Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 stocks made the list for top value stocks in the Investment Management & Fund Operators industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Investment Management & Fund Operators Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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5 Undervalued Investment Management & Fund Operators Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the Investment Management & Fund Operators industry for Tuesday, February 20, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Investment Management & Fund Operators industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Bank of New York Mellon Corp’s Value Grade

Value Grade:

The Bank of New York Mellon Corporation is a global company. The Company?s businesses are divided into three business segments: Securities Services, Market and Wealth Services and Investment and Wealth Management. The Company also includes Other segment, which includes the leasing portfolio, corporate treasury activities, including its securities portfolio, derivatives and other trading activities, corporate and bank-owned life insurance, renewable energy and other corporate investments. The Company?s two principal United States banking subsidiaries include The Bank of New York Mellon, a New York state-chartered bank, which houses its Securities Services businesses, including asset servicing and issuer services and certain market and Wealth Services businesses, including treasury services and clearance and collateral management, as well as the bank-advised business of investment management and BNY Mellon, National Association, which houses its wealth management business.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Bank of New York Mellon Corp has a Value Score of 80, which is considered to be undervalued.

When you look at Bank of New York Mellon Corp’s price-to-sales ratio at 2.08 compared to the industry median at 3.81, this company has a lower price relative to revenue compared to its peers. This could make Bank of New York Mellon Corp’s stock more attractive for value investors.

Bank of New York Mellon Corp’s price-earnings ratio is 13.86 compared to the industry median at 13.81. This means it has a higher share price relative to earnings compared to its peers. This could make Bank of New York Mellon Corp less attractive for value investors.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Bank of New York Mellon Corp’s shareholder yield is higher than its industry median ratio of 3.50%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Bank of New York Mellon Corp’s price-to-book ratio is higher than its industry median ratio of 1.06. This could make Bank of New York Mellon Corp less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Bank of New York Mellon Corp’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Bank of New York Mellon Corp’s price-to-free-cash-flow ratio is lower than its industry median ratio of 15.04. This could make Bank of New York Mellon Corp more attractive because the lower P/FCF ratio indicates that Bank of New York Mellon Corp is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Chesapeake Granite Wash Trust’s Value Grade

Value Grade:

Chesapeake Granite Wash Trust (the Trust) is a statutory trust. The Trust is formed to own the producing wells and development wells (the Royalty Interests) for the benefit of the Trust unitholders. The Royalty Interests are derived from Chesapeake Energy Corporation's (Chesapeake's or the Trustor's) interests in the underlying properties, all of which are located within an area of mutual interest (the AMI) in the Colony Granite Wash play in Washita County in the Anadarko Basin of western Oklahoma. The Trust owns certain royalty interests in oil, natural gas liquids and natural gas wells in Washita County, Oklahoma producing from the Colony Granite Wash play within the broader Granite Wash formation of the Anadarko Basin. Its trustee is The Bank of New York Mellon Trust Company, N.A.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Chesapeake Granite Wash Trust has a Value Score of 80, which is considered to be undervalued.

Chesapeake Granite Wash Trust’s price-earnings ratio is 3.3 compared to the industry median at 13.8. This means that it has a lower price relative to its earnings compared to its peers. This makes Chesapeake Granite Wash Trust more attractive for value investors.

Chesapeake Granite Wash Trust’s price-to-book ratio is lower than its peers. This could make Chesapeake Granite Wash Trust more attractive for value investors when compared to the industry median at 1.06.

You can read more about Chesapeake Granite Wash Trust’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Hywin Holdings Ltd - ADR’s Value Grade

Value Grade:

Hywin Holdings Ltd is a China-based company mainly engaged in the provision of third-party wealth management service. The Company primarily provide wealth management services, insurance brokerage services, asset management services and other services. Its wealth management solution platform serves its clients across lifecycles and both onshore and offshore. Its privately raised products consist of real estate products, and private equity and venture capital funds products.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Hywin Holdings Ltd - ADR has a Value Score of 93, which is considered to be undervalued.

Hywin Holdings Ltd - ADR’s price-earnings ratio is 2.5 compared to the industry median at 13.8. This means that it has a lower price relative to its earnings compared to its peers. This makes Hywin Holdings Ltd - ADR more attractive for value investors.

Hywin Holdings Ltd - ADR’s price-to-book ratio is higher than its peers. This could make Hywin Holdings Ltd - ADR less attractive for value investors when compared to the industry median at 1.06.

You can read more about Hywin Holdings Ltd - ADR’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Safeguard Scientifics Inc’s Value Grade

Value Grade:

Safeguard Scientifics, Inc. is a provider of capital and relevant expertise to technology-driven businesses. The Company holds interests in 8 non-consolidated companies. The Company offers strategic, operational, and management support to certain of its ownership interests. Through its strategic support, the Company offers strategic direction to certain of its ownership interests, which include defining short and long-term strategic goals; identifying and planning for the critical success factors to reach these goals; identifying and addressing the challenges and operational improvements; and identifying sources of and providing capital to drive growth. Through its management and operational support, the Company serves on the boards of directors of its partner companies, working with them to develop and implement strategic and operating plans. It measures and monitors the achievement of these plans through regular review of operational and financial performance measurements.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Safeguard Scientifics Inc has a Value Score of 96, which is considered to be undervalued.

Safeguard Scientifics Inc’s price-to-book ratio is higher than its peers. This could make Safeguard Scientifics Inc less attractive for value investors when compared to the industry median at 1.06.

You can read more about Safeguard Scientifics Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Westwood Holdings Group, Inc.’s Value Grade

Value Grade:

Westwood Holdings Group, Inc. through its subsidiaries, manages investment assets and provides services. It provides investment advisory services to institutional investors, a family of mutual funds called the Westwood Funds, other mutual funds, individuals and clients of Westwood Trust. The Company?s segments include Advisory and Trust. The Advisory segment provides investment advisory services to corporate pension and profit-sharing plans, public employee retirement funds, Taft-Hartley plans, endowments, foundations and individuals, sub-advisory. It also provides investment management services to the Westwood Funds. The Company?s advisory business investment capabilities: United States Value Equity, Multi-Asset, Energy and Real Assets, Tactical Absolute Return, and Income Alternatives. The Trust segment provides trust and custodial services and participation in common trust funds that it sponsors to institutions and high-net worth individuals.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Westwood Holdings Group, Inc. has a Value Score of 91, which is considered to be undervalued.

Westwood Holdings Group, Inc.’s price-earnings ratio is 9.5 compared to the industry median at 13.8. This means that it has a lower price relative to its earnings compared to its peers. This makes Westwood Holdings Group, Inc. more attractive for value investors.

Westwood Holdings Group, Inc.’s price-to-book ratio is higher than its peers. This could make Westwood Holdings Group, Inc. less attractive for value investors when compared to the industry median at 1.06.

You can read more about Westwood Holdings Group, Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Investment Management & Fund Operators Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Investment Management & Fund Operators stocks as well as other industrys.

Choosing Which of the 5 Best Investment Management & Fund Operators Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Bank of New York Mellon Corp stock has a Value Grade of B.
• Chesapeake Granite Wash Trust stock has a Value Grade of B.
• Hywin Holdings Ltd - ADR stock has a Value Grade of A.
• Safeguard Scientifics Inc stock has a Value Grade of A.
• Westwood Holdings Group, Inc. stock has a Value Grade of A.

Now that you have a bit more background about each of the 5 undervalued stocks in the Investment Management & Fund Operators industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Investment Management & Fund Operators Stocks

Want to learn more about Investment Management & Fund Operators stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 5 Undervalued Investment Management & Fund Operators Stocks for Tuesday, February 20
• 4 Undervalued Investment Management & Fund Operators Stocks for Monday, February 19
• 7 Undervalued Investment Management & Fund Operators Stocks for Friday, February 16
• Why Hercules Capital Inc’s (HTGC) Stock Is Up 4.85%

AAII Disclaimer

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