Articles

Articles Written by Validea Founder John Reese

11/14/2017

John Reese Forbes Articles
Forbes

M&A Activity Growing, What Stocks Would Benefit Most?

The stock market may be eerily calm in terms of volatility, but merger and acquisition activity has been bubbling up over the past year, more so than in the first year of any other modern president's term. Thomson Reuters data shows that U.S. merger and acquisition transactions totaled $1.2 trillion since Trump was elected, stemming from nearly 12,700 deals-the Broadcom-Qualcomm and Disney-21st Century Fox talks being two of the more recent.

11/14/2017

John Reese Globe and Mail Articles
The Globe and Mail

Three Stocks From Different Sectors That Could Provide Value For Investors

Some prominent professional investors have been talking about the difficulty of finding value stocks in a market that seems to go nowhere but up. Even Warren Buffett's Berkshire Hathaway is sitting on $100-billion (U.S.) of cash looking for places to invest. After losing out on a hot trade in the energy sector this summer, his biggest deal so far this fall has been to take a private stake in Pilot Flying J, the largest truck stop operator in the United States. The deal isn't going to go far to solve the billionaire's dilemma. He has so much cash to put to work he needs a big transaction or two to really move the numbers.

11/2/2017

John Reese Globe and Mail Articles
The Globe and Mail

The Contrarian View on Dividend-Paying Stocks

Investors tend to view companies that pay dividends as boring, but reliable, stewards of shareholder capital, but there are a variety of reasons why these payouts aren't necessarily the best sign of a strong company. Dividends and stock buybacks have been the staple demands of activist investors in the past few years as they push company managers to unlock more value for shareholders. These are often vulnerable managers who have been struggling to unlock growth.

10/30/2017

John Reese NASDAQ Articles
NASDAQ.com

Scary Stocks Could Present Contrarian Investor Opportunities

There doesn't seem to be much that's spooking investors these days. Ever-rising geo-political tensions loom over a roiling White House and stymied Congress. Yet, the markets remain eerily calm. Volatility continues to be low and consumer sentiment is high. The market is widely considered to be pricey, but the extended bull market seems to be keeping investors pretty upbeat.

10/30/2017

John Reese Forbes Articles
Forbes

The Downside Of Dividend Paying Stocks

Investors view dividend-paying stocks as a reliable way to collect income from their portfolios without being forced to sell shares, and dividend-paying companies as reliable stewards of shareholder capital. While this can be true, the dividend stock landscape has changed somewhat, and investors should consider a variety of factors when hunting for returns.

10/18/2017

John Reese Globe and Mail Articles
The Globe and Mail

Three Value Stock Picks From the Worst-Performing Sectors

If global economic growth predictions come true, stocks could continue their climb into the stratosphere. It almost seems impossible at this point, but every day there are signs this bull still has room to run, despite a steady drumbeat of warnings that it is about to end and Thursday's ominous 30-year anniversary of the 1987 crash. Around the world, central banks are shifting gears on easier money policies that were needed during the financial crisis and its aftermath but are no longer as necessary. This is happening as economic output begins to climb, a sure sign of growth. And the promise of government spending and corporate tax cuts in the United States, combined with strong earnings reports, has lifted shares this year.

10/11/2017

John Reese TheStreet.com Articles
TheStreet.com

Why Doesn't Berkshire Just Buy More Apple?

Berkshire Hathaway (BRK.A) (BRK.B) still has a hefty wad of cash in its pocket (nearly $100 billion at the close of the second quarter), and Warren Buffett continues his search for ways to spend it. Last week, Berkshire Hathaway announced a deal to purchase around 40% of Pilot Travel Centers LLC -- one of the largest private companies in the U.S. and operator of Pilot and Flying J travel centers -- for an undisclosed amount. The Wall Street Journal called the deal "Berkshire's latest wager on traditional forms of transportation and U.S. economic growth." This on the heels of the summer's foiled plan to purchase power-transmission company Oncor for $9 billion (Sempra Energy swooped in with a higher bid). Earlier in the year, the $15 billion Berkshire committed for Kraft-Heinz's (KHC) purchase of Unilever (UN) unraveled. But Buffett isn't giving up.

10/10/2017

John Reese Forbes Articles
Forbes

6 Stocks That Fit Ken Fisher's Out Of the Box Selection Criteria

We all know that money doesn't grow on trees. But for billionaire investing giant Kenneth Fisher, they may be kissing-cousins. Before founding Fisher Investments, one of the largest money management firms in the world (overseeing about $90 billion in assets), a young Ken Fisher set out to study forestry at Humboldt University, but instead graduating in 1972 with a degree in economics. From 1984 to 2017, Fisher also wrote a column for Forbes magazine titled "Portfolio Strategy" (making him the longest continuously-running columnist in the magazine's history).

10/9/2017

John Reese Globe and Mail Articles
The Globe and Mail

Three Stocks to Watch For Investors Awaiting Value's Return

Technology stocks commanded the headlines this year until September, when out-of-favour stocks in the financial and health-care sectors heated up and people started talking about the return of the reflation trade. You may remember this from late last year, when investors were betting on deregulation and infrastructure spending to fuel global growth, egged on by central banks. The idea lost momentum in the spring, when the promised changes didn't happen immediately, but new talk about tax cuts in Washington has breathed new life into the trade. Some strategists are betting on a turning point.

10/3/2017

John Reese Forbes Articles
Forbes

10 'Magic Formula' Stocks Market Guru Joel Greenblatt Would Love

Market pundits come in all shapes and sizes and tout a wide range of strategies for analyzing stocks. In his bestselling 2005 book, The Little Book That Beats the Market, market guru Joel Greenblatt showed readers how to identify good companies selling for bargain prices using a "Magic Formula" of only two criteria--return-on-capital and earnings yield. Greenblatt, co-founder and chief investment officer of Gotham Asset Management, created his one-two stock analysis punch by weaving together concepts of two of the greatest investors of all time: Warren Buffett and Benjamin Graham.

10/3/2017

John Reese TheStreet.com Articles
TheStreet.com

Search For Deep Value, Not Flashy Overbought Stocks

Investors seem complacent about this long bull-run market, lulled by low volatility and major indexes that continue their climb upward seemingly impervious to news. Some have argued that stocks are too expensive, especially the handful of big technology companies that are dominating headlines lately and driving the indexes higher. The contrarian investor David Dreman, author of "Contrarian Investment Strategies: The Psychological Edge," says investors give high-flying glamour stocks -- which tend to include tech stocks -- too much attention. They allow emotion to overvalue these stocks and ignore or overlook cheaply priced stocks of companies that may be going through some short-term but fixable problems.

9/26/2017

John Reese Globe and Mail Articles
The Globe and Mail

How Warren Buffett Uses Numbers to Gauge a Stock's Qualitative Strengths

Warren Buffett continues to feel the weight of nearly $100-billion (U.S.) in cash on Berkshire Hathaway's balance sheet - not an ideal situation for a guy who always wants dollars to be working for the shareholders. But this legendary investor didn't get to where he is by acting hastily or impulsively. He has made a long and successful career of looking before he leaps. What exactly does "looking" involve for Warren Buffett, arguably the most famous investor of all time?

9/19/2017

John Reese NASDAQ Articles
NASDAQ.com

Rebalancing Is Key to Avoiding Increased Risk Exposure

If it ain't broke, don't fix it can be a useful mantra in many walks of life, but investors should be wary when applying this idea to asset allocations. Movements in the market can shift allocations and result in concentrations that might not necessarily fit your risk profile and/or investment goals.

9/13/2017

John Reese Globe and Mail Articles
The Globe and Mail

Three Beaten-Down Stocks That Fit Warren Buffett's Patient Investor Style

If there's one thing that's hard to persuade investors to be, it's patient. The urge to chase the hot idea or the manager with the dazzling recent track record is incredibly powerful. The resolve to resist crowd mentality can falter when it seems as if everyone else is winning and you've been left behind. Imagine hiring a manager in 1997 and for the three year period to 2000, he clocks a gain of 65 per cent. That sounds pretty good, but remember: It was the roaring 1990s, and the technology-fuelled boom was all anyone could talk about. Dot-com after dot-com soared. During the same three year period, the Standard & Poor's 500 rose 107.6 per cent. That means your manager with the decent track record got beaten pretty handily and trailed the market by more than 40 per cent during this period.

9/12/2017

John Reese TheStreet.com Articles
TheStreet.com

3 'Orphan Stocks' to Consider Adopting

While it seems like the whole world is investing in stocks that trade in the major market indexes, sometimes winners can be found on the path less traveled. It's easy to see why investors are flocking to index-traded stocks. When a stock joins a major market index like the S&P 500, there is often celebration. It almost certainly means an immediate boost to the price and adds to the perception that the company has a promising outlook. Index stocks also benefit from a boost in liquidity. They immediately get bought up by all funds tracking the index and anyone who is trying to mimic it.

9/11/2017

John Reese Forbes Articles
Forbes

A Contrarian Investment Strategy Built For The Long Run

Newton's Laws of Motion describe the relationship between a body, the forces acting upon it, and its motion in response to those forces. The third of these laws states: For every action, there is an equal and opposite reaction. Granted, the laws of physics don't apply to investor behavior. But if they did, we'd have a universal mess on our hands. Investor behavior is firmly rooted in psychology, a notion that's evident in all the guru-inspired stock screening models I created for Validea. One of these gurus, however, dug into this field of study more than most others--David Dreman, author of both Psychology and the Stock Market (1977) and Contrarian Investment Strategies (1980). In fact, Dreman (who founded his own investment company) is on the board of directors of the Institute of Behavioral Finance, publisher of the esteemed Journal of Behavioral Finance.

9/7/2017

John Reese NASDAQ Articles
NASDAQ.com

Strong Offense and Defense Necessary to Prepare for Market Downturns

As the September 7th kick-off of this year's National Football League season approaches, we're reminded of the importance of both strong offensive and defensive lines of players. The same argument holds true in terms of a winning investment portfolio. Building a resilient, well-performing "team" involves incorporating both "offensive" and "defensive" holdings to ensure the best probability of success.

9/6/2017

John Reese CNBC Articles
CNBC

Oncor acquisition battle isn't Buffett's first - or last - rodeo

Berkshire Hathaway recently made investment headlines with its agreement to purchase the power-transmission company Oncor for $9 billion in cash, a would-be coup for the legendary billionaire, as it would have chipped away at Berkshire's bloated cash balance (of nearly $100 billion). Disappointment, however, came in the form of Sempra Energy, which swooped in with an offer of $9.45 billion. This made headlines, some of which characterized the chain of events as a "stumble" by Buffett, even insinuating that the Oracle of Omaha might be losing his deal-making chops.

8/30/2017

John Reese Forbes Articles
Forbes

Go 'Back to Old School' On Your Investment Portfolio

It's the time of year when notebooks and pencils (okay, iPads and styluses) are replacing flip-flops and swimsuits. Go into any store and you'll see all the trappings; every food item imaginable in snack-size packaging, backpacks, dorm room accoutrements, and a sea of organizational shelves, bags and boxes. Maybe it's also a good time to evaluate how organized you are with respect to your investment portfolio. Do you have a solid, go-to approach that is aligned with your risk profile and future goals? Are you sticking to that approach no matter what you hear on television or from friends and family? If not, these are questions that deserve your attention.

8/24/2017

John Reese Globe and Mail Articles
The Globe and Mail

Three Stocks to Hedge Against a Stock Market Downturn

The waning days of August leave many parents looking forward to the start of school and many investors bracing for September, the month that is historically the worst of the calendar year for stocks. Add the increasing uncertainty coming out of Washington and stock valuations that look increasingly overheated, and it's enough for a few prominent investors to warn that a pullback is probably on its way.

8/23/2017

John Reese TheStreet.com Articles
TheStreet.com

Quant Models Begin to Find Value in Energy Names

Energy is a sector that has burned even the savviest of investors over the years. It's easy to see the allure: the U.S. administration's promised major infrastructure spending should boost related industries, and alternative energy generation has shown promise. But the energy sector is still struggling with oil prices at (or recently below) $50 a barrel, and many investors appear reluctant to hunt for bargains among the beaten-down shares of major energy companies. The Energy Select Sector SPDR (XLE) is down more than 16% percent this year, while the Standard & Poor's 500 is up more than 10%. That makes energy one of the worst performing sectors in the index, which would suggest there might be some bargains to be found

8/22/2017

John Reese Forbes Articles
Forbes

Investors: Keep Calm And Carry On With These 5 Investing Commandments

Keep Calm and Carry On was a motivational poster produced by the British government in 1939 in preparation for World War II. The poster was intended to raise the morale of the British public as they faced the threat of mass air attacks. Today, the motto can be found on a seemingly endless array of merchandise ranging from coffee mugs to car seat covers. If only the notion was as widely embraced by investors as it is by slogan-loving shoppers.

8/22/2017

John Reese NASDAQ Articles
NASDAQ.com

Investors, the Trigger is Not Your Friend

It seems that financial advisers, like individual investors, can fall prey to impulsive investment decision-making. And it can hurt their clients' pocketbooks. After Morningstar conducted a study in which they analyzed the returns of actively managed stock and bond funds from 2003 through 2016, the firm published the following conclusion: In short, we find, on average, there is no change in future performance following a fund-management change. Yet, investors overreact and subsequently pull money from these funds. Our findings suggest that the fund industry handles succession planning far better than investors react to such changes.

8/16/2017

John Reese Globe and Mail Articles
The Globe and Mail

Why Apple is a Perfect Fit For Warren Buffett's Value Investment Strategy

Berkshire Hathaway's recent purchase of Apple shares has revived debate about whether the world's biggest tech company has become a value stock. After all, Berkshire's Warren Buffett made his fortune seeking out undervalued companies with strong fundamentals and dominant industry positions, and it's not hard to argue that Apple meets those criteria. Now, the iPhone maker is well on its way to becoming the world's first $1-trillion (U.S.) company. Its shares are up 45 per cent in the past year. Berkshire has about 130 million shares, a $20.2-billion stake. The Street recently figured Berkshire has made almost $3-billion from this investment.

8/14/2017

John Reese Forbes Articles
Forbes

Build An Investment Checklist Using Buffett's Investment Criteria

In this year's letter to Berkshire Hathaway shareholders, Warren Buffett refers to the conglomerate's "gradual shift from a company obtaining most of its gains from investment activities to one that grows in value by owning businesses." An article in the Wall Street Journal last month titled, "Warren Buffett's Berkshire Moves Away from Stock Picking," underscores the shift in the context of the conglomerate's offer to purchase power-transmission firm Energy Future Holdings for $9 billion in cash.