Understanding What Defines a Value Stock Manager
Feb 26, 2026What truly defines a value stock manager?
According to Merriam-Webster, value is defined as the monetary worth of something, a fair return in exchange, or its relative importance, utility, and desirability.
Nasdaq defines a value manager as one who seeks to buy stocks that are at a discount to their "fair value" and to sell them at or in excess of that value. Traditionally, value managers would run screens to identify stocks that were “cheap” based on a variety of valuation metrics, such as price-to-earnings, price-to-book, price-to-sales, price-to-cashflow, etc. The problem with focusing only on such metrics is that while sometimes a cheap stock can be a “good buy,” often times it can be a “goodbye.”
Historically, bank stocks have traded at a discount to broader market indices, which is why many value managers tend to overweight the sector. In 2007, we held a couple of bank stocks, but the growing housing bubble mania made us increasingly uneasy. When the first auction rate preferred securities failed, we exited our bank holdings—and we have not owned any since. Some might ask, “What have you missed by avoiding this space?” The answer is “very little.”
The KBW NASDAQ Bank Index which tracks the performance of the world’s leading banks (designated as Globally Systemically Important by the FSB and Basel Committees) is an equal weighted index currently composed of 27 banks. Since December 2006, it has delivered an annualized total return (including dividends) of just 2.15%—a disappointing outcome compared with the broader MSCI All Country World Index (ACWI) annualized total return of 8.36%, the standard benchmark for global equity investors. While there were periods when the sector offered trading opportunities, its weak performance over nearly two decades underscores the structural headwinds facing this historically ‘cheap’ area of the market.
To gauge whether a stock genuinely represents value, we believe it is necessary to consider a broader range of factors beyond conventional valuation measures. The factors include: the company’s capacity to compound growth over time, the quality and progression of its operating metrics—such as gross and operating margins—and the durability of the competitive moat that protects its business. Each of these elements contributes meaningfully to a more comprehensive and rigorous evaluation of intrinsic value.
MAP’s Investment Team adheres to the Warren Buffett / Charlie Munger philosophy that value investing involves not just buying cheap stocks but acquiring high-quality businesses with durable competitive advantages at reasonable prices. This is why Apple was one of Berkshire’s largest holdings for years, despite carrying valuation levels that many traditional value managers would have avoided. Furthermore, we believe in using a multi-faceted valuation process that looks to enter securities prior to catalyst-driven inflection points utilizing stock-specific catalysts, with the objective of unlocking value over time.
The markets frequently blur the lines between value and growth. At times, growth is priced as certainty. At other times, cyclicals are priced for disaster. Labels like “value” and “growth” rotate in and out of favor. But enduring value is not a style box – it is a philosophy rooted in fundamentals, discipline, and patience. Importantly, value also evolves over time. Changing economic conditions, technological disruption, and geopolitical headwinds all influence how markets price risk and opportunity. What constitutes value in a zero-percent interest rate world may look different in a higher-cost-of-capital environment.
As an Investment Team, we do not rely on outdated definitions, but continually reassess what constitutes prudent, risk-adjusted opportunity. Our role is to translate market dynamics into portfolios that serve our clients’ long-term objectives. In markets—as in life—value is rarely obvious in real time. It demands perspective, discipline, and conviction. And while investors may differ on the precise definition, we believe value is grounded less in near term price movements and more in the enduring intrinsic worth a business can compound over time, supported by durable fundamentals and a margin of safety.
Managed Asset Portfolios Investment Team
Michael Dzialo, Karen Culver, Peter Swan, Zachary Fellows, and Nicolas Vilotti
February 2026
Certain statements made by us may be forward-looking statements and projections which describe our strategies, goals, outlook, expectations, or projections. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those expressed or implied by such forward-looking statements. The information contained herein represents our views as of the aforementioned date and does not represent a recommendation by us to buy or sell this security or any other financial instrument associated with it. Managed Asset Portfolios, our clients and our employees may buy, sell, or hold any or all of the securities mentioned. We are not obligated to provide an update if any of the figures or views presented change.
