There are people in the world who do not mind paying full price for items. Other shoppers prefer to buy things on sale. Maybe they’re bargain hunters or discount divers. Whatever the name, there’s a corresponding term in the financial world: value investor. FinArc Investments, since its inception in 1990, has been and continues to be a value investor, looking for undervalued assets and purchasing them when the opportunity arises.
That said, FinArc does not simply look for cheap assets. Sure, we buy things on sale. But, we only invest in quality. We look for high-quality companies that are priced like low-quality companies––an investment philosophy that must be coupled with patience and discipline.
Value investing, when performed properly, is not about emotions or instincts. There is a scientific approach to value investing. At FinArc, some of the metrics we look at include price/earnings ratios, profitability and improving profit trends, growing market share, and proven, successful management teams.
One key, and often overlooked aspect, to being a successful investor is recognizing that knowing when to get out is just as important as knowing when to get in. Prior to purchasing any security, FinArc assigns target prices at which we will buy and sell, and the range in which we will allow the price to fluctuate while holding it. Our analysts may adjust price targets to incorporate new information, but identifying target prices prior to owning the security helps us to invest with discipline.
Our clients are attracted to value investing as a proven and intuitive approach. Some companies can be great operators, but if their stock price is too expensive it may not generate great returns. FinArc’s target prices are grounded in the fundamentals of a company, not the hope that someone will be willing to pay more for a stock tomorrow based on emotions or price trends.
To learn more about the discipline of value investing, contact us directly.