Methodologies, Valuation, Value Investing

Frederick (Fritz) Reynold’s Valuation Methodology (Reynolds Funds)

The points here are summarised from an interview with Fritz Reynolds (Reynolds Funds) conducted by Kirk Kazanjian in his book Wizards of Wall Street.

  • Look for companies with above-average growth characteristics, strong unit growth (>= 13%), are well managed, and enjoy good pricing power.
  • Often that might be the number one or two company in the industry. It could also be economies of scale or worldwide growth.
  • Many times it’s a very profitable company with high return on equity.
  • It has balance sheet that’s strong, maybe no more than 30% debt.
  • Use the PEG ratio (P/E divided by growth rate) as a valuation yardstick. If PEG is 1.25, and interest rates are very high, stocks are a good value. When interest rates are near a 30-year low, the average PEG is 1.5 to 2 for many of the companies ,and they are good values.


No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

Copyright © 2005 – 2018 All Rights Reserved.

Enter your email address to follow this blog and receive notifications of new posts by email.


Blog Stats

  • 582,553 hits
%d bloggers like this: