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ERROR: type should be string, got "https://www.wsj.com/articles/SB93975979853187952\nValue Is As Value Does\nBy Lawrence Strauss\nUpdated Oct. 12, 1999 7:20 pm ET / Original July 15, 2019 4:56 pm ET\nHiggins' Favorite Stocks | Performance Snapshot | Top Holdings\nA fter showing signs of a comeback in the second quarter, long-suffering practitioners of value investing took it on the chin yet again in the third quarter. Nevertheless, Peter I. Higgins, who manages the Dreyfus Midcap Value Fund , has stayed ahead of the pack. In 1999, the fund's total return is 15.22%, beating the S&P 500 by more than five percentage points, putting it in the top 5% of Morningstar's Midcap Value category. Over the last year, the fund has garnered an eyepopping 72% return, almost twice the S&P's performance over that period. (The fund lost 9% in the third quarter, however.) And Higgins' approach is decidedly old-fashioned: find out-of-favor stocks whose P/E multiples are at the low end of their historical ranges, then sell as soon as the stock hits its price target. Higgins, who has managed the fund for four years, holds an undergraduate degree from the University of Pennsylvania as well as an MBA from Penn's Wharton School of Business.\nBarron's Online: What is your investing philosophy?\nHiggins: It is a bottoms-up approach where we are trying to take advantage of what we believe are inefficiencies in the market, mainly by focusing on under-followed, misunderstood stocks. [We] also look at stocks where we may be able to catch a turn or inflection point in their business, where business may be getting more favorable.\nQ: What do you focus on?\nA: The overriding emphasis is on valuation. We are not going to pay extreme prices for stocks. There are a lot of very cheap stocks out there, and we are very disciplined about what we are willing to pay. Having said that, we are more interested in looking at stocks that are cheap against themselves as opposed to stocks that are cheap against the market.\nQ: Do you mean relative to historical valuation?\nA: Correct. We prefer to buy stocks that are at the low end of [their historical] averages as opposed to looking at relative P/Es, or relative price to book, relative to the broader market.\nQ: Why is that?\nA: Because frankly, the S&P 500, which is how most people define the broader market, in our opinion is not cheap. But there are plenty of very cheap stocks. So, if you play the relative valuation game, you are sort of fooling yourself.\nPerformance Snapshot\n(Total Return as of October 8, 1999)\nYear-to-Date 1-year 3-year*\nDreyfus Midcap Value 15.22% 72.11% 16.14%\nS&P 500 9.75% 37.53% 26%\n*annualized\nSource: Morningstar\nQ: What kind of turnover rate do you have in the portfolio these days?\nA: It is probably at least 200%.\nQ: That means you hold stocks for around six months. So you turn over your holdings quite fast -- for a value-oriented fund?\nA: That is more a function of the market, which is probably more volatile than I have ever seen it before. When you buy a stock that tends to perform very well in a very short period of time, and it reaches your target price, you are not doing a proper service to our clients by maintaining that position if we think it is fairly valued. So we sell those and buy something else.\nQ: What sort of scenarios do you look for?\nA: Is there an inflection point in the business? Could revenues accelerate relative to consensus expectations? Can margins expand? Is the balance sheet getting better? Can a company do something to unlock value, whether it is a significant buyback of stock, or cutting costs, or breaking up the company?\nQ: What's your read on the market today?\nA: We have, in my opinion, unusual circumstances in the market today in that valuation is being absolutely ignored by the market people [who] are playing price-momentum games because they are working. And [they are] selling stocks regardless of valuation, if they have disappointing earnings.\nQ: You have been adding to your energy holdings. What give you confidence in the sector?\nA: First and foremost, the valuation, which is where we start everything. And valuations of numerous companies are still at the very low end of where they historically traded. I believe in regression to the mean. I believe that the past is a precursor for the future.\nQ: Why is your portfolio overweight in retail?\nA: I think there are a lot of good values within retail. We have a lot of stocks trading there at six, seven, eight, nine times earnings, and it doesn't make a lot of sense. So we are overweight there, and the business dynamics are fine.\nQ: You are not concerned about the economy slowing down and consumer spending patterns changing a little bit?\nA: That is certainly is a possibility, but I don't see any signs of that right now. If there is a recession, then the retail stocks can do incredibly well. Maybe not. But I am not an economist, and I am not predicting where the economy is going. All I do know is that these individual stocks in that sector are trading at levels as though we are going into a recession.\nQ: What about technology holdings?\nA: We have taken the weighting down. Technology did incredibly well for us. The latter part of last year when people were thinking the world was coming to an end in terms of technology, we made a big bet in a lot of different names and did very well. But some of those names have, even though they have gone higher, met our target prices.\nDreyfus Midcap Value Fund\n(Top Holdings as of June 30, 1999)\nCompany Ticker\nTech Data TECD\nVenator Group Z\nQuest Diagnostics DGX\nToys \"R\" Us TOY\nSt. Paul Companies SPC\nSafety-Kleen SK\nSterling Commerce SE\nLam Research LRCX\nUnion Pacific Resources UPR\nCypress Semiconductor CY\nHiggins' Favorite Stocks"