue
has built sophisticated, stock-screening systems, based on Wall-Street calibler point-in-time data, that are designed to select the most undervalued companies from a universe of moderately sized stocks that have satisfactory volume. These systems are built with parameters that ensure the system is robust through the perpetually changing economic and market conditions. Our investment process is both qualitatively and quantitatively intensive. Thirty-five-plus years of experience in stock analysis and pricing of assets are applied in the developmet of the IntelligentValue model portfolios.

     1) MODEL PORTFOLIOS - We provide several model portfolios for subscribers, including Deep Value, Relative Value, and Premier.  These model portfolios are time-tested and we provide the back-test data and charts, factors and formulas used, closed-position returns, and detailed performance analysis so that you can understand the basis for each portfolio and choose the one(s) that best fit your objectives.  Real-time performance as well as clear charts, detailed statistics and an accurate statement of the returns of each position (including dividends) make these model portfolios incredibly useful.

Value investors jump on these stocks when 'Mr. Market' offers ownership of a company at a deep discount to its true value. We show you when and where to take advantage of these almost foolproof investment opportunities.

   2) FOCUSED ASSESSMENT - When there has been a change in investment outlook, we identify it and tell you exactly how to prepare for it, including any changes in suggested asset allocation.

It's hard to go wrong if offered
the chance to buy dollar bills for 50 cents


IntelligentValue provides you with a complete toolbox to access all the opportunities that the value approach to investing offers. Each week, you'll get a complete update of our model value-based portfolios, along with analysis of the individual stocks we've highlighted, and commentary on the state of the overall market. The results you'll be able to achieve can be through the roof! Have a look at the next page for the results of the value-investing approach!

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Now you can get started immediately with a proven system to produce outstanding investment returns. IntelligentValue.com has been generating market-beating performance since 2004. Check out the returns of our systems on this page. Isn't it time you got safe, outstanding performance that can only be achieved through disciplined value investing?  Get Instant Access Now!