S&P Value Led by Consumer, Health Stocks

Bill Smead is chief investment officer at Smead Capital Management.

SEATTLE (TheStreet) -- Oppenheimer's chief market strategist, Brian Belski, put out a great piece of research last week -- "U.S. Strategy Weekly: Shifting Focus to Value Over Growth" -- on the composition of the companies that make up the value half of the market capitalization of the S&P 500 .

The index is divided into growth and value partitions by the factors listed in the following table. High ratios in the growth factors show investors expect a bright or growing future. High yields in the value factors infer low future expectations on the part of investors.

The two accompanying charts appear to "paint a thousand words." The first chart shows the number of companies in the value side of the index has grown immensely in the last 15 years. We believe it is not unusual for this to happen in the aftermath of a major market decline.

Number of Companies Within S&P 500 Value Index Value Index Source: Oppenheimer Asset Management Strategy

The second chart shows which sectors of the S&P 500 Value index are the most overrepresented and underrepresented today as compared with the average of the index over the last 15 years.

Sector Composition of the S&P 500 Value Index Source: Oppenheimer Asset Management Strategy

We have only begun to decipher the "thousand words," but here are a few translations. First, what would have caused the growth half of the index to require far fewer companies than before to equal 50% of the S&P 500's market capitalization?