
INVESTMENT PROCESS
Act Two Investors believes that low-valuation investing works. Therefore, Act Two typically invests in equities, mutual funds and ETFs with one or more of the following characteristics:
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Price/earnings, price/cash flow or price/book value ratios lower than the market
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Price/earnings, price/cash flow or price/book value ratios lower than its industry group
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Price/earnings, price/cash flow or price/book value ratios lower than companies with similar prospects and financial characteristics
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Price/earnings, price/cash flow or price/book value ratios lower than usual relative to the company’s own history
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Price/earnings, price/cash flow or price/book value ratios lower than usual relative to the market
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Asset value significantly above the current stock price
For individual stock selection, Act Two Investors employs a variation of low valuation investing developed and refined by Jeffrey Scharf. Act Two's in-house statistical screen seeks to identify stocks with at least one of the characteristics above and 30-40% upside potential over the ensuing 18-24 months. The upside potential should exceed the downside risk and the stock should have a greater chance of achieving the upside than the downside.
Once a stock is identified by the screen, fundamental qualitative analysis is applied to confirm its suitability as an investment.
Find out more CONTACT Jeffrey Scharf