In the Deep Value model, manager Analytic Investments uses a set of valuation factors to determine what stocks to add to the model. These factors include low price to earnings ratio and high dividend yield. On their website, Analytic Investment talks about their method of portfolio management:
We use proprietary computer algorithms to manage portfolios with the goals to maximize gains and minimize risks. With computer algorithms, exposure to risk is actively managed, human emotion and buy-sell bias are eliminated from the equity investing process, unnecessary market timing is avoided, and continuous participation of market is possible for long-term growth.
The current top holding in the model is American Axle & Manufacturing Holdings (NYSE: AXL). Recently, there have been rumors about Magna International making a cash bid to takeover AXL. AXL has risen quite a bit since it delivered an earnings surprise in October. On November 1st the stock closed at $8.86. On January 13th its closing price had risen to $15.82.
The second top holding in the model is BSQUARE (NASDAQ: BSQR). On December 15th the company announced that it was expanding its staff of sales, support and developers in Asia. In even more good news during the month, the company announced that its new Snapdragon (TM) mobile development platform for the Android (TM) was available. BSQR’s stock price responded positively to the good news, rising from a $3.80 closing price on November 1st to $11.46 on January 13th.
*Prices and charts courtesy of Yahoo Finance.
