As objective, disciplined, systematic investment managers, we view investing first and foremost as a science, in contrast to fundamental managers, who could be said to see investing as more of an art. The science of stock selection typically relies on a stock-ranking model incorporating a variety of stock attributes. In our disciplines, the factors in our stock-selection model fall into four categories: value, momentum, growth, and quality. Continue reading →
Gold prices have recovered slightly in early May 2013 after retreating sharply in April 2013 to well under $1,400 an ounce (from nearly $1,800 an ounce in September 2012) on fears of central bank sales in Cyprus and other European countries, as well as fears of slowing growth in China. Gold mining stocks have endured a beating as a result of weaker gold prices, higher production costs and worry about rising taxes imposed by overseas governments. Our current short-term outlook is in a tight range, with selling pressure from central banks and speculators balanced by support coming from consumer demand. Continue reading →
After a strong 2012, global equity markets continued to rally in the first quarter of 2013. The MSCI World Index rose 7.7% during the quarter, with developed markets generally outperforming emerging markets. As we look forward to the rest of 2013, several forces are likely to favor some sectors and regions over others. Continue reading →
Phillip N. Davidson, CFA, Chief Investment Officer U.S. Value Equity
Every now and then it is critical to look under the hood to ensure that our value investing vehicle continues to run at optimum performance. We have spent many years establishing a fundamental, repeatable process that incorporates various valuation metrics that are tapped into meaningful financial variables. Our repeatable investment process—consistently applied over time—can help us differentiate the stocks that are likely to recover (of a transitory, cyclical nature) from those that will likely continue waning (of a secular nature). So, it begs the question, what does a value stock look like these days? Continue reading →
The market’s recent rally feels good after the lows of the Great Recession and volatility associated with the sovereign debt crisis. But with stocks at record highs, investor uncertainty is also peaking. Questions about whether to add to or take profits from an equity position are best answered in the context of your unique financial situation and asset mix. Having said that, we have a fairly sanguine outlook for equities, and believe there are attractive opportunities in selected sectors and securities. We continue to favor corporate high-yield and select foreign bonds in the fixed-income slice. Continue reading →
While a narrow universe of REIT (real estate investment trust) securities reduces the relative amount of individual selection for active portfolio managers, it does not diminish the potential for outperformance over passive investments. Despite appearing at first glance to be an obvious area to employ a passive investment strategy—because of the comparative assets under management (AUM) for passive REITs versus other asset categories—the REIT universe possesses exploitable informational inefficiencies.
Experienced REIT managers have the ability to identify and take advantage of the category’s inefficiencies and potentially deliver outperformance without taking on the active risk that may be seen by active managers in other equity categories. Continue reading →
Mark Kopinski, Chief Investment Officer, Global and Non-U.S. Equity
As Japan’s new government tries to inflate its way out of ongoing economic stagnation amid an aging and declining population, it must confront some significant challenges, including soaring debt, steadily increasing retirement and health care obligations, and a shrinking tax base. Continue reading →
Our Global Macro Strategy Team believes U.S. inflation should remain contained in the near term, but monetary stimulus could contribute to long-term inflation pressures. See what indicators we’re monitoring. Continue reading →
While larger and smaller companies seem to get all of the attention, it is the companies in the middle that occupy a sweet spot in the investment world. The performance of mid-cap companies has dwarfed that of large- and small-cap companies largely because of their excellent growth potential and more sustainable business models. Also, mid-cap companies have provided a more attractive long-term risk-adjusted return, and we see this trend likely continuing over time. Continue reading →
Home prices jumped 9.3% in February 2013, according to the S&P/Case Shiller Home Price Indices, recording the largest year-over-year gain since 2006. All 20 cities represented in the indices reported increases for the second consecutive month, an occurrence that has not been matched since 2005. While it is quite possible that the S&P/Case Shiller Indices could have overstated both the declines and the rebound—because pricing declines of previous years could have been amplified by a higher share of distressed sales (and increases aided by fewer foreclosure sales)—the non-foreclosure impact has been measured by other indices, such as Zillow, to still be positively in the mid-single digits. Continue reading →
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