Investment Masters' Stock Picks: Value Investing Expert's Strategy

Liberty Times' "Wealth Freedom" channel, in partnership with Taiwan Economic News, has launched a new investment strategy feature focusing on value investing, inspired by the principles of renowned investor Charles Brandes. This initiative aims to simplify investment management for readers by applying the stock-picking logic of prominent Western investors to the Taiwanese stock market.

The current feature highlights Charles Brandes, a former student of Benjamin Graham, who founded Brandes Investment Partners in 1974. Under his leadership, the firm grew its managed assets from $130 million to over $75 billion. His Brandes Global Equity Fund achieved a 17.91% annualized return over twenty years, significantly outperforming the MSCI World Index and earning multiple awards. Brandes is known for adhering to the core tenets of value investing, rejecting reliance on future predictions and emphasizing "margin of safety" and a company's intrinsic value, with a philosophy of medium to long-term holding.

To accurately reflect Brandes' investment philosophy, the research quantifies his ideas, substituting net asset value for traditional discounted cash flow models. A backtesting framework was developed to evaluate the strategy's performance using historical market data. This article details the data processing, backtesting design, and performance analysis, aiming to demonstrate the viability and robustness of Brandes' value investing approach within a quantitative framework.

The "margin of safety" concept is central to Brandes' strategy. It refers to the buffer created when an asset's intrinsic value exceeds its market price. This principle aims to mitigate risk by ensuring that even if future business operations or market conditions turn unfavorable, the potential for loss is reduced due to purchasing the asset at a sufficiently low price. The study utilized data from all listed companies on the Taiwan Stock Exchange and the GreTai Securities Market, collecting stock prices, financial statements, and director shareholding information from 2013 onwards. The backtesting period was set from January 1, 2020, to April 21, 2025, to ensure data integrity and rigorous strategy testing.