The Active Investor: Seeking Quality and Value in Today’s Market скачать в хорошем качестве

The Active Investor: Seeking Quality and Value in Today’s Market

In this podcast, Lord Abbett Portfolio Manager John Hardy discusses the current equity market environment, and how an active, value-oriented approach can help investors uncover long-term opportunities. * GLOSSARY OF TERMS USED IN THIS BROADCAST* Buy-side refers to firms that purchase securities, including investment managers, pension funds, and hedge funds. Sell-side refers to firms that issue, sell, or trade securities such as investment banks, advisory firms, and corporations. Capital expenditures (capex) represent amounts spent by an organization or corporate entity to buy, maintain, or improve its fixed assets. Cost of capital is the minimum rate of return or profit a company must earn before generating value. Fama-French: In 1992, Eugene Fama and Kenneth French released their influential research on how to define value companies, growth companies, and the high-minus-low (HML) factor, which showed, historically, how value companies had outperformed growth companies, i.e., the value premium. Value companies were defined as companies with lower price-to-book values (P/B), while growth companies had higher P/B ratios. Free cash flow (FCF) represents the amount of cash generated by a business, after accounting for reinvestment in non-current capital assets by the company. Normalized free cash flow attempts to smooth out a company’s FCF by excluding non-core operations and one-time items. Graham-Dodd: First published in 1934, the book Security Analysis by Benjamin Graham and David Dodd, professors at the Columbia Business School, laid the intellectual foundation for value investing. Growth/Value Investing: Growth stocks may be characterized as equities of companies that have demonstrated better-than-average gains in earnings in recent years and that are expected to continue delivering high levels of profit growth. Growth equities typically carry higher price-to-earnings multiples than the broader market, high earnings growth records, and greater volatility than the broader market. Secular growth stocks are stocks of companies whose economic performance is relatively immune to economic cycles. Value stocks may be characterized as equities of companies that have fallen out of favor with investors but still have good fundamentals, or new companies that have yet to be recognized by investors. Value stocks typically feature lower price-to-earnings multiples than the broader market, and often industry peers, and somewhat lower volatility than the overall equity market. Market capitalization: The U.S. Financial Industry Regulatory Authority, or FINRA, defines the following categories of stocks based on their market value: mega cap stocks, $200 billion or more; large cap stocks, between $10 billion and $200 billion; mid cap stocks, between $2 billion and $10 billion; small cap stocks, between $250 million and $2 billion; and micro cap stocks, less than $250 million. The price-to-book ratio compares a company's market value to its book value. The market value of a company is its share price multiplied by the number of outstanding shares. The book value is the net assets of a company. Price-to-earnings ratio: Stock analysts calculate a price-to-earnings ratio by dividing a stock's current price by its earnings per share on a trailing 12-month basis. A forward price-to-earnings ratio is calculated by dividing a stock's current price by estimated future earnings per share. Spread is the percentage difference in current yields of various classes of fixed-income securities versus Treasury bonds or another benchmark bond measure. A bond spread is often expressed as a difference in percentage points or basis points (which equal one-one hundredth of a percentage point). Tangible assets are assets with a physical form and that hold value. Examples include property, plant, and equipment. Intangible assets lack physical substance and include are patents, copyright, franchises, goodwill, trademarks, and trade names. A top-down investment process generally places more emphasis on macroeconomic forecasts than on individual stock picking. A bottom-up approach typically relies on selecting individual securities as the primary driver of investment returns. Value trap refers to a stock that appears to be attractively priced based on company fundamentals and the stock’s market price but ultimately provides either a negative or subpar return. Working capital is the difference between a company's current assets and its short-term liabilities.