Global and International Value Equity team: Segmenting value stocks

As value investors, it is essential for us to understand what has driven a stock into our investment universe.

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is value investors it is essential for us to frame categorize and understand the nature of potential investment opportunities that have fallen into our valuation Universe this graphic highlights how we view our world of investment opportunities we need to understand what has driven a stock down into our investment universe is it cheap because it's correctly priced and should be eliminated or is it cheap with unrecognized potential value each candidate typically falls into one of four broad categories short-term opportunities which review as high quality companies that are temporarily out of favor long-term turnarounds reciclables companies which may be affected by the macroeconomic cycle and Industry cycle or a company's Pacific Cycle these are often solid companies and out of favour Industries which require surveillance overtime financials firms that we believe are heavily dependent on the business cycle Financial companies will frequently fall in and out of our investable universe we researched this group separately due to their unique balance sheet structure and correlation with the interest rate cycle and finally chronic underperformers what we view as value traps typically these are companies with poor competitive positions broken business model will compromise balance sheets in our opinion

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