At Fair Weather Strategies, we have found that often some of the best values are to be found away from the eye of the news media and Wall St. analyst coverage.

Often, “story stocks” that generate a lot of buzz and excitement become quickly overvalued as investors incorrectly assume that the growth of these stocks will continue unabated forever. Many of these high-growth stocks quickly grow market share but are unable to sustain healthy profit margins as competition increases in their space.

Others become so large that continued high growth becomes a mathematical impossibility. For example, if Apple, Google and Amazon were to continue growing revenues at the same rate as they had in the first couple of decades of their existence, in a few years they would account for more than half of the world’s GDP!

Quite often, we find that the best values are in stocks that are too boring or too non-volatile to garner a lot of media attention. Our FWS Stalwarts strategy is highly biased towards these sorts of companies.

Our FWS Opportunistic Value strategy concentrates on smaller value stocks with minimal analyst coverage and news-flow. Often the only major tell that these companies are undergoing improving business fundamentals is by watching their stock price closely.

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Hong, Lim and Stein (2000) in their whitepaper “Bad News Travels Slowly: Size, Analyst Coverage and the Profitability of Momentum Strategies” concluded that their findings were strongly consistent with the hypothesis that there should be more momentum for stocks for which information gets out more slowly.

* This information relates to the firm’s multi-asset class portfolio’s. One or more of the firm’s composites may track a single asset class only.

Past performance is no indicator of future return. There is no guarantee that applying a momentum strategy will either increase your portfolio’s return or lower its volatility as compared to any other strategy. Some securities and market environments are particularly unsuitable for trading using a momentum strategy. An active investing strategy will likely incur higher commissions than a buy and hold strategy and may or may not increase your taxes relative to buying and holding.