Abstract
Value strategies published in 1934 proposed from Graham Todd (securities analysis), after that they were beginning to concern by academia. The concept of the central value of value strategies was that the margin of safety. The margin of safety mean that investor purchase on the stock with lower price than its’ intrinsic value of the one, and ensures to earn satisfied return in a quite safety situation. Almostin a bad situation such as recession or depression and the firms are in trouble that the price is in quite lower than its’ intrinsic value. Because of the poor past performance, contrarian strategiespurchase the stock with underestimated price compared to intrinsic value. The strategy supposed that other investors underprice the company with poor past performance and overprice the company with well past performance. We still use simple measures, like book-to-market, cash flow-to-price and earnings-to-price to test contrarian strategy’s performance. But we take capital expenditure into consideration to form the free cash flow to test contrarian strategies.