Waiting on Fundamental s to Improve

Many value investors will buy the cheap company when there’s just a turnaround story attached to it, but we patiently wait for the fundamentals to improve first. The philosophy works because investors underreact to both positive and negative changes in fundamentals. If we see all the ingredients of a sustainable turnaround, we’ll buy after one quarter of good earnings, allowing our clients to benefit from the slow rebuilding of confidence that will be reflected in the stock price over time.