Smart Stocks Investing

Low Priced Stocks We Like

Value Expectations submits:

Twice in 2009, ValueExpectations.com highlighted “Fidelity’s Low Priced Stock Fund”, an investment strategy that has been employed since 1989 by fund manager Joel Tillinghast. The theory behind this “low-price” strategy is that stocks within the small cap space tend to experience the most frequent mis-pricings and have the least amount of analyst coverage. Mr. Tillinghast created this strategy to take advantage of the numerous inefficiencies in small caps. They started out as a strategy to invest in stocks trading below $10; that limit has since been raised to $35 to widen the pool of investable stocks.

Although this fund has been a market performer over the past year, Tillinghast had taken advantage of such mispricing’s during the 15 prior years, averaging an 11% annual return vs. a 6% annual return for the S&P 500 over the same period. The fund had been closed to investors since 2003, but was recently reopened in December to get more cash inflow to be able to take advantage of all of the investment opportunities they see in the market.

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