Few Value-led managers consider the Value factor in isolation when making investments. For us Value is the determinant of the extent of the investment anomaly but sits side-by-side with Potential and Timing in our three factor PVT Investment Philosophy.
As a reminder (please refer to our UK Equity Philosophy and Process for a detailed explanation), the Potential factor describes the type of investment anomaly we are looking at, be it Growth, Quality, Recovery, or Asset-backed, as determined by where companies are in their lifecycle.
The Timing factor helps us identify whether the fundamental catalysts, positive earnings and share price news are in place to reduce the Value gap.
So, for us, the best investments are those that have big valuation anomalies, in combination with clear medium-term recovery, growth, and quality potential, all supported by improving timing indicators.