In holding around 40 stocks at a time, we're trying to get the appropriate balance between diversification and putting most of our dollars in the names we like the best. As a practical matter, it's difficult to find 40 names that you really like. The lion's share of your excess returns will come from a [...]

Valuation predominates in our models, but we do believe value managers underweight positive [share price] momentum in their portfolios. The obvious reason is that stocks with positive momentum are often overpriced, but when they're not, we think its presence helps us avoid value traps. We'll ignore momentum if there's sufficient value-based justification, but if our [...]

An ideal stock according to our model would be inexpensive on an absolute basis, relative to its peers and relative to its history. It would be supported by high-quality earnings, as measured by things such as cash flow relative to net income, capital spending relative to depreciation and earnings-estimate dispersion. It would be financially secure, [...]