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Value Investing

Value Investing. October 22 nd , 2010. Presented by. Jason J. Tyler. Investment Styles How does Ariel Practice Value Investing? Investment Management Lab School  Value Investing. Investment types. Investment styles. Active. Passive. Investment styles. Concentrated. Diversified.

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Value Investing

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  1. Value Investing October 22nd, 2010 Presented by Jason J. Tyler

  2. Investment Styles How does Ariel Practice Value Investing? Investment Management Lab School  Value Investing

  3. Investment types

  4. Investment styles Active Passive

  5. Investment styles Concentrated Diversified

  6. Investment styles Value Growth

  7. Investment styles Small Cap Mid Cap Large Cap

  8. EquitiesBonds, Commodities, Real Estate, Derivatives Active Passive Concentrated Diversified Value Growth Micro Small Mid Large Investment styles

  9. Investment Styles How does Ariel Practice Value Investing? Investment Management Lab School  Value Investing

  10. Markets are very Efficient…. “In the short term, the market is a voting machine…”

  11. But do provide moments of Opportunity “But in the long run it is a weighing machine”

  12. Winners identify Greed and Fear “Be greedy when others are fearful and fearful when others are greedy”

  13. Value investors specialize in fear Greed Fear

  14. From 1957-2003, the lowest quintile P/E stocks outperformed the S&P 500 by nearly 300 bps annually, and outperformed the highest P/E quintile by nearly 500 bps annually. Even over more recent time horizons, it is clear that low P/E stocks outperform: Even Fama and French - the most loyal disciples of EMH - confirmed in the early 1990’s that low P/E stocks outperform high P/E stocks – and that risk is not the reason Value Investing works over time

  15. Groupthink – Fear of being wrong Fear Groupthink Loss Aversion Recency Bias Standing Still

  16. Groupthink – Fear of being wrong Fear Groupthink Loss Aversion Recency Bias Standing Still http://www.youtube.com/watch?v=iRh5qy09nNw

  17. Bubbles: Housing & Technology Fear Groupthink Loss Aversion Recency Bias Standing Still

  18. Loss Aversion

  19. Recency Bias – fear of change Fear Groupthink Loss Aversion Recency Bias Standing Still

  20. Recency Bias – fear of change Fear Groupthink Loss Aversion Recency Bias Standing Still 75% of S&P 500 topped analysts’ estimates in 2Q10

  21. Fear of standing still Fear Groupthink Loss Aversion Recency Bias Standing Still “The best holding period is forever” 21

  22. Fear of standing still

  23. Very few managers beat the market over long stretches

  24. Investment Styles How does Ariel Practice Value Investing? Investment Management Lab School  Value Investing

  25. What it takes to be an analyst 28 28

  26. Investment Styles How does Ariel Practice Value Investing? Investment Management Lab School  Value Investing

  27. Lab School exists in the heart of Ariel…. Director Bob Solomon Founder, CEOJohn Rogers Vice ChairmanCharlie Bobrinskoy • Senior Vice President – Jason Tyler • Research Analyst – Russell Kohn • Information Technology – Xander Meadow • Director & Corporate Liaison – Tai Duncan • Interns – Priyanka Rupani, Ben Picker, Lauren Stewart, Jacqueline Chaudhry, Michael Hernandez, Nick Sisodia, Jaya Sah, Rui Lou, Angel Pu, Mario Gage, Anchellie Akuamoah, Danielle Kutasov & John Kinsella

  28. It is all about seeing the future… • Founded in 1925 • Leading food and beverage company • Experienced, well-respected management team

  29. Seeing the future…..to be updated • Fashion retailer, selling clothes, shoes and accessories • Industry-leading customer loyalty due to extraordinary customer service

  30. It is all about seeing the future…

  31. Seeing the future

  32. Questions…

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