Insiders Guide Value Investing Approach

Large-cap growth strategies have been a popular investment approach, but risk within these strategies has been growing due to concentration concerns and raised multiples. Value strategies offer a strong alternative, but choosing the right value strategy is critical.

Tweedy, Browne looks to find attractive opportunities within value securities by choosing value companies in which insiders are buying up the company’s own stock. This approach can help mitigate risks associated with large-cap growth strategies.

Large-cap growth risk is raised for two reasons: concentration risk and extended multiples. Growth approaches often lean into a narrow set of securities and sectors, making each future earnings call a risky proposition. If companies don’t outperform earnings expectations, the consequences can be significant.

However, determining which companies are truly undervalued and which are cheap for a reason is a traditional challenge within value investing.

The Tweedy Browne Insider + Value ETF (COPY) offers a solution to this challenge by capitalizing on insider momentum. COPY’s approach to value investing centers around finding value stocks that are seeing action from company insiders, such as executives, directors, or controlling shareholders buying up the company’s stock.

Leaning into action from company insiders can be a reliable filter for unearthing undervalued gems among bargain stocks. Since insiders are likely more aware of a company’s potential than anyone else, their actions can be a strong indicator of a company’s value.

COPY’s advantageous take on value investing is also due to its active management, allowing it to make informed decisions and take advantage of Tweedy, Browne’s 100+ years of investment experience. This can help portfolios tap into stronger opportunities within value investing, which is providing strong long-term benefits.