The Acquirer's Multiple: How the Billionaire Contrarians of Deep Value Beat the Market

by Tobias E. Carlisle

For each stock, Oppenheimer worked out the discount to its cigar-butt value. He put the stocks into five groups, from the most undervalued to the most expensive. The most undervalued group beat the next group and so on. The most expensive group had the lowest returns. The most undervalued group beat the most expensive group by more than 10 percent a year. Oppenheimer’s second finding is his most interesting one. He split the stocks into two groups. One had only profitable stocks, and the other, only loss makers. Oppenheimer found the loss makers beat the profitable group. His third finding is also interesting. He split the profitable group again. The first group was comprised of dividend-paying stocks. The second group paid no dividend. Oppenheimer found the stocks that didn’t pay a dividend beat the ones that did.