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Why a Winning Value Fund Likes Amazon and Real Estate Services Stocks

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It’s a sad fate that befalls numerous value investors: buying cheap stocks that screen as highly attractive on a variety of valuation criteria, then watching them stay frustratingly cheap as declining fundamentals justify their discount.

But effective value investing is about more than just looking for cheap stocks, says C.T. Fitzpatrick, founder, CEO, and CIO of Vulcan Value Partners, based in Birmingham, Ala. (That’s “Vulcan” as in the hard-laboring blacksmith and Roman god of fire whose colossal statue towers over Birmingham—not the extraterrestrial humanoid species from Star Trek.)

A value investor still needs to own high-quality, defensible businesses. The value lens just defines the entry point: when a stock’s price falls meaningfully below its intrinsic value. That gives it a “margin of safety,” a term coined by Benjamin Graham, the father of value investing.

“The future is going to come at you and it’s going to do what…

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