David Dreman (1939, Winnipeg, Manitoba, Canada) is a noted value contrarian investor. Dreman has been at the cutting edge of research into contrarian investing for over three decades, he is also the founder, Chairman and Chief Investment Officer of Dreman Value Management, an investment company.

Dreman graduated from the University of Manitoba in 1958. His background is in finance, Dreman’s father, Joseph Dreman was a prominent trader on the Winnipeg Commodity Exchange for many years.

David Dreman commenced his career in finance. After Dreman graduated he worked as director of research for Rauscher Pierce, then as a senior investment officer with Seligman and a senior editor of the Value Line Investment Service.

Dreman then went on to set up his own firm, Value Management which manages assets of mutual funds, pension, foundation, and endowment funds, as well as high net-worth individuals.

The Dreman fund family was bought by Kemper, which was bought by Scudder, which itself was then acquired by Deutsche Bank.

David Dreman has published many scholarly articles, he has written four books and he also writes for a Forbes magazine.

Dreman is on the board of directors of the Institute of Behavioral Finance, publisher of the Journal of Behavioral Finance.

David Dreman has been at the cutting edge of research into contrarian investing for over three decades

INVESTMENT STYLE

David Dreman is a famous contrarian value investor. In other words, Dreman would search for unpopular stocks and deliberately act against the current market mood he would buy the stock.

For example, when OPEC suggested it would never cut production and no one wanted to own oil stocks Dreman would buy oil stocks.

When OPEC caved and energy stocks climbed 24% in 2016 Dreman stood to make a handsome profit.

David Dreman would focus on the cheapest 20% of stocks in the market based on fundamental analysis, such as price-to-earnings, price-to-book, and price-to-cash flow. He also favors a contrarian high dividend yield approach.

He would prefer to buy larger company stocks with signs of earnings growth and financial strength. As soon as a company looks overvalued against the market, its price weakens or its fundamentals deteriorate, he would sell it.

We invest in undervalued companies that exhibit strong fundamentals, above-market dividend yields and historic earnings growth, which our analysis indicates will persist. Our strategy is to own strong, fundamentally sound companies and to avoid speculative stocks or potential bankruptcies – David Dreman

LEARNING RESOURCES

David Dreman is a prolific writer with already a number of books to his name. They are as follows:

Contrarian Investment Strategy: The Psychology of Stock Market Success. 1980. Random House. ISBN 0-394-42390-9;
The New Contrarian Investment Strategy. 1982. Random House. ISBN 0-394-52364-4;
Contrarian Investment Strategies: The Next Generation. 1998. Simon & Schuster. ISBN 0-684-81350-5;
Contrarian Investment Strategies: The Psychological Edge. 2012. Free Press. ISBN 0-743-29796-2.

David Dreman’s over three decades of research into contrarian value investing and behavioral finance provides investors with many scholarly articles to read.

Below is a sample of some of the most relevant articles today:
Bubbles and the Role of Analysts’ Forecasts. David Dreman, 2002
The Journal of Psychology and Financial Markets (now The Journal of Behavioral Finance) and Do Contrarian Strategies Work Within Industries? David Dreman and Eric Lufkin, 1997. Journal of Investing.

If you play it out long enough it blows up – David Dreman

CONNECT WITH INVESTOR

Follow this World Top Investor via their various social media channels and read more about their background and current investment interests on their official website:

David Dreman
www.dreman.com/

TRADING SOFTWARE

Dan Loeb targets Sony. Dan Loeb is an activist investor and founder of Third Point, which oversees about $14.5 billion in assets.

Last year the activist investor viewed Campbell soup as a bargain when Third point reported that the soup maker could fetch a takeover value of $52 to $58 per share.

A year later and the activist investor Dan Loeb targets Sony

Dan Loeb's activist hedge fund Third Point is raising an investment vehicle to generate between $500 million and $1 billion so it can continue to buy Sony shares, according to a recent report in Reuters.