Value Equity
We believe that:
- Stocks that are relatively inexpensive with cyclically improving earnings should provide superior returns.
- Valuation disparities tend to correct over time, but cheap stocks are more likely to outperform when unexpected positive news raises expectations.
- Real value should be visible across multiple metrics and not distorted by accounting.
- Buying when returns and margins are historically low and rising may reduce risk and enhance returns.
- Favorable price momentum and low volatility can improve risk-adjusted returns.
We want to invest where:
- Valuation is attractive;
- Fundamentals provide a margin of safety;
- Sales and earnings are recovering from recently depressed levels;
- Investor expectations are still too low.