Quantitative Screening for Undervaluation
Over the past 25 years, a growing series of studies in empirical finance have identified specific combinations of quantitative business characteristics that are strongly associated with extraordinarily high long-term returns. Many of these are the straightforward ratios and fundamentals familiar to most investors, while some are more sophisticated measures of valuation requiring significant prior calculation. When properly applied, these criteria can enable the individual investor to acquire millions in real business assets for a fraction of their true value, secure vast streams of cash flow at minimal cost, and exploit predictable errors in market sentiment to achieve consistently above average profits over the long term.. Building a portfolio of solid stocks with these qualities is, very simply, the only known way to beat the market.
Deep Value research begins with a computerized search of private financial databases to identify stocks with an optimal combination of the specific characteristics that correlate with outstanding long-term returns. Adapted from academic and finance industry sources, a series of proprietary algorithms performs these and other screens on a database extracted from current SEC filings to identify stocks with maximum potential outperformance over the long term. Updated versions of this list are provided only to subscribers.
Sample version of Deep Value screen (October 2004 edition)
Microsoft Excel file, 55KB
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