About The Deep Value Index (DEEPI)
The Deep Value Index identifies undervalued stocks using The Acquirer’s Multiple®.
The Index is composed of the 20 most undervalued, fundamentally strong stocks listed in the US.
Constituent stocks are selected from the largest 25% of all stocks by number, or largest 90% by market cap (equivalent to a market cap greater than about $2.5 billion).
How it works
Step 1.
The Index identifies potentially undervalued stocks using The Acquirer’s Multiple®.
The initial universe of stocks is valued holistically—assets, earnings, and cash flows are examined—to understand the economic reality of each stock. Each stock is ranked on the basis of such valuation.
Potential components are further evaluated using statistical measures of fraud, earnings manipulation, and financial distress.
Step 2.
Each potential component is examined for a margin of safety in three ways:
(a) a wide discount to a conservative valuation,
(b) a strong, liquid balance sheet, and
(c) a robust business capable of generating free cash flows.
Step 3.
Finally, a forensic-accounting due diligence review of each of the remaining potential components’ financial statements, particularly the notes and management’s discussion and analysis, is undertaken.
The Index is formed from the components passing each stage. Each position will be weighted to about 5% of the Index value.
The Index is reconstituted and rebalanced quarterly.
About The Acquirer’s Multiple®
Constituents
Weight | Name |
|---|---|
| 5.33% | Enstar Group Ltd. |
| 5.32% | Best Buy Co Inc |
| 5.26% | D. R. Horton Inc |
| 5.24% | Intel Corporation |
| 5.22% | NetApp Inc. |
| 5.20% | Allstate Corp |
| 5.18% | Biogen Inc |
| 5.10% | HP Inc |
| 5.06% | AmerisourceBergen Corp. |
| 5.03% | BorgWarner Inc. |
| 4.94% | Evercore Inc |
| 4.91% | Lockheed Martin Corporation |
| 4.91% | LPL Financial Holdings Inc |
| 4.88% | Synchrony Financial |
| 4.88% | First American Financial Corp |
| 4.82% | Oshkosh Corp |
| 4.82% | MGIC Investment Corp. |
| 4.80% | Murphy USA Inc |
| 4.76% | HCA Healthcare Inc |
| 4.34% | TechnipFMC PLC |
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Disclaimer: acquirersmultiple.com is not an investment adviser, brokerage firm, or investment company. “The Acquirer’s Multiple®” is a term used to describe the investment strategy explained in the book Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations. Use of the formula does not guarantee performance or investment success. acquirersmultiple.com is owned in part by Tobias Carlisle.
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