For deep value managers with long holding periods, now is the time to find healthy companies that can weather today’s low prices
As a deep value manager with a long time horizon, I often see opportunities in the midst of gloomy headlines. While crude oil hit a new 12-year low of around $26 a barrel in January1, I view this sector as one of my top long-term opportunities.
That’s not to say the road ahead will be smooth, however. I believe that over the next six months or so, we’ll likely see some bankruptcies hit the oil patch — especially among smaller companies. But in my view, that’s a healthy development that will allow companies with strong balance sheets to pick up good assets at fire-sale prices.Continue
Part of Invesco’s High-Conviction Investing series
Amid the frantic quest for gold came the 1859 discovery of the richest silver deposit in American history, buried in the Comstock Lode in Nevada. But the treasure wasn’t readily apparent. Only after analyzing the bluish mud that coated miners’ picks was the silver ore of exceptional value discovered. Like that mud silver, the opportunities Invesco Comstock Fund seeks aren’t necessarily apparent upon first look.
Early, patient investments
Our deep value, high-conviction strategy seeks to outperform the market by making early and patient investments in large-cap, undervalued companies with improving business dynamics. When companies with strong fundamentals have temporarily fallen out of favor with investors — creating an unreasonable gap between their current stock price and the underlying value of their assets — we see that as a potential opportunity to profit from their turnaround.
How do we determine whether a stock’s woes are temporary?Continue
2016 investment outlook: US deep value stocks
After six years of positive returns and almost four years without a US market correction, August 2015 provided a jolt to investors as the Dow Jones Industrial Average fell 10% from its peak.1
Before August’s market correction, valuations for US stocks were relatively homogeneous, with two exceptions — financials and energy. This made it challenging for our US deep value strategy to find quality undervalued companies outside of those two sectors. But looking into 2016, other sectors are beginning to look more interesting from a valuation perspective, including some that we haven’t been excited about for several years.Continue