Look for good companies experiencing some sort of controversy. When the mis-pricing hits, buy it. Okay, not so fast, warns Mark Finn, fund manager for the
T. Rowe Price Value Fund (TRVLX). It’s not
that easy.
Finn’s team wants to know, first and foremost, if the short-term pain is “secular or cyclical; whether it’s addressable or unaddressable.” If the company’s woes are addressable, meaning the problem is something management can correct, and the economic cycle will provide some tailwinds in the process, then that is the kind of company they want in their value fund.
In the video, Finn talks with RIA Channel’s CEO Julie Cooling about where he is finding value right now. They’re bearish on energy, but gives one idea. And it’s not American.
The $35 billion Morningstar four star rated fund is up 15.38% over the last 12 months ending May 31 and up 11% since inception ending on the same date. The fund launched on September 30, 1994. Its top 10 holdings account for around 25% of the fund’s total assets, with names like Citigroup (C), Microsoft (MSFT) and Tyson Foods (TSN) among the biggest holdings.
