Value Funds Now Have A Larger Universe To Choose From

As the market has dropped over the last six month, the lower prices have resulted in lower P/E ratios for many companies, even in the face of lower earnings (see WSJ article). While earnings could continue to fall, lower prices are currently offering value investors more opportunities than they may have had in the past as once high-flying technology, energy, health care, and bio-tech companies are now looking attractive. Many of these same stocks were sold-off as hedge funds were forced to liquidate positions in the wake of increased redemption requests. The fact that now both growth and value managers are looking at some of the same companies could produce an increase in buying pressure and stock price appreciation in the short-term for growth companies that were previously widely held.