Value investing often takes the form of investing in companies that are currently out of favor with the markets, which means the general investment community. Sometimes, it may take the form of investing in great companies that are selling at a fair price, which may be companies that were once growth investor darlings, but have now entered their mature days. A great value investor stock portfolio would display a range of characteristics that covers both these aspects. A common underlying theme however is that a great value investor never overpays for a company, and thus automatically builds in a floor on the investment.

In a great value investor stock portfolio, you will find companies that are selling below the long-term trend of their Price to Earnings (P/E) ratio. This may have occurred owing to a temporary setback in the business, a drop in earnings, a reduction in growth rate, or a long-term structural change in the industry characteristics. This phenomenon also occurs in cyclical stocks, such as in the automobile industry or other commodity industries where the demand follows a fairly predictable up/down cycle spread out over 3-4 years.

All the companies in a great value investor stock portfolio would be viable and strong companies, and generally not facing a financial or bankruptcy crisis. While there are some specialists who deal with those cases, as a stock investor, a great value investor would stay away from those situations.

Obviously, when a company is in some distress, or facing a re-organization or re-planning, the only thing one can place one's faith in is the management team in the company. Every company in a great value investor stock portfolio would have an experienced management team with a great track record. A change in management at this stage may not be a good sign, and the stock may need to be sold.

Many stocks in a value investor's portfolio would reflect companies whose comeback plans would already be afoot. In other words, it won't just be words, but a lot of action that has occurred to execute the plans. At this stage of execution, the results of the action would not have been reflected in the earnings, and thus the company would continue to be cheaply valued, but the progressions towards the end goal would ensure confidence in the company.

Finally, the companies in a great value investor stock portfolio would be in "old" economy companies and generally be quite boring for those who are always looking out for new ways to do things.

Take a look at the publicly displayed list from some great value investing mutual funds such as Dodge & Cox Stock Fund and Legg Mason Value Trust. At Dodge & Cox for example, you will the names of companies such as Xerox and Dow Chemical - which are stars from a bygone era, but continue to have a solid business with good plans to grow their earnings reliably. You will then see names such as Wal-Mart, Dell, Sun and Time Warner - which have been growth stocks in the recent past, but their size or a fundamental change in the industry has caused them to somewhat out of favor with the market, finally causing their stock price to be more reasonably valued (great companies at good prices). You will also see some cyclicals such as Alcoa (Aluminum - commodity) and Chevron (Energy Sector - commodity) which are in the upswing phase of their cycle.

Keeping the above characteristics in mind and studying the portfolios of great mutual fund holdings, you will quickly have a great value investor stock portfolio for yourself.