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Value Focus Rewards Long Term Investors

Volatility can create serious value for careful investors.

Amid some recent volatility, many investors may be looking away from the indices that have garnered manager-beating returns for almost 10 years straight.

The same goes for stock pickers as popular stocks like Amazon (AMZN) - Get, Inc. Report  and Facebook (FB) - Get Facebook, Inc. Class A Report encountered some tough treading in recent months and took down FAANG-focused portfolios.

As such, it may be an opportunity for fundamental-driven, active managers to win out.

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"Over the long term, value managers will do a lot better than an index," Neil Hennessy, CIO at Hennessy Funds told TheStreet. "We've seen this before where passive overtakes fundamentals, but it always comes back to fundamentals."

He added that he is looking for value in the price to sales ratios of companies, eschewing the high flying stocks like Twilio (TWLO) - Get Twilio, Inc. Class A Report and Netflix (NFLX) - Get Netflix, Inc. (NFLX) Report that have led the market in recent years, but come with larger potential downsides.

"Over the long term, the value investor will be rewarded," he said. "Whenever you're buying growth, you're paying up for something that might or might not happen in the future...if you buy a quality coat it's going to be with you a long time. If you don't, it's not going to be around too long."

For more on investing for the long term and the virtues of value investing, check out the video above.

For Neil's 2019 outlook and some specific stock picks in his mid-cap focused portfolio (HFMDX) - Get Hennessy Cornerstone Mid Cap 30 Inv Report , click here.