How to Find Value Plays

1. How to Find Value Plays • Depressed Multiples

2. vsLow Multiple as a Screen Price/Share “The Multiple” = –––––––––––– Earnings/Share Price = –––––––––––– Earnings If Price falls, and Earnings do not fall (as much) then the Multiple will fall Thus, a low Multiple is a screen for a potential value play – an underpriced stock

3. Low P/E Predicts Better Returns Jeremy Siegel Stocks ranked by P/E

4. 2011

5. How to Find Value Plays • Depressed Multiples • Sentiment (e.g., Analysts’ Opinions)

6. Buy on the “Sell” “Buy”s beat “Sell”s only during the Bubble Source: The Wall Street Journal (2005)

7. How to Find Value Plays • Depressed Multiples • Sentiment (e.g., Analysts’ Opinions) • Dividend Yield

8. Dividend Yield • Value Screens

9. Dividend Yield

10. Dividend Yield as a Screen

11. Dividend Yield Thus, a high Yield is a screen for a potential value play – an underpriced stock Dividend/Share Yield = –––––––––––– Price/Share Dividend = –––––––––––– Price Dividends tend to “hold the line” and are decreased only in unusual distress Therefore, as Price falls, Yield will rise

12. 2011

13. Dogs of the Dow: A Classic “Value” Investment Strategy Source: The Wall Street Journal (2006)

14. 2009

15. 2010 Dogs of the Dow • Value Investing

16. 2010 2010 Dogs

17. 2010 2010 Dogs

20. Source: Barron’s (2007)

21. Euro Dogs, just like U.S. Dogs Euro-Dogs beat the Average 12 out of 14 years Source: Barron’s (2007)

22. 2010 HDOGX • Value Investing

23. 2010

24. Equity Yields vs Bond Yields Interest Bond Yield = –––––––––––– Price of the Bond Bond Yields calculated the same way Comparing Dividend Yield and Bond Yield Can be Revealing

26. 2011

27. 2011 Dividend Yield

28. 2013 Dividend Yield • Alpha Capture

29. Explanation 1: Energy Stocks are Cheap (Value Plays) Explanation 2: Treasurys are Expensive (Financial Repression)

30. 2012 Yields: Private Sector vs Public Sector

31. 2012 Rate Risk • Bond Market Repression

32. The Risk

34. 2013 Dividend Yield • Alpha Capture

35. In other words, there is Alpha here

36. 2013 Dividend Screens • Alpha Capture

38. 2009 Dividend Screens • Value Investing

41. 2012 Dividend Screens

42. 2012 Dividend Aristocrats

43. 2012 Dividend Strategies • Investment Strategies

44. Dividend-Payers Win – Except in Rebound Years

45. 2010 Dividend Trends • Capital Structure

46. 2011

48. 2012

49. 2010 Tax Effects

50. Dividend Rate Lowered in 2003