A more worldly approach
Thanks to the Internet and other new technologies, all the world's a market for today's value seekers

October 18, 2001

Whether it's applied to stocks in Canada, the United States or Thailand, the style of value investing never changes. Value managers compare a stock's price to the underlying company's earnings, cash flow, book value and sales. They assess the company's management and evaluate the company's prospects against other businesses in the same sector. Some value investors may give more weight to one set of numbers than another, but all of them look for undervalued stocks that promise to regain their value over time.

Until the 1990s, value investors had an easier time assessing the stock of a domestic company than that of a foreign company because of their proximity to management and the ease with which they could get financial information about a domestic firm. But in recent years, value investors have gained access to more information than ever about companies all over the world.

"Most companies post their latest investor information right up front on the Internet," says Gavin Ivory, vice-president of International Equities for Beutel, Goodman & Company Ltd. in Toronto. "It makes managing an international fund a lot easier. And it's exponentially better than it was 10 years ago," adds Ivory, who has worked in the investment industry for 21 years.

"We have Bloomberg and other sources of information available," adds Irwin Michael, portfolio manager of ABC Funds in Toronto, who invests through one of his funds in U.S. value stocks. "We can participate in conference calls and use the Internet. We can talk to analysts who follow a stock, so we're no farther away in theory than a value investor in Iowa."

The convergence of accounting standards throughout the world has also made it easier for value investors to compare stocks in different countries. Likewise, regulations and investment-industry pressure have encouraged management to disclose more information on a more timely basis. "So service providers such as Bloomberg, Standard & Poor's and Reuters can package data with a higher degree of confidence," says Ivory.

Whether you're looking at Canada or another country, Ivory adds, "the most important factor in selecting investments is the company itself. Our biggest job is to get the company right. The sector is the second most important factor and the country is third."