Michael Wiggins de Oliveira rejoins the Marketplace Roundtable Podcast to discuss his investing experience as reflected in his Deep Value Returns service.
As the name of his research service suggests, Wiggins de Oliveira specializes in deep value, focusing on companies that generate strong free cash flow. His model is Warren Buffett's run from 1956 to 1969 when Buffett generated 30% annual returns for his partnership. The idea is to buy companies that are out of favor and cheap.
This is difficult to accomplish today when most equity markets are richly valued. This requires investors to even more selective than usual. It is important to scrutinize a company's balance sheet carefully and think about the business' long term prospects. "You need to know that the business itself, the enterprise, should have a huge staying power, three, five, 10 years down the road," Wiggins de Oliveira says.
The boom in passive investing funds is one item of concern at present. The result of the proliferation of passive funds is that a lot of companies' shares get purchased by virtue of inclusion in an ETF or index, and not because of the underlying value of its business. "At some point when this bubble pops and a lot of retail investors come out of passive funds it's going to be a difficult environment with mass selling," Wiggins de Oliveira says. While passive funds are certainly important in many ways, "I'm not sure retail investors are going to be able to withstand the downturn when it comes. And it will come."
For his part, Wiggins de Oliveira, has "stuck to my guns" and doing his utmost to be very careful with capital deployment. Even cheap value stocks can go down in price but at some point they do hit a bottom. 
Topics Covered
2:00 minute mark - Investing strategy

3:45 - Important lesson learned about investing

7:00 - View of the current market and outlook

11:00 - Are there many companies that don't pay dividends and also don't repurchase shares?

14:45 - Concerns about the market/portfolio

18:00 - What gives you confidence in your approach?

21:30 - Favorite ideas (BBBY) (IPI)


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