- A strong 12 months with a 42 per cent total return vs 36 per cent from the market
- A 147 per cent return since inception seven years ago vs 78 per cent from the market
- Simply loads of new ideas for value fans
When accountancy professor Joseph Piotroski came up with his system to identify companies with improving prospects, he married it with a measure of value that was highly regarded among academics at the time: the price-to-book (P/BV) ratio.
The P/BV ratio is great in theory. The book value of a company should tell investors two important things. One is an indication of what value may be salvageable for shareholders in the doomsday scenario that a company goes out of business. The other more important thing the ratio should indicate is the size of the asset base from which a company seeks to generate profits. Often value stocks have seen profitability sag, so having an idea about the raw potential for profit in sunnier times can be extremely helpful.