John Rogers Says Contrarian Investing Gives You The Confidence To Buy When Others Are Selling

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John Rogers Says Contrarian Investing Gives You The Confidence To Buy When Others Are Selling

Here’s a great interview with contrarian value manager John Rogers on WealthTrack who says if you don’t follow the crowd you’ll be a better investor. “Value investing is a contrarian approach. You’re going to be buying when others are selling. When there’s a lot of fear out there you’re going to be the one feeling confident going in buying those stocks at bargain prices.”

On how to keep shareholder during periods of underperformance Rogers says it’s important to stay in touch with your investors and keep them focused on the long term. “People are more likely to stick with us during those inevitable downturns because we’ve been able to make the case that if you think long term you’re going to outperform and by communicating that strategy consistently and executing it consistently I think it builds confidence in customers.”

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On lessons he’s learned from Buffett and Munger he says:

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  • Stay within your circle of competence
  • Invest in what you understand
  • Wait for the perfect pitch

On what type of companies to look for he says:

  • Strong brand
  • Strong franchise
  • How are companies going to maintain their moat over the next 5 to 7 to 10 years
  • Balance sheet strength is critical

This article originally appeared on The Acquirer's Multiple - Stock Screener.

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The Acquirer’s Multiple® is the valuation ratio used to find attractive takeover candidates. It examines several financial statement items that other multiples like the price-to-earnings ratio do not, including debt, preferred stock, and minority interests; and interest, tax, depreciation, amortization. The Acquirer’s Multiple® is calculated as follows: Enterprise Value / Operating Earnings* It is based on the investment strategy described in the book Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations, written by Tobias Carlisle, founder of acquirersmultiple.com. The Acquirer’s Multiple® differs from The Magic Formula® Earnings Yield because The Acquirer’s Multiple® uses operating earnings in place of EBIT. Operating earnings is constructed from the top of the income statement down, where EBIT is constructed from the bottom up. Calculating operating earnings from the top down standardizes the metric, making a comparison across companies, industries and sectors possible, and, by excluding special items–earnings that a company does not expect to recur in future years–ensures that these earnings are related only to operations. Similarly, The Acquirer’s Multiple® differs from the ordinary enterprise multiple because it uses operating earnings in place of EBITDA, which is also constructed from the bottom up. Tobias Carlisle is also the Chief Investment Officer of Carbon Beach Asset Management LLC. He's best known as the author of the well regarded Deep Value website Greenbackd, the book Deep Value: Why Activists Investors and Other Contrarians Battle for Control of Losing Corporations (2014, Wiley Finance), and Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors (2012, Wiley Finance). He has extensive experience in investment management, business valuation, public company corporate governance, and corporate law. Articles written for Seeking Alpha are provided by the team of analysts at acquirersmultiple.com, home of The Acquirer's Multiple Deep Value Stock Screener. All metrics use trailing twelve month or most recent quarter data. * The screener uses the CRSP/Compustat merged database “OIADP” line item defined as “Operating Income After Depreciation.”

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