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NUMBER CRUNCHER

Twenty stocks that value gurus love Add to ...

We look for the most compelling companies that prominent value investors have recently added to their portfolios

Brian Pinchuk is a portfolio manager at Lorne Steinberg Wealth Management in Montreal.

What am I looking for?

The most compelling companies that prominent value investors have recently added to their portfolios.

How I did it

At Lorne Steinberg Wealth Management, we are always on the lookout for quality businesses at undervalued prices.

To help pinpoint prospects, I used S&P’s Capital IQ Screener to sift through more than 17,000 stocks on major exchanges worldwide. Specifically, I screened for shares that were recently acquired by well-known and successful value investors, such as Warren Buffett (Berkshire Hathaway), Seth Klarman (Baupost Group), Joel Greenblatt (Gotham Asset Management) and others.

I was interested in companies that are not overburdened with debt, have a track record of generating positive free cash flow and have share prices that are down significantly from their highs. I also wanted to key on companies that have yet to advance in any meaningful way since the notable investors initiated their positions.

I then combed through the list to find companies with favourable value-based metrics, such as relatively low forward price-earnings multiples and price-to-book ratios. The accompanying chart shows the top 20 companies sorted by the lowest forward P/E multiple, a measure that can help point to stock prices that do not reflect a company’s long-term fundamentals.

What I found

The 20 companies listed here are a good starting point for finding value and our research team is actively looking at investing in a number of them.

Remember, though: Things are often cheap for a good reason. Investors are strongly advised to do their own homework before buying any of the stocks listed here.

New positions taken by value managers

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