A valuable experience for value investing students
Undergraduate | Feb 24, 2017 | Kathleen Clarke
While there is plenty to do at Fordham, Gabelli School students know the city really is their campus.
Taking advantage of their proximity to a number of business schools, Gabelli students in the value investing concentration attended Columbia Business School’s 20th annual Columbia Student Investment Management Association (CSIMA) conference.
This year’s event featured distinguished value investors David Abrams and Mohnish Pabrai as keynote speakers. Students also had the opportunity to attend several panel discussions with top-tier industry professionals covering important topics in investment management such as “best ideas,” “behavioral finance,” and “finding value abroad.”
What did the Gabelli students learn from panelists?
- Value investing succeeds when it identifies “quality” companies whose businesses are transparent and easy to understand, and whose stock prices are undervalued by the market.
- One approach to discern quality is to analyze the company’s return on invested capital (“ROIC”).
- A strong, positive ROIC is generally indicative of a good, financially stable business.
- Value investors will look for stocks trading at a discount to their perceived intrinsic value, including those with low P/E ratios.
- It’s important to understand the underlying businesses of investments, a term known as “analyzability” in the field.
By following these suggestions, panelists said, investors would increase their probability of “getting it right.”