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.


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