Value investment strategy
Invest like Graham und Buffet

The value investment strategy is very popular, used by such well-known investors as Benjamin Graham and Warren Buffet, who have been successful with this strategy for a long time.

"Long ago, Ben Graham taught me that ‘Price is what you pay; value is what you get.’ Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down." - Warren Buffet

Benjamin Graham, the father of Value Investing, and his protege, Warren Buffet, concentrated on the Value Investment Strategy. They bought stocks that were underrated. The industry or the individual company made no difference to them. Buffet said that he achieved very good results with this strategy for over 50 years, and outperformed the Dow Jones average more than twice over during that span.

We all want quality products at reasonable prices. The Value Investment Strategy offers this opportunity, since it proposes choosing stocks, which are currently depreciated in the market, as compared to other stocks. The value stocks with the highest Obermatt ranks are those stocks that are the most underrated, i.e. the highest value for money.

Investments in undervalued companies will result in additional yield and returns when the market ultimately evaluates the stocks more typically. This is also known as regression to the mean.

One advantage of the Value Investment Strategy comes during a market downturn. As a rule, undervalued companies are less likely to be highly valued, as investors and other market players flee and turn to more solid assets.

Anyone who wants growth and security in addition to Value, uses a Combined Investment Strategy.

Metrics of the value strategy


Price/Earnings Ratio

Defined as:

\[ \frac{MV \ of \ Equity }{\ Profit} \]

We use the share price at the end of the period and the profit during the preceeding period. The higher this value relative to peers, the lower the rank.

Market-to-Book Ratio

Defined as:

\[ \frac{MV \ of \ Equity }{\ BV \ of \ Equity + BV \ of \ net \ debt } \]

We use the share price and the book values at the end of the period. The higher this value relative to peers, the lower the rank.



Price/Sales Ratio

Defined as:

\[ \frac{MV \ of \ Equity }{\ Revenue} \]

We use the share price at the end of the period and the revenue during the preceeding period. The higher this value relative to peers, the lower the rank.

Dividend Yield

Defined as:

\[ \frac{Dividends }{\ MV \ of \ Equity} \]

We use the share price from the end of the period and dividend pay-outs during the preceeding period. The higher this value relative to peers, the higher the rank.

MV = Market Value
BV = Book Value

The Obermatt investment strategies at a glance