Research Article
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Year 2021, , 90 - 101, 30.06.2021
https://doi.org/10.17261/Pressacademia.2021.1394

Abstract

References

  • Bala, R. M., Prada, E. M. (2014). Migration and private consumption in Europe: A Panel Data Analysis. Procedia Economics and Finance, V.10, 141-148. https://doi.org/10.1016/S2212-5671(14)00287-1
  • Bellone, B., Carvalho, R. L. (2021). Value Investing: Capitulation or Opportunity? SSRN: https://ssrn.com/abstract=3796005 or http://dx.doi.org/10.2139/ssrn.3796005
  • Blitz, D., Hanauer, M.X. (2020). Resurrecting the value premium. The Journal of Portfolio Management, 47(2), 63-81.
  • Browne, C. H. (2007). The little book of value investing. New Jersey, John Wiley&Sons Inc.
  • Capaul, C., Rowley, I., Sharpe, W. F. (1993). International value and growth stock returns. Financial Analysts Journal. 49, 27-36. DOI:10.2469/FAJ.V49.N1.27
  • Fama, E.F. & French, K.R. (1992). The cross-section of expected stock returns. The Journal of Finance, 47(2), 427 - 465. https://doi.org/10.1111/j.1540-6261.1992.tb04398.x
  • Fama, E. F., French, K. R. (1998). Value versus growth: the international evidence. The Journal of Finance, 53(6), 1975-1999. DOI:10.2139/SSRN.2358
  • Gonenc, H., Karan, M. B. (2003). Do value stocks earn higher returns than growth stocks in an emerging market? Evidence from the Istanbul stock exchange. Journal of International Financial Management and Accounting, 14(1), 1-25. DOI: 10.2139/ssrn.266048
  • Graham, B. (1949). The intelligent investor: The definitive book on value investing. New York, Harper & Brothers.
  • Graham, B., Dodd, D. (1934). Security analysis. United States, Whittlesey House, McGraw-Hill Book Co.
  • Hakansson, E. and Kvarnmark, P., (2016). Value investing on the Nordic Stock Market does the magic formula constitute a viable strategy for outperforming the market? LUP Student Papers. Department of Economics. NEKH01-Bachelor Thesis, 20162.
  • Karcıoglu, R., Yıldırım, R. (2017). Değere dayalı portföy seçiminde çok amaçlı bulanık optimizasyon yönteminin kullanılması. Atatürk Üniversitesi iktisadi İdari Bilimler Dergisi, 31(4): 857-874, Retrieved from https://dergipark.org.tr/tr/pub/atauniiibd/issue/30589/296986
  • Klarman, S. A. (1991). Margin of safety: Risk-averse value investing strategies for the thoughtful investor. United States, HarperCollins.
  • Lakonishok, J., Shleifer, A. and Vishny, R. (1994). Contrarian investment, extrapolation, and risk. The Journal of Finance, 49(5), 1541-1578. https://doi.org/10.1111/j.1540-6261.1994.tb04772.x
  • Lee, C.M.C. (2014). Value investing: Bridging theory and practice. China Accounting and Finance Review (CAFR), 16(2), 2014-2019. DOI: 10.7603/s40570-014-0005-3
  • Mohanram, P. (2005). Separating winners from losers among low book-to-market stocks using financial statement analysis. Review of Accounting Studies, 10 (2), 133-170. DOI: 10.1007/s11142-005-1526-4
  • Pätäri, E., Leivo, T. (2009). Performance of the value strategies in the Finnish Stock Markets. Journal of Money, Investment and Banking, 2 (8), 5-24.
  • Piotroski, J. (2000), Value investing: The use of historical financial statement information to separate winners from losers. Journal of Accounting Research, 38 (Supplement), 1-41. DOI: 10.2307/2672906
  • Sareewiwatthana, P. (2014). PE growth and risk: Evidences from value investing in Thailand. Technology and Investment, 5(2), DOI:10.4236/ti.2014.52012
  • Sharpe, W. F., Capaul, C. And Rowley, I. (1993). International value and growth stock returns. Financial Analysts Journal, 49(1), 27-36 https://doi.org/10.2469/faj.v49.n1.27
  • Srivastava, A. and Lev, B., (2019). Explaining the recent failure of value investing. NYU Stern School of Business, SSRN, DOI:10.2139/ssrn.3442539

VALUE INVESTING ANALYSIS OF BANKING SECTOR ON BIST-100

Year 2021, , 90 - 101, 30.06.2021
https://doi.org/10.17261/Pressacademia.2021.1394

Abstract

Purpose- The main goal of this study is to apply the value investing criteria to a selected portfolio and to test the validity of basic value investment hypothesis. The return performance of the selected portfolio was examined over the other bank stocks in addition to assessing the risk and return criteria (Sharpe Ratio). The efficient ratio (Price/Book Value vs Price/Earnings ratios) in the formation of the selected portfolio is further explored. The paper aims to prove the existence of margin over P/B Value and P/E ratios to the banking sector in Turkey.
Methodology- A universe of 6 banks (3 state and 3 private) trading in BIST-100 were selected within the framework of this analysis. BIST-100, MATRIKS DATA™ database was used to compile data for six selected banking stocks, for the 95 months period between February 2011 to December 2018. The performance of the selected portfolio was benchmarked over the control portfolio for the relevant financial year.
Findings- In line with the results of the analysis and as observed in developed markets, the value investing strategies implemented for the selected banking shares listed in BIST-100, offer significantly high returns to the investors. Consequently, an investing strategy grounded on P/E ratio is more profitable than a value investing strategy relying on P/B ratio. The study thus demonstrates that the shares selected within the framework of the value investing concept garner superior returns compared to benchmark portfolio.
Conclusion- As observed in developed markets, the value investing strategies implemented for the selected banking shares listed in BIST-100 results in significantly high returns for the investors. An investing strategy grounded on P/E ratio is therefore more profitable than a value investing strategy relying on P/B ratio.

References

  • Bala, R. M., Prada, E. M. (2014). Migration and private consumption in Europe: A Panel Data Analysis. Procedia Economics and Finance, V.10, 141-148. https://doi.org/10.1016/S2212-5671(14)00287-1
  • Bellone, B., Carvalho, R. L. (2021). Value Investing: Capitulation or Opportunity? SSRN: https://ssrn.com/abstract=3796005 or http://dx.doi.org/10.2139/ssrn.3796005
  • Blitz, D., Hanauer, M.X. (2020). Resurrecting the value premium. The Journal of Portfolio Management, 47(2), 63-81.
  • Browne, C. H. (2007). The little book of value investing. New Jersey, John Wiley&Sons Inc.
  • Capaul, C., Rowley, I., Sharpe, W. F. (1993). International value and growth stock returns. Financial Analysts Journal. 49, 27-36. DOI:10.2469/FAJ.V49.N1.27
  • Fama, E.F. & French, K.R. (1992). The cross-section of expected stock returns. The Journal of Finance, 47(2), 427 - 465. https://doi.org/10.1111/j.1540-6261.1992.tb04398.x
  • Fama, E. F., French, K. R. (1998). Value versus growth: the international evidence. The Journal of Finance, 53(6), 1975-1999. DOI:10.2139/SSRN.2358
  • Gonenc, H., Karan, M. B. (2003). Do value stocks earn higher returns than growth stocks in an emerging market? Evidence from the Istanbul stock exchange. Journal of International Financial Management and Accounting, 14(1), 1-25. DOI: 10.2139/ssrn.266048
  • Graham, B. (1949). The intelligent investor: The definitive book on value investing. New York, Harper & Brothers.
  • Graham, B., Dodd, D. (1934). Security analysis. United States, Whittlesey House, McGraw-Hill Book Co.
  • Hakansson, E. and Kvarnmark, P., (2016). Value investing on the Nordic Stock Market does the magic formula constitute a viable strategy for outperforming the market? LUP Student Papers. Department of Economics. NEKH01-Bachelor Thesis, 20162.
  • Karcıoglu, R., Yıldırım, R. (2017). Değere dayalı portföy seçiminde çok amaçlı bulanık optimizasyon yönteminin kullanılması. Atatürk Üniversitesi iktisadi İdari Bilimler Dergisi, 31(4): 857-874, Retrieved from https://dergipark.org.tr/tr/pub/atauniiibd/issue/30589/296986
  • Klarman, S. A. (1991). Margin of safety: Risk-averse value investing strategies for the thoughtful investor. United States, HarperCollins.
  • Lakonishok, J., Shleifer, A. and Vishny, R. (1994). Contrarian investment, extrapolation, and risk. The Journal of Finance, 49(5), 1541-1578. https://doi.org/10.1111/j.1540-6261.1994.tb04772.x
  • Lee, C.M.C. (2014). Value investing: Bridging theory and practice. China Accounting and Finance Review (CAFR), 16(2), 2014-2019. DOI: 10.7603/s40570-014-0005-3
  • Mohanram, P. (2005). Separating winners from losers among low book-to-market stocks using financial statement analysis. Review of Accounting Studies, 10 (2), 133-170. DOI: 10.1007/s11142-005-1526-4
  • Pätäri, E., Leivo, T. (2009). Performance of the value strategies in the Finnish Stock Markets. Journal of Money, Investment and Banking, 2 (8), 5-24.
  • Piotroski, J. (2000), Value investing: The use of historical financial statement information to separate winners from losers. Journal of Accounting Research, 38 (Supplement), 1-41. DOI: 10.2307/2672906
  • Sareewiwatthana, P. (2014). PE growth and risk: Evidences from value investing in Thailand. Technology and Investment, 5(2), DOI:10.4236/ti.2014.52012
  • Sharpe, W. F., Capaul, C. And Rowley, I. (1993). International value and growth stock returns. Financial Analysts Journal, 49(1), 27-36 https://doi.org/10.2469/faj.v49.n1.27
  • Srivastava, A. and Lev, B., (2019). Explaining the recent failure of value investing. NYU Stern School of Business, SSRN, DOI:10.2139/ssrn.3442539
There are 21 citations in total.

Details

Primary Language English
Subjects Finance, Business Administration
Journal Section Articles
Authors

Ozlem Ozarslan Saydar This is me 0000-0001-8427-6298

Canpolat Bedir This is me 0000-0002-3847-5779

Publication Date June 30, 2021
Published in Issue Year 2021

Cite

APA Ozarslan Saydar, O., & Bedir, C. (2021). VALUE INVESTING ANALYSIS OF BANKING SECTOR ON BIST-100. Journal of Economics Finance and Accounting, 8(2), 90-101. https://doi.org/10.17261/Pressacademia.2021.1394

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