Value investing is one of the simple concepts in finance that is difficult in practice. The concept is to buy stocks that are undervalued, wait until they are fully valued or even overvalued to capture a profit, and repeat the process with an increasing amount of wealth.

Many investors are value investors, but no investor has attained the success of Warren Buffett, the billionaire value investor who brings unique insights to the process of wealth creation. One reason value investing is difficult could be the fact that so many investors are using the same information.

There is, after all, a limited amount of information available to investors. There is the financial statement which report less than two hundred individual pieces of information. Here, many investors ignore much of the information available and focus on just more popular data.

There could be thousands of investors looking for stocks with low price to sales (P/S) ratios, low price to book (P/B) values or low price to earnings (P/E) ratios. This can be useful but is unlikely to result in an unusual level of success since so many investors are looking at that same information.

In an effort to find something that other investors are missing in their analysis, there are some investors who will look beyond the financial statements but remain in the realm of publicly available information. There is also a series of regulatory filing including many footnotes to the financial statements.

This is a more complex challenge since the information may not be easy to access. But it could be more rewarding and many investors, especially professional analysts and portfolio managers, will look at less popular data. But they may not talk freely about what they do, concerned they could sacrifice their personal edge by sharing their methods.

When Investment Pros Talk, It Could Pay To Listen

Because not all professionals will talk, it can be useful to pay attention to the ones that do, especially when the investment pro goes in depth discussing their techniques.

Barron’s recently interviewed Gordon Haskett analyst Don Bilson who, they noted, “takes an even less traditional approach. He calls his research “event driven,” although other investors prefer the term “special situations.”

Many individual investors will share Bilson’s goal:

“I’m looking for events that can move a stock more than 10%: mergers and acquisitions and corporate restructurings, including spinoffs. Management change is a big one. Another is changes in the shareholder roster.

That usually comes after a series of missteps, and can be a turnaround opportunity. Shareholder activism is in there, too, and occasionally, environmental matters.”

What’s important to consider is whether or not individual investors can work towards that same goal and Bilson says his process is accessible to individuals, noting

“You’d be surprised…. Everything we do is traceable to publicly available information. We’re not really dealing so much in innuendo, but what, exactly, are companies saying on conference calls? And by exactly, I mean that we parse the adverb.

If the adverb changes from quarter to quarter, we’re the ones to amplify that. Corporations stick to scripts. When they change the script, it means a lot.

And it’s overlooked. If you’re not paying close attention to it, you’ll miss the important pivots that companies are telling you [about] without really telling you.”

Transcripts of calls, and previous calls for comparison, are available on a number of web sites for free. Some companies make the calls available on their investor relations web site so that an individual investor could listen to the tone of the CEO’s voice, just like analysts do.

Now, one of the reasons value investing is difficult is because investors can find value, buy the stock and then the stock fails to move. This is the risk of a value trap, a stock offering value but instead presenting a trap to investors which traps funds that could be employed elsewhere.

To reduce this risk, Bilson “We watch price action pretty closely—which stocks are moving; why are they moving. What’s the volume behind these moves? Who owns the stock?”

Hidden Information Might Be Hiding In Plain Sight

Bilson also looks at data that is publicly available but maybe often ignored by many investors, professionals and individual investors alike. One factor that could be overlooked, and that Bilson finds useful is:

“CEO age is important. Older CEOs are dangerous CEOs. Older CEOs are the ones who make moves. So we pay very close attention to 62-, 63-, 64-year-old CEOs, especially those without succession plans. Those are the people who make news.”

Barron’s followed up a question, “Where do you find information about CEO succession plans?” and Bilson responded,

“Sometimes, it’s obvious—say, a promotion to chief operating officer made by a 64-year-old CEO. That person is going to be the CEO in two years—or six months. Sometimes, it’s three years. Sometimes, the successor is pretty obvious. Other times, it’s not. You have to use a little guesswork.”

Many investors might wonder where the information about a CEO’s age is available and the truth is the information is relatively easy to find. It is in SEC filings and on websites like Yahoo which shows the data under the company profile, as shown below.

The fact they hired a CEO from outside the company is significant to Bilson who said, “…by and large, if you make a commitment, bring a new guy to a new city and set him up with a new [pay] package, that company is not going to be sold for X amount of years. So, in a sale situation, I’d much rather an internal promotion.”

This could make a deal difficult but not impossible. Other companies he likes include those involved in potential “M&A in the [Texas] Permian Basin. Finally, after so much talk about M&A last March or April, Concho Resources bought somebody.

Energen was then sold to Diamondback Energy, and now you’ve got QEP Resources (NYSE: QEP) up for sale. Probably, some other businesses in that region will go, as well.”

QEP is a cheap stock whose CEO is about 61 years old. This could be an ideal buy in the sector.

Gold is often considered an investment, but others might believe it is more. The Asia Times recently noted, “gold quietly shapes our world.”

Gold is “very useful in medicine in the form of gold-containing drugs.

There are two classes of gold drugs used to treat rheumatoid arthritis. One is injectable gold thiolates – molecules with a sulfur atom at one end, and a chemical chain of virtually any description attached to them – found in drugs such as Myocrisin, Solganol and Allocrysin.

The other is an oral complex called Auranofin.

Gold is also increasingly being used in nanotechnology. A nanomaterial is generally considered a material where any of its three dimensions is 100 nanometers (nm) or less.

Nanotechnology is useful because it is not restricted to a particular material – any material could in principle be made into a nanomaterial – but rather a particular property: the property of size.

For example, gold in its bulk form has a distinct yellow color. But as it is broken up into very small pieces it starts to change color, through a range of red and purple, depending on the relative size of the gold nanoparticles.

Such nanoparticles could be used in a variety of applications, for example in the biomedical or optical-electronic fields.

Another exciting advancement for gold in nanotechnology was the discovery in 1983 that a clean gold surface dipped into a solution containing a thiolate could form self-assembled monolayers. These monolayers modify the surface of gold in very innovative ways.

Research into surface modification is important because the surface of anything can show very different properties than the bulk (that is, the inside) of the same material.

Gold nanoparticles have also proven to be an effective catalyst. A catalyst is a material that increases the rate of a chemical reaction and so reduces the amount of energy required without itself undergoing any permanent chemical change.

This is important because catalysis lies at the heart of many manufactured goods we use today. For example, a catalyst turns propylene into propylene oxide, which is the first step in making antifreeze.”

As an investment, some analysts believe now is an ideal time to buy gold. Kitco reported,

“Gold prices holding firmly above strong support at $1280 this year, even as the U.S. dollar’s strength has weakened gold’s currency component, is a testament to the metal’s institutional support. According to the World Gold Council, central banks added the highest level of gold reserves in 2018 in over 50 years.

China’s central bank also increased its gold reserves to 60.62 million ounces in March from 60.26 million in February. China has previously gone long periods without revealing increases in gold holdings.

When the central bank announced a 57 percent jump in reserves to 53.3 million ounces in mid-2015, it was the first update in six years. The latest pause was from October 2016 until December last year.

… the fundamental and technical factors I have mentioned in recent missives could still propel the gold price higher by later this spring.”

Barron’s noted that silver could be the better investment.

“It is difficult to be pessimistic about silver at these levels,” with prices that don’t provide an incentive to boost supply, says Maria Smirnova, senior portfolio manager at Toronto-based Sprott Asset Management.

“We expect silver to outperform gold,” says Smirnova. “Silver has lacked retail investment demand, so a sustained rally in gold will lead to the speculators coming and buying silver.”

Total physical demand for silver rose 4% last year, to a three-year high of 1.03 billion ounces, according to the Silver Institute’s World Silver Survey, compiled by a team at financial data and analytics provider Refinitiv.

The report … showed that global industrial silver demand fell 1% last year, to 578.6 million ounces. All told, silver’s physical market posted a “minor deficit” of 29.2 million ounces in 2018 which is considered to be close to in balance.

Source: Barron’s

Smirnova expects industrial demand to “remain stable, despite slower [economic] growth.” A recent forecast from the International Monetary Fund revealed expectations for global economic expansion of 3.3% this year, down from an estimated 3.5% in January.

“Silver does not represent large components of end products,” Smirnova explains, pointing out that electronics, cars, and medicines don’t use a lot of the metal per unit, so an economic slowdown probably won’t have a big impact on it. Its use in solar applications is also “insulated from economic growth” because that market is “more driven by government incentives and the need for renewable energy.” Instead, it’s the “return of retail investment demand [that] will be the driving force behind an increase in the silver price,” Smirnova predicts.

The World Silver Survey found that global investment in silver bars and coins grew 20% last year, with bar demand alone up 53%. The study also revealed a third consecutive annual decline in global production of the metal. It fell 2% in 2018, to 855.7 million ounces.

“Silver is cheap, at $15 [an ounce] as it is not encouraging new supply,” says Smirnova. “Primary mines are not generating a lot of cash at these levels or are losing money.”

Still, some analysts urge caution. Adam Koos, president of the Libertas Wealth Management Group, believes that silver is a “wait-and-see game” right now. However, he has recently detected “momentum [for gold] waning in favor of silver.”

Given that, he wouldn’t be surprised to see a “changing of the guard at some point in 2019, putting [silver] in the lead.” Koos adds, however, that he’d want to see prices break above $16 before risking any “serious capital.”

Investors seeking exposure to physical silver can consider Sprott Physical Silver Trust (ticker: PSLV), which Smirnova manages. Those interested in silver stocks might want to look at the Ninepoint Silver Equities Class funds, which are subadvised by Sprott Asset Management.

Exchange-traded funds focused on the metal include the iShares Silver Trust (SLV), as well as Global X Silver Miners (SIL) and Aberdeen Standard Physical Silver Shares (SIVR).

Traders are excited about driverless cars. They see a tremendous investment opportunity. Driverless cars, also referred to as autonomous vehicles, are designed to sense their environment and navigate roads without human input.

Autonomous vehicles rely on technologies like GPS and radar to study their surroundings and make intelligent decisions about the car’s direction and speed. Depending on how soon the vehicles are introduced and adopted, the implications for investors are potentially large.

Automated vehicles are quickly nearing a level of maturity that will allow manufacturers to start deliveries to consumers. A large group of companies are actively developing complete automated driving systems and the components that go into those systems.

This list includes traditional auto companies, suppliers, non-automotive technology companies, and startups. Several of these companies entered this market recently but rapidly moved into contention through acquisitions, investments, and strategic hiring of key personnel.

In short it is a competitive market and there will be winners and losers. The losers are likely to outnumber the winners, a situation that has historically been the case before. Barron’s recently reviewed the market and reached a possibly surprising conclusion.

“The United Kingdom has emerged as the No. 1 location on earth to support autonomous vehicles, or AVs, in a new analysis conducted by the Society of Motor Manufacturers and Traders, or SMMT. The U.K. lobby group has calculated that it will generate an economic boost of 62 billion pounds sterling ($81.1 billion) per annum by 2030, which will boost the U.K. economy and a range of firms.

But How Can Investors Benefit?

The key is to identify the sectors most likely to profit, and then some of the investible stars that lead the way in their fields.

The car makers are an obvious choice. The automotive giants with well-advanced AV programs are Daimler ’s Mercedes-Benz, Volkswagen’s Audi, and BMW; Ford Motor (NYSE: F) and Tesla (Nasdaq: TSLA); Tata Motors (NYSE: TTM) Jaguar Land Rover; and Nissan Motor.”

A long-term chart of Ford is shown below.

The stock is near multiyear lows and the concern for investors might be the market for nonelectric cars. Those cars, of course, make up the majority of the company’s business and could be a drag on Ford’s performance for some time.

A pure play in electric cars could be TSLA.

The chart shows the stock has delivered significant gains in the long term however the company has stumbled recently, largely on concerns that the company’s CEO, Elon Musk, is not focused enough on the company as he directs attention to other projects.

Barron’s continued, “Sajid Yacoob, head of global electric vehicles at Tata Consultancy Services, says that these stocks are well placed for growth because they are embracing change.

“When you see established OEMs [original equipment manufacturers] focus on autonomous activities, you see a bump in share prices,” he says. “This is because the market is moving away from traditional operations to this value-added business model.”

But the sectors extend to a bunch of less obvious industries—think technology, telecoms, transport, infrastructure, insurance, and legal. Once driverless cars are built, the next two vital components are telecoms and power.

AVs rely heavily on communications such as 4G and, eventually, 5G—the mobile connectivity that links them to the environment, such as intelligent traffic lights and road sensors.

Among these, Yacoob says, the strongest telecoms players are the U.K.’s Vodafone Group (Nasdaq: VOD) and EE, a joint venture between Germany’s Deutsche Telekom and Orange, formerly France Télécom.”

VOD is available in the US and the long term chart is shown below. This stock is also weighed down by the legacy business.

Barron’s concluded, “In terms of power, most of the auto makers are developing their own battery technology. Japan’s Nissan has built its own state-of-the-art battery plant in northern Britain.

Next up are the firms developing the software and hardware that allow cars to “talk” to the roads around them. These are electronic gadgets that sit inside vehicles that use wireless internet to synchronize with similar boxes placed at traffic junctions and along highways.

Yacoob highlights Germany’s Continental, a blue-chip stock on the benchmark DAX index that is probably best known for tires but is also a leader in electronics, as well as the privately owned engineering company Bosch.

In Europe, four countries, the U.K., the Netherlands, France, and Germany, are battling to be the first to deploy these autonomous robots on the roads. They believe that the technology will unlock economic growth, jobs, and wider improvements.

The rollout of the new infrastructure and new software and hardware will generate an estimated £18 billion for firms and create about 420,000 jobs, according to the SMMT. Investors could benefit from owning a piece of the firms delivering all of this.”

With so many of the potential investments in overseas markets, investors should consider their options carefully. Many large brokers allow investors in the US to access individual stocks in overseas markets directly through their accounts.

While this could be tempting to some investors, the risks should not be ignored. Investing in stocks in other countries carries many of the same risks that investing in stocks on US markets carry. That includes company specific risks along with risks associated with the stock’s sector and the broad stock market.

These stocks carry additional risks including risks associated with currencies. One large broker notes, “U.S. stocks can be impacted by the value of the dollar relative to currencies of other countries.” And adds,

“International investments involve additional risks, which include differences in financial accounting standards, currency fluctuations, geopolitical risk, foreign taxes and regulations, and the potential for illiquid markets.”

While the risks may be acceptable to some, they must be considered, especially when investing in new technologies. Another factor that must be considered is the issue of taxes.

Investing in foreign stocks can require additional tax forms and the work involved may not be worth the effort for smaller investments. For smaller investors exchange traded funds could offer the best way to access international markets.