About The Acquirer’s Index
The Acquirer’s Index identifies undervalued and overvalued stocks using The Acquirer’s Multiple®.
The Index is composed of the 30 most undervalued, fundamentally strong stocks and 30 short positions of the most overvalued, fundamentally weak stocks listed in the US.
The Index is constructed with a 100% net equity exposure (130% long, 30% short). 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
The Index identifies potentially overvalued and 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.
Each potential long 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.
Each potential short component is examined to identify:
(a) a large premium to an optimistic valuation,
(b) a weak, distressed balance sheet, and
(c) a deteriorating business and stock price.
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 undervalued position will be weighted to about 4.3% of the Index value and each overvalued position will be shorted to about 1% of the Index value.
The Index is reconstituted and rebalanced quarterly.
The Acquirer’s Multiple®
|5.74%||Molina Healthcare, Inc.|
|5.08%||Best Buy Co Inc|
|4.96%||First American Financial Corp|
|4.77%||Fiat Chrysler Automobiles NV|
|4.73%||Steel Dynamics, Inc.|
|4.67%||First Citizens BancShares Inc (Delaware Class A|
|4.39%||Assured Guaranty Ltd.|
|4.26%||Bank of America Corp|
|4.08%||Royal Bank of Canada|
|4.05%||Spirit AeroSystems Holdings, Inc.|
|3.95%||Charles Schwab Corporation Common Stock|
|3.91%||Bank of Montreal|
|3.83%||Mercury General Corporation|
|3.76%||Radian Group Inc|
|3.70%||Berkshire Hathaway Inc. Class B|
|3.43%||Southwest Airlines Co|
|-0.63%||Acadia Realty Trust|
|-0.69%||California Water Service Group|
|-0.88%||Kilroy Realty Corp|
|-0.94%||Healthpeak Properties Inc|
|-0.94%||American Assets Trust, Inc|
|-0.95%||ACI Worldwide Inc|
|-0.96%||South Jersey Industries Inc|
|-0.98%||Stag Industrial Inc|
|-1.09%||Quaker Chemical Corp|
|-1.09%||PNM Resources Inc|
|-1.12%||Hudson Pacific Properties Inc|
|-1.13%||American Campus Communities, Inc.|
|-1.17%||Q2 Holdings Inc|
|-1.25%||Wynn Resorts, Limited|
|-1.32%||Cantel Medical Corp.|
|-1.33%||New Relic Inc|
Questions? Feel free to email or call us.
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 The Acquirer’s Multiple: How the Billionaire Contrarians of Deep Value Beat the Market.
The Acquirer’s Multiple® (TAM) constructs, publishes, and licenses indices and does not offer or provide investment advice or offer or sell any securities, commodities or derivative instruments or products, and nothing on this website should be taken as constituting financial or investment advice. Unlike its affiliates, TAM is not registered with the SEC and is not permitted to provide investment advice. Neither TAM nor its respective directors, officers, employees or affiliates make any representation regarding the advisability of investing in any security or instrument. A decision to invest in any such security or instrument should not be made in reliance on any information on this website. Inclusion of a security in an index is not a recommendation to buy, sell or hold that security.
Acquirers Funds, LLC (AF) is an affiliate of TAM, and all investment decisions for investment products and client portfolios are made independently by AF. AF is an investment adviser registered with the SEC.
© 2019 The Acquirer’s Multiple®. The Acquirer’s Multiple® is a registered trademark. All Rights Reserved.