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John Neff | Low PE Investor
Profile: While known as the manager with whom many top managers entrusted their own money, Neff was far from the smooth-talking,
high-profile Wall Streeter you might expect. He was mild-mannered and low-key, and the same might be said of the Windsor Fund that he
managed for more than three decades. In fact, Neff himself described the fund as "relatively prosaic, dull, [and] conservative." There
was nothing dull about his results, however. From 1964 to 1995, Neff guided Windsor to a 13.7 percent average annual return, easily
outpacing the S&P 500's 10.6 percent return during that time. That 3.1 percentage point difference is huge over time -- a $10,000 investment
in Windsor (with dividends reinvested) at the start of Neff's tenure would have ended up as more than $564,000 by the time he retired, more
than twice what the same investment in the S&P would have yielded (about $233,000). Considering the length of his tenure, that track record
may be the best ever for a manager of such a large fund.
Investment Strategy: Neff's approach was "relatively prosaic" and "dull" because it focused on the market's unloved. Neff identified these
stocks using the price/earnings ratio, seeking stocks with P/Es that were between 40 to 60 percent of the market average. From this group, he
looked for firms with steady, sustainable EPS growth (between 7 percent and 20 percent per year, and driven by sales growth), as well as positive
free cash flows. He also used what he called the "total return/PE" ratio, which combined a stock's growth rate and dividend yield and divided
that by its P/E ratio to find good values. The variable underscored Neff's belief that strong dividends were an often-overlooked part of how
investors could beat the market.
Book Used for Strategy: John Neff on Investing
Model Portfolio Performance:
Since Inception: -1.11%
TSX: 6.89%
Full Performance Details
Stocks Passing Strategy: 10 Stock Model Portfolio | All Stocks Passing Methodology
Recent Upgrades and Downgrades:
Upgrades - EQUITABLE GROUP INC. | FIRST NATIONAL FINANCIAL CORPORATION | EQUITABLE GROUP INC. | FIRST NATIONAL FINANCIAL CORPORATION | EQUITABLE GROUP INC. |
Downgrades - MELCOR DEVELOPMENTS LTD. | FIRST NATIONAL FINANCIAL CORPORATION | JUST ENERGY GROUP INC. | MORGUARD CORPORATION | EQUITABLE GROUP INC. |
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