Introduction to Shades of Value

Everyone has a different definition of value. For example, you and your best friend are comparing footwear (or grocery stores, plumbing services, or even housing). You call your shoes a deal because you got them on sale 50% off! Your friend, meanwhile, considers her shoes a value buy simply because she paid less than she would have for a comparable brand.

Fund managers who buy value stocks express similar differences of opinion. All value managers buy stocks that they believe are worth significantly more than the current share price, but they tend to argue about just what makes a stock a good deal. How a manager defines value will determine what his or her portfolio includes and, ultimately, how the fund performs.