'I LOVE TO BUY A GROWTH VEHICLE THAT HAS BEEN BEATEN UP'
Judith A. Jones of Key Asset Management in Cleveland has managed the Victory Value Fund since 1993 and its the predecessor trust fund ever since 1977.
ON SEARCHING FOR VALUE STOCKS
"I look at the statistics like price-to-earnings, price-to-book-value, and price-to-cash flow, both today and compared to the 10-year history. I also look at the traditional dividend discount models. There's no one measure you can hang your hat on all the time."
ON ENERGY COMPANIES
"Energy stocks are attractive because oil prices are low. You've had weather-related problems and problems with overproduction, but those don't tend to last. Energy stocks are also defensive. They don't get hit as hard when the market goes down. In the recent sell-off, they did their job."
HOW SHE VIEWS FINANCIALS
"We've done very well with the banks, but I'm a little concerned now. There could be some margin erosion from bad loans to Asia. Perhaps that's why insurance company stocks are holding up better now."
ON OUT-OF-FAVOR COMPANIES
"I love to buy a growth vehicle that's been beaten up. That's why I bought Motorola (MOT). The company has great technical skills, market penetration, and name recognition. It's a lot like IBM (IBM)
was a few years ago."
ON MERGERS
"Value stocks make good takeovers because they're cheap. Chrysler (C)
was a tremendous classic value stock--cheap by every yardstick. We made a lot of money on it."
ON THE PRICE-TO-BOOK RATIO
"People seem to knock it, and say it isn't relevant as a measure of value. But it seems to work, not necessarily on all companies but in the aggregate, we find it useful."
ON RUNNING A VALUE FUND
"Not every stock is going pass every test of value. But when you boil it all down, the fund as a whole should have below average p-e [price-earnings] and p-b [price-to-book] ratios, and higher than average dividend yields."
ON THE TRAP IN VALUE INVESTING
"The risk is that you've bought too early and have to wait longer for the stock to move up. That's why we often wait for a company to have one positive earnings surprise before we buy."
RELATED ITEMS
 - THE SEARCH FOR VALUE
- COVER IMAGE: Where to Invest
- STOCKS
- TABLE: Big and Cheap
- CHART: Large-Cap Stocks Lead the Way
- `I LOVE TO BUY A GROWTH VEHICLE THAT HAS BEEN BEATEN UP' (extended)
- MERGERS
- TECHNOLOGY
- BIOTECH
- SHORTS
- REAL ESTATE
- GLOBAL
- BONDS
- MUTUAL-FUNDS
- 401(k)s
- INVESTOR POLL
- INSIDE WALL STREET: REEBOK
- INSIDE WALL STREET: GENERAL MILLS
- INSIDE WALL STREET: ADVANCED HEALTH
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