Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 4 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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4 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 4 undervalued stocks in the Investment Management & Fund Operators industry for Tuesday, March 12, 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.

Federated Hermes Inc’s Value Grade

Value Grade:

Federated Hermes, Inc. is an investment management company. The Company operates through a single segment, being the investment management business. It sponsors, markets and provides investment-related services to various investment products, including sponsored investment companies and other funds (Federated Hermes Funds); and Separate Accounts, which include separately managed accounts (SMAs), institutional accounts, sub-advised funds and other managed products in both domestic and international markets. In addition, it markets and provides stewardship and real estate development services to various domestic and international companies. The Company provides investment advisory services to approximately 180 Federated Hermes Funds. It markets these funds to institutional customers and banks, broker/dealers and other financial intermediaries who use them to meet the needs of customers and/or clients, including, among others, retail investors, corporations and retirement plans.

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.

Federated Hermes Inc has a Value Score of 68, which is considered to be undervalued.

When you look at Federated Hermes Inc’s price-to-sales ratio at 1.85 compared to the industry median at 3.63, this company has a lower price relative to revenue compared to its peers. This could make Federated Hermes Inc’s stock more attractive for value investors.

Federated Hermes Inc’s price-earnings ratio is 11.63 compared to the industry median at 14.07. This means it has a lower share price relative to earnings compared to its peers. This could make Federated Hermes Inc more attractive for value investors.

Now, let’s assess Federated Hermes Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 6.6, when compared to the industry median of 14.8, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

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. Federated Hermes Inc’s shareholder yield is higher than its industry median ratio of 3.29%. 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. Federated Hermes Inc’s price-to-book ratio is higher than its industry median ratio of 1.11. This could make Federated Hermes Inc less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Federated Hermes Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Federated Hermes Inc’s price-to-free-cash-flow ratio is higher than its industry median ratio of 13.18. This could make Federated Hermes Inc less attractive because the higher P/FCF ratio indicates that Federated Hermes Inc 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.

Mentor Capital Inc’s Value Grade

Value Grade:

Mentor Capital, Inc. is an operating, acquisition, and investment business. The Company has investments in the medical marijuana, cannabis, energy, manufacturing, and management services sectors. The Company operates through two segments: Cannabis and Medical Marijuana Segment and Facilities Operations Related. The Cannabis and Medical Marijuana segment includes the operation of subsidiaries in the cannabis and medical marijuana sectors. The Company has a legacy investment in Waste Consolidators, Inc. (WCI), which works with business park owners, governmental centers, and apartment complexes to reduce their facility-related operating costs. WCI?s waste management and disposal services include waste consolidation, bulk item pickup, general property maintenance, and one-time clean-up services. The Company's subsidiaries include WCI, Mentor IP, LLC, Mentor Partner I, LLC, Mentor Partner II, LLC, and TWG, LLC.

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.

Mentor Capital Inc has a Value Score of 95, which is considered to be undervalued.

Mentor Capital Inc’s price-to-book ratio is higher than its peers. This could make Mentor Capital Inc less attractive for value investors when compared to the industry median at 1.11.

You can read more about Mentor Capital 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.

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 95, 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 1.11.

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.

Source Capital Inc’s Value Grade

Value Grade:

Source Capital, Inc. (the Fund) is a diversified, closed-end management investment company. The investment objective of the Fund is to seek maximum total return for common shareholders from both capital appreciation and investment income to the extent consistent with protection of invested capital. The Fund's investments include semiconductor devices; industrial distribution and rental; cement and aggregates; Internet media; cable and satellite; application software; electrical components; chemicals; insurance brokers; diversified banks; base metals; banks; investment companies; food services; integrated utilities; railroad rolling stock, apparel, footwear and accessory design; e-commerce discretionary, hotels; restaurants and leisure; commercial and residential building equipment and systems; automotive retailers; real estate owners and developers; entertainment content; energy; health care services and others. The Fund's investment adviser is First Pacific Advisors, LP.

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.

Source Capital Inc has a Value Score of 61, which is considered to be undervalued.

Source Capital Inc’s price-earnings ratio is 6.4 compared to the industry median at 14.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Source Capital Inc more attractive for value investors.

Source Capital Inc’s price-to-book ratio is higher than its peers. This could make Source Capital Inc less attractive for value investors when compared to the industry median at 1.11.

You can read more about Source Capital 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 4 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.

• Federated Hermes Inc stock has a Value Grade of B.
• Mentor Capital Inc stock has a Value Grade of A.
• Safeguard Scientifics Inc stock has a Value Grade of A.
• Source Capital Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 4 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.

• 4 Undervalued Investment Management & Fund Operators Stocks for Tuesday, March 12
• 4 Undervalued Investment Management & Fund Operators Stocks for Monday, March 11
• Why AlTi Global, Inc’s (ALTI) Stock Is Up 4.42%
• 3 Undervalued Investment Management & Fund Operators Stocks for Friday, March 08

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.