By David Marcus

"In the middle of difficulty lies opportunity" - Albert Einstein

The worst economic and market disruption since the era of the Great Depression has profoundly changed the rules for business engagement and success around the world.  But at the same time, opportunities will abound, both internally and externally, for managers to unlock the value inherent in their companies-to the benefit of discerning investors.

What's required is for management to take necessary transformative steps that position their companies to respond to new imperatives and outpace their competitors for the long term.  Not all corporate management teams will do so.  Identifying those that will-through an in-depth, personal assessment of the team itself-is a cornerstone of a highly active approach to value investing.

Active value is a methodology based on seeking out undervalued businesses undergoing significant strategic changes and taking advantage of these opportunities through investments across the capital structure. The approach demands careful evaluation of whether a company can achieve its strategic plans and projections-a process that draws its best support from practical business and operating experience as well as long relationships with managers globally.

It's not a hedge fund approach that focuses on finding and profiting from small inefficiencies via significant use of leverage, with significant risk.  Rather, active value is an "old school" approach; its goal is to find companies with real value, trading at substantial discounts, with a real margin of safety.

Active value is well suited to the emerging opportunities of a changed and demanding business environment-and worthy of the attention of advisors seeking to build a globally focused, value component into portfolios.

Global Recovery Creates Opportunities For "Transformation"

It's become clear that time will be needed to repair and rehabilitate economies globally and that the days of "business as usual" are behind us.

Global GDP, which declined by 2.2% in 2009, is expected to grow 2.7% this year and 3.2% in 2011, according to the World Bank.  But growth won't proceed at the same pace throughout the world.  For example, the Morgan Stanley Global Economic Forum estimates that U.S. output will expand by 2.8% in 2010, but that the "euro area" economies will grow by less than half that rate (1.2%). Japan, according to the forum, could fall back into recession sometime later in 2010. Real GDP growth among emerging economies is forecast to reach almost 5% in 2010, with the rebound driven by China, India and a number of other vibrant Asian nations, according to the International Monetary Fund.

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