ValueSlant
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I have been thinking about how momentum might be incorporated into a value investing framework. Here is one thought on it in light of the crazy action in JVA in the past few months:
http://valueslant.com/2011/07/22/value-momentumthe-case-of-coffee-holding-co-jva/
Basic idea would be to look for stocks that are in hot sectors but are still undervalued from fundamental perspective and could use momentum as a value unlocking catalyst when the momentum investors "find" the stock. Would be interested in hearing about if anyone has tried this as a defined strategy or if you have any current stock ideas along these lines.
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An interesting lesson in the past few days with the yellow pages company DEXO and their "big" partnership with Google that is something that literally hundreds of small marketing companies also have. With corporate PR motto should be Don't Trust, Only Verify
More on it here:
Value investing and momentum
in General Discussion
Posted
Hester- I think I am proposing something different than trying to buy stocks with price momentum that are still cheap by value standards. I agree that would seem hard to implement, although I have seen some investors who try to do something along those lines.
I was proposing buying stocks that have not exhibited price momentum and are cheap and safe from a value perspective but are in a sector where a lot of the other names do have price momentum (and are probably richly valued). Theory being that you basically have a free option that momentum investors grab a hold of it as the next "hot thing", and if not you are just left with a good value investment.
This probably wouldn't be a stand alone strategy but just a point to consider in the course of research if you are of the value investing persuasion that likes to look for catalysts. I also don't know how common opportunities like these are as I have not consciously looked for them in the past.
Thanks for the perspective on combining strategies, I know many feel that way.