Value Investing

For over 30 years, we have been investing our clients' wealth through the systematic identification of real value. Our approach, which we call value investing, is highly disciplined.

The philosophy of value investing is simple. Find a company that is financially strong, a company with measurable worth and solid management. When the company's stock is selling at a price below its intrinsic value, buy it. In time, the market should recognize this value and the price should rise. When the stock reaches its perceived real value, sell it.₁

This philosophy raises two important questions:

1. How do we seek to identify real value?

We seek to identify value by comparing a company's stock price with its fundamentals using a careful analysis of a company's financial reports. In addition, we assess the company's accounting methodology to estimate its impact on earnings and shareholders' equity.

Beyond quantitative studies, The Franklin Management Group analyzes qualitative aspects of a company's history as well. We investigate product lines, markets, the competitive environment, the company's business plan, labor relations, and, most importantly, the quality of the company's management. The Franklin Management Group believes that only those efficiently managed companies that produce goods and services of real value to society may provide, over an extended period, reasonable to above-average returns.

2. Why do stocks sell below their real value?

The markets are often not efficient or rational. Some people (including professional investors) buy on the basis of fad, hope or fear. When companies lose emotional appeal, their prices fall — often well below what they're really worth. The Franklin Management Group seeks these “undervalued” stocks. It has been our opinion that the more undervalued a stock (the greater the gap between a stock's current price and its real value), the more potential it can provide the investor.

Diversification and Patience Can Help Manage Risk

Forecasting the future is a most difficult task. Therefore, prudence dictates diversification. Diversification is also necessary to help maximize exposure to the vast array of investment opportunities available not just in the United States but in both developed and emerging world markets.₂

Value investing maintains that when you can buy real potential value at a substantial discount, you can create a potential profit over a three- to five-year market cycle. This does not happen every time. However, value investing can reward the patient investor. In fact, those who are the most patient often get the most reward.₃

While the principles of value investing are simple, the process is complex. As you might expect, a full explanation is impossible in this brief summary.

For more detailed information, please contact the Franklin Management Group of Wells Fargo Advisors at 800-345-2347.

The Philosophy of Value Investing
Why Use a Professional Money Manager?
Our Background
Summary of Services
How Do I Open An Account?
Our Associates

74245 Highway 111, Suite 203
Palm Desert, CA  92260

760-340-3200
800-345-2347

1. Stocks offer long-term growth potential, but may fluctuate more and provide less current income than other investments. An investment in the stock market should be made with an understanding of the risks associated with common stocks, including market fluctuations.

While stocks generally have a greater potential return than government bonds and treasury bills, they involve a higher degree of risk. Government bonds and treasury bills, unlike stocks, are guaranteed as to payment of principal and interest by the U.S. Government if held to maturity.

2. Global/International investing involves risks not typically associated with U.S. investing, including currency fluctuations, political instability, uncertain economic conditions and different accounting standards.

3. “Why Own Stocks,” 2024, Wells Fargo Advisors.

The PIM® program is not designed for excessively traded or inactive accounts, and is not appropriate for all investors. Please carefully review the Wells Fargo Advisors advisory disclosure document for a full description of our services. The minimum account size for this program is $50,000.

As each Private Investment Management (PIM®) program account is individually managed, construction and ongoing management of portfolios may vary from those discussed in this Philosophy Statement.

Richard C. Brusky acts as the group's PIM® Portfolio Manager, and is authorized to make all discretionary decisions for PIM® accounts. Other team members referenced on our website provide support and assistance in the implementation of the investment strategy as outlined by the portfolio manager.