One of my favourite value investing sites is The Value Perspective which is the web outlet for some of the (value) fund managers over at Schroders. In their latest piece, Andrew Lyddon talks about how the telecoms sector is not exactly a hot favourite. Despite the sectors deserved reputation as a defensive play, share prices often fallen and lagged far behind the wider market and even other defensive sectors.
Andrew comes to the same startlingly obvious conclusion that I did when I recently invested in Vodafone. 10 years ago, telecoms companies were horrendously overvalued as part of the dot com bubble. Over the years since 2000, their prices have come down even as the actual businesses have grown. Every year, as these companies grow and as their share priced fell further, they became better value.
At some point, they become good value. For Vodafone, I think that time is now. But for many investors, they will just look at the share price and how it has gone down for years and think that Vodafone is anything but a good investment.
Going against the tide may be hard, but it’s the bread and butter of successful value investing.