The Forester Value Fund is a diversified, no-load mutual fund for investors seeking long-term investment returns, with added emphasis on capital protection in unfavorable market conditions.
The Fund generally buys stocks with exceptional appreciation potential, due to the stock's price being significantly below the intrinsic value of the company – Forester Capital’s estimate of the amount a buyer would pay to own the entire company. Forester Capital performs its own fundamental analysis of the company.
Forester Capital believes that if it buys more earnings, assets and dividends with each investment dollar than its benchmark, it should perform well. Thus the Fund places special focus on companies whose current market prices are low in relation to:
Price-to-cash flow ratio
Earnings estimates for the next 12 months
Five-year return on equity
Securities may be undervalued as a result of overreaction by investors to unfavorable news about a company, industry or the stock markets in general or as a result of a market decline, poor economic conditions, or actual or anticipated unfavorable developments affecting the company. This undervaluation may lead to great appreciation potential for the security.
The Fund may sell a stock when Forester Capital thinks the stock is too expensive compared to Forester Capital’s estimate of the company’s intrinsic value, changing circumstances affect the original reasons for a company’s purchase, a company exhibits deteriorating fundamentals or more attractive alternatives exist.
Under normal market conditions, the fund invests at least 65% of its net assets (at market value at the time of purchase) in the common stocks of large companies that have market capitalizations greater than $8.0 billion. The Fund may also invest in preferred stocks, convertible securities, warrants and foreign securities. The Fund may also invest in stock and stock index futures, options to buy and sell such futures, mutual funds and exchange traded funds.
We use risk control to preserve capital and enhance returns by avoiding over-valued markets. This can be done by buying options, futures or other instruments, or going to cash to adjust market exposure. The Fund avoided the down equity market by taking a defensive position, using bonds and cash to eliminate market exposure from inception through June, 2002. It was in a similar defensive position from October, 2002 through April, 2004. The Fund has also used various levels of cash and index puts to limit downside risk from 2005 through 2008.