Hello value investors- I have a question

Hi, Speaking for myself. I do mainly equities, I am however invested in a value etf called “COPY”, this etf is quite specific in that they aim to invest in companies where insiders have been buying back shares. The etf is higher fees as (1) it is actively managed (2) global equities. The results has been unreal, I think 35% since purchased last year and 22% ytd. My main issue is that I don’t know if this is due in part of the broader rise of value stocks or is it specific to the fund management Tweedy Browne.

I also own COPY, we will see performance on a longer timeframe but so far so good

Celebrus Technologies have been actively buying back this past month and insider deals. Check it out before their Q&A tomorrow.

No way to call luck or skill on a <2 years old fund.

Run by a very old operator, so old that Tweedy Brown was the Original broker for Benjamin Graham. So while the etf is new (<2 years) their mutual fund has been around much longer.

I use AVUV for my small cap exposure. I don’t have time to expose myself to small cap through individual companies, plus AVUV management has performed quite well historically. The majority of my portfolio is in large or mega cap companies that I buy at or below my FMV estimates. Currently that is MSFT cost basis around $370, GOOG around $340, and META around $570. The next chunk is not value plays, but more high growth, speculative plays in ASTS ($60 average, will accumulate at or below $60-65 range) and OKLO (also around $60 average, accumulating under $50, my initial lots were because of a sudden inflow of money that I pulled the trigger on too quickly). I also have some QQQ, VXUS, and SPYG just acting as anchors in those accounts (yes, I know there’s lots of overlap between QQQ, SPYG, and my top holdings - I’m purposefully concentrated). Thats all split between Roth IRA and brokerage, then I just treat my 401k as my “core” at 50% US large, 25% US small and mid, and 25% international.

RMT is a good CEF for microcap exposure

Yea I call it BRK - they will always have a spot in my portfolio and while I wouldn’t call Berkshire a value investing firm so to speak, but they have an incredible track record of picking up companies that retrospectively look prophetic.

Multiple options, such as: AVUV VFVA AVLV VTV What are you looking for? Are you able to beat their performance by selecting individual stocks over a long term, and can you beat VOO and VTI as well? Considering all in and taxes?

Well, right now I’m 100% VT, but I feel that I’d like to add maybe a15-20% value tilt . So looking for an ETF that would complement VT

Why not just keep it in VT? VTI / VXUS allow you to create your own preferred percent ratio so I typically go that route. Do your own research of course, but some of these have high fees. Though good recent returns and forecast, like AVUV. These lag behind tech heavy VTI & VOO past decade but could see a rebound.

Because VT is market cap weighted and heavily concentrated in large-cap stocks, I’m wondering whether it’s worth diversifying further into small cap value for additional exposure to that segment of the market.

Good point. Look at AVUV. VBR (small/mid) and VIOV (mid) are other options but don't have that filter that AVUV does, which comes with a higher expense. Though many would also say no, just stick with broad market and low fee. If it's a Roth IRA you can easily change later if you don't like it.

Thanks you man. Appreciate the recommendations.

I have always felt value ETFs have little to nothing in common with value investing and tend to give it a bad name. I don't think any of the big names in the field recommend them. Even the ones who recommend ETFs just recommend ones that track the whole market. Value investing can't be boiled down to a formula and the biggest names in the field preach high concentration in high conviction positions even if thats not universal.

I remember looking at top components of AVDV and those were gold miners and financials. I know nothing about miners so I generally stay away from those. These ETFs may also have a different idea of what value is. I think P/B is the most commonly used metric. If you only look at P/B you’ll end up local banks and insurers. Not saying that these are value traps but you gotta know why they have such a low P/B (even compared to their peers) Companies like Berkshire and Fairfax may hold undervalued assets but they also have their own risks (operational risk, insurance cycle, etc) I bought them because I see the whole company as fair value, not because I want exposure to value through them

Yeah ETFS are awesome, SCHV (Schwab Large Cap Value), I also like RSP (EQUAL WEIGHT) , and then the VOO of course. Feel like those 3 really capture the whole market. 

At times VOO and other broad index funds have been strong value propositions and I have had everything in them. That window closed years ago, but it always reopens.

value-focused ETFs

Value ETFs are factor investing, not value investing.

I did use value factor ETFs when I first started (ones which track MSCI world/US/European value etc) They're okay but tend to select for junky companies, for example automakers. Inevitable as they simply choose lowest PE, lowest PB, and lowest P/OCF while preserving market cap index sector weights to provide some diversification. I think most of us agree just picking companies by a few simple numbers isn't a great strategy. With that said, it has been shown to slightly outperform the market cap weighted index on a risk-reward index (although the drawdowns can be higher) But most of prefer value combined with some quality or growth metrics. And many of us prefer concentration rather than broad index diversification Not a bad way to dip your toes in the water though. You can start looking at which companies the ETF holds that you like, and why

I think the ETF definition of value isn’t that accurate, like low P/E stocks. I think value investing is just seeing a lot more value in a company that the market doesn’t, and being right. Amazon at 500x PE 25 years ago would have been a phenomenal value investment and it was for people like Nick Sleep. I would say a better gauge of what value actually is are quality ETFs.

I do use a value-focused ETF: 5OGE. It is very small though. Long-term should be ok.

If you leave the argument stock picking vs passive investing aside. Ask yourself : Is the 'value' factor really the best one? Historically = no Quality should be your main strategy long term according to data. And that confirms my view : 'value' in 'value investing' refers to the underlying qualities of a business. And NOT price or valuation metrics... I personally chose to build my portfolio hybrid, between world ETF (true passive stuff) and the strongest compounders I could find (Fortinet, S&P global, MSCI, Safran...)