The Focus Value model, managed by Analytic Investment, uses algorithms to help them take advantage of mispricing opportunities due to market inefficiencies. The algorithms assist by continually computing a relative value for stocks based on their fundamental factors, which allows the model managers to quickly spot price-based opportunities brought on by market inefficiencies and buy or sell accordingly. The model has a high turnover.
The top position in the model is UFP Technologies Inc (NASDAQ: UFPT), a company that creates foam and plastic products along with specialty fabrics. They have a relatively low price to earnings ratio when compared to peers. Their net revenues dropped from $110 million in 2008 to $99.2 million in 2009, and their total liabilities grew from $16.8 million in 2008 to $20.4 million in 2009. Their quarter two 2010 financial results showed their liabilities dropping to $19.9 million and reflected a 43 percent increase in sales from the same quarter during 2009. The stock hit a low closing price of $3.54 on March 9th, 2009, a low it hadn’t seen since it closed at $3.55 on May 8th, 2006.
The next largest holding in the model is WHX Corp (NASDAQ: WXCO), an industrial company that delivers its products globally. WXCO has a relatively high price to earnings ratio compared to competitors and their net revenues fell to $534.4 million in 2009 from $725.8 million the year before. Their total liabilities fell from $441.4 million in 2008 to $371.6 million in 2009 but their quarter two 2010 financial results show their liabilities rising to $391.6 million. They also reported a 31.8 percent increase in sales compared to the same quarter in 2009. The stock fell to an all-time low on July 21st, 2009, when it closed at a price of $1.20. While it still hit many bumps after that time, the stock closed at $9.85 on October 1st, 2010.
