Value investing is all about buying stocks that are trading below their intrinsic value.
In practical terms, that often involves investing in companies and sectors that have been shunned by the market due to particular macro headwinds.
"It should be no surprise as to where the pockets of opportunity are," says Tim Carleton, Auscap Asset Management CIO and today's guest on the Rules of Investing.
"They're in the more cyclical sectors that people are most concerned about from an earnings perspective."
In today's interview with Livewire's David Thornton, Tim runs through two retail stocks in the Auscap Long Short Australian Equities Fund that fit this profile. I won't give them away, but one is the only stock on the ASX with a return on equity above 50%, while the other is a long-term compounder poised to take market share.
He also discusses why he's avoided the tech and energy sectors, what he expects from earnings season, why he doesn't put much weight in earnings beats and misses, and why lithium is a crowded trade (yet remains invested in it).
Note: This episode was recorded on July 26, 2023.
Timestamps
0:00 - START
1:30 - Have we avoided a hard landing?
3:30 - Australian base case
4:30 - Reporting season
10:00 - Stock prices follow earnings
12:30 - A checklist for finding value
14:20 - Consumer discretionary in 2023
17:55 - Two COVID beneficiaries primed for growth
20:50 - Avoiding tech and energy
23:00 - Lithium is crowded, but does that matter?
29:20 - Look past the market's time horizon
44:00 - Bottom drawer retail stock
The 15 stock portfolio
Finding value in dark corners of the market
Season's greetings from Livewire Markets
Buy Australian for the next recovery phase
The biggest trends to watch in the next 5 years
3 early warning signs it’s time to change your view
Sell-offs are a buying opportunity. Don’t get off the train
What the ‘smart money’ is saying about Australia's future
Did Buffett really change his mind on gold?
Tapping into research from the world’s best investors
How Ophir spot offshore growers (before they get big)
A key question most investors ignore, do you?
Chris Stott launched a new boutique. Then COVID hit.
Don’t fight the Fed, buy commodities instead
The $200 billion opportunity to power Australia's future
The unspoken rules of Wall Street’s best hedge funds
Buy growth, but don't ignore the price
The biggest experiment in markets: How does it end?
Navigating the COVID crisis
COVID-Crash special with Sam Sicilia and Martin Thompson
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