Value investors believe these companies are undervalued due to temporary issues, market overreactions, or broader economic conditions.
The approach is long-term, as value investors wait for the market to recognize the company's actual value, which may take time.
On a podcast earlier this year, well-known hedge fund manager David Einhorn of Greenlight Capital lamented that modern-day passive investors pay no attention to "value" of the companies they buy.
Outcome Scenarios : If the stock price stays above the strike price, the option expires worthless, allowing the investor to keep the premium as profit.
If the stock price falls below the strike price, the option buyer will likely exercise it, obligating the seller to buy the stock at the strike price.
Persons:
Benjamin Graham, Warren Buffett, David Einhorn, CNH
Organizations:
Greenlight, Deere & Co, Agco Corp, Farmers, CNBC, NBC UNIVERSAL