| Topic - Value Stocks: Hunting Hidden Treasures | Education Center |
Value investors look for stocks that have been overlooked by other investors and that may have a "hidden value." These companies may have been beaten down in price because of some bad event, or may be in an industry that's looked down upon by most investors. However, even a company that has seen its stock price decline still has assets to its name -- buildings, real estate, inventories, subsidiaries, and so forth. Many of these assets still have value, yet that value may not be reflected in the stock's price.
Value investors look to buy stocks that are undervalued, and then hold those stocks until the rest of the market -- hopefully -- realizes the real value of the company's assets.
Warren Buffet is usually recognized as one of the greatest investors of all time, and his approach to buying stocks is grounded in the value approach. As Chairman of Berkshire Hathaway, Inc., headquartered in Omaha, Nebraska, Buffet has managed to increase the book value (the total net worth of the company on its books) at a compounded annual growth of 24.1 percent.