The Hotchkis & Wiley Diversified Value A Fund (HWCAX) rose 32% in 2021, peaking at 92% of its lowest points with the best performance since 2012.
Investors must check two boxes to be successful, according to the manager: They must prioritize value by refusing to pay overvalued stocks and maintain a long time horizon. The latter is especially important in a frantic news cycle, where a 2% drop could be treated as a disaster.
The following is a list of stocks that have upward potential for the coming year:
Capital value: $ 133.6 billion
Summary: “The only financial company in our portfolio that stands out as the most attractively valued is Citigroup. It is traded at 6.5 times our estimate for normal profits or 80% of the material carrying amount. Business is undervalued because it earns little. They have a new CEO: Jane Fraser. It does the right thing for business and invests in improving Citi’s systems and processes. These investments put pressure on Citi’s net income in the short term.
Capital value: $ 14.6 billion
Summary: “Marathon, like many management teams in the industry, is very disciplined about what they do with their money. They are not investing in increasing production, as most of the industry has been doing in the last decade. What most are doing now is to return this cash flow to shareholders. So we are talking about a double-digit return on free cash flow from $ 2.50 to $ 3 free cash flow on shares of $ 18 and most of that money will be returned to the owners. “
Capital value: $ 113.1 billion
Brief thesis: “They have a 70% market share in the large market for commercial jet engines. This was good business for growth before the pandemic, which was obviously a big headwind. Air travel is still about 25% lower than in 2019. So it has improved from the bottom, but still does not return to where it was. However, this business has an excellent market structure, and GE is the largest player in the market.
Capital value: $ 14.7 billion
Short thesis: “F5 is a software company, market leader and business with good growth. In the last few quarters, it has grown by about 10% per year. This is a debt-free company that trades about 15 times more than the expected normal profit.
Dealer Veselin Zlatev