What is Property Value investing?

What is value investing?

It is an investment style that places an emphasis on Stocks and REITs with lower-than-average price to book ratios and higher dividend yields.

Investopedia defines Value Investing as an investment strategy where stocks are selected that trade for less than their intrinsic values, so they actively seek stocks they believe the market has undervalued.

Whether you want to sell your residential property or buy a new real estate investment, a house or an apartment, your Property Angel is here to help you find your textured home.

Property Angels – Attorney Realtor Partner

The strategy is built on the belief that the market overreacts to good and bad news, resulting in stock price movements that do not correspond with a company’s long-term fundamentals.

The strategy to invest in these undervalued stocks originates from investor irrationality and the objective is to profit from holdings in stocks with lower-than-average:

– price-to-book ratios

– price-to-earnings ratios and/or higher dividend yields.

However, calculating the intrinsic value of a stock is challenging with investors deriving differing valuations despite acting on the same information.

For this reason, another central concept of value investing is that of margin of safety. Benjamin Graham, who is seen as the father of value investing, in his 1949 book The Intelligent Investor wrote that: The function of the margin of safety is, in essence, that of rendering unnecessary an accurate estimate of the future.

Renowned value investor Seth Klarman, in his book Margin of Safety states that a margin of safety is achieved when securities are purchased at prices sufficiently below underlying value to allow for human error, bad luck, or extreme volatility in a complex, unpredictable, and rapidly changing world.

Klarman further stated that: The disciplined pursuit of bargains makes value investing very much a risk averse approach.

The greatest challenge for value investors is maintaining the required discipline.

Being a value investor usually means standing apart from the crowd, challenging conventional wisdom, and opposing the prevailing investment winds.

This statement seems even more true for REITs, where the generally accepted investment principles of equities seem to reverse.

REITs with value characteristics TEND to underperform their sector peers Research by Greenstreet Advisors demonstrates that contrary to conventional wisdom, it is REITS with lower: – dividend yields, – leverage and – capitalisation rates who are the top performers. However, the mean reverting nature of REITs needs to be exploited to achieve the greatest level of out performance.

Conclusion

We at Reitway have a philosophy of benchmark agnosticism which we believe allows us the opportunity to select REITs with greater opportunity to outperform based on sound fundamentals.

Our style is Growth At a Reasonable Price (GARP), in which we look for companies that are showing consistent earnings growth above broad market levels (a tenet of growth investing) while excluding companies that have very high valuations (central principle value investing). We also actively seek to deliver returns with a reasonable Margin of Safety.

We apply Reverse Momentum, as shown in the Cumulative out performance by Factor graph, to our investment considerations and, as can be seen in the graph, it is a significant contributor to out performance.

The overarching goal is to avoid the extremes of either growth or value investing, as this typically leads GARP investors to growth-oriented stocks with relatively low price / earnings (P/E) multiples in normal market conditions.

We believe that our approach provides the best-balanced investment approach, specifically tailored to the unique sectoral realities of global REITs, in order to deliver superior investment returns to our investors.

References:

– Investopedia

– Kirby, Mike and Rothemund, Peter. “The Factor Tracker.” Greenstreet Advisors – Heard on the Beach Series. 2018-01-11.

– Graham, Benjamin. “The Intelligent Investor.” Harper Business, 1949.

– Klarman, Seth. “Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor.” Harper Collins, 1991.

For more information about Reitway Global, please visit our website at www.reitwayglobal.com

Property Angels is an online property portal that promotes residential and commercial property for sale across South Africa. You can buy, sell, list and find South African properties online. Find houses for sale in Johannesburg, Cape Town and Durban which are the three biggest cities in South Africa.

At Property Angels we will help you sell or buy your next house or office space so that you can move on quickly and affordably.

Traditional Estate Agents do offer good service but you want so much more when it comes to selling or buying your next home.

Some of the top property companies online in South Africa include Private Property, Property 24, My Property, Property Fox, PropertyCoZa, Remax, Pam Golding, LeadHome, SA Hometraders, Gumtree and Property Angels.

Whilst most online property brands offer online visibility for Estate Agents South Africa, Property Angels offers online visibility for Attorney Realtor Agents South Africa.

Whether you have a property for sale or you are seeking a house to buy in the southern suburbs, Northern Suburbs, Eastern suburbs or Western suburbs, choose Property Angels as your attorney realtor property website in South Africa. Sell your property online through Property Angels.

Your dedicated Attorney Realtor will call you back today or the next business day.

Whether South Africa is in a buyer’s market or in a seller’s market, contact Property Angels today for quick and efficient online and face to face service.

List your house for sale with Property Angels. You can also find property to view, property selling tips and many other useful property and finance blog articles and property products bespoke to your needs. Buy and sell your private residential property through Property Angels. Allow Property Angels to become your chosen property website portal for your choice of homes to sell and homes to buy.