Aaron Hugh Braun is an experienced and successful classic long/short manager and investor, affiliated with Willow Creek Capital Management

While the strong form of market efficiency hypothesis claims that prices always reflect all available public and private information and therefore show the intrinsic value of companies, value investing relies on preconditions that contradict this theory. Value investors look for times of inefficiency when the market determines an inaccurate price per share. A company with an intrinsic (fair) value of $20 per share but traded for $15 will, as we know, be an attractive investment for value invest...

While the strong form of market efficiency hypothesis claims that prices always reflect all available public and private information and therefore show the intrinsic value of companies, value investing relies on preconditions that contradict this theory. Value investors look for times of inefficiency when the market determines an inaccurate price per share. A company with an intrinsic (fair) value of $20 per share but traded for $15 will, as we know, be an attractive investment for value investors. If the stock price drops to $10 per share, this could mean an increase in the risk. If, however, Aaron Hugh Braun or other the investors continues to maintain the internal value of $20 per share, they will appreciate the declining price as an opportunity for an even better deal. The better the deal (the higher the return from its inherent value the share is traded), the risk is smaller. While such investors are certain in their judgment, the decline in price can be seen as a fruitful trend. One well-known method of stock selection used by Aaron Hugh Braun is the net asset method. It reads as follows: If the shares of a company are traded at two-thirds of the value of its current assets, no other value measure is needed. The arguments behind this are as follows: if the company is traded at this level, the buyer receives, in essence, all the fixed assets of the company (including property, equipment, etc.) and company intangible assets. Unfortunately, very few companies are very rarely traded at such low prices. The discussion of the value investment can not be fully exhausted without mentioning the use of the margin of safety - a simple but rather efficient technique with Willow Creek Capital Management. Value investment is not as attractive with Aaron Hugh Braun as some other types of investment - it relies on a rigorous survey of the company. But do not forget that there is nothing boring to achieve profitability over the market.