Value Stocks Not Left for Dead Yet

Although the value strategy has been “in crisis” of late, a recent Bloomberg article suggests, “let’s not take the panic too far.” It says, “Yes, on a relative basis, the buy-cheap philosophy has been a loser, particularly to more voguish quant strategies when deployed in a hedge fund long-short portfolio. At the same time, very few things can really be said to have done badly in the current bull market. AT least on an absolute… Read More

A London Gathering—and Reckoning–for Value Investors

A recent article in Bloomberg offers insights on the outlook for value investing, highlighting a recent talk given at a London conference by Inigo Fraser Jenkins, head of quantitative strategy for Sanford C. Bernstein. In the wake of the strong performance of value in September, Fraser Jenkins shared with the audience that he was barraged with questions: “Is this it? Is this the beginning of the value rally that we’ve been waiting for for years… Read More

GMO Excerpts: The Comeback Trail of Value Investing

A recent article in FT Alphaville offers insights from GMO’s Head of Asset Allocation Ben Inker regarding the potential for a value reversal, as outlined in the firm’s third quarter letter to investors. The article summarizes his comments: “In short, the current market reminds him of 2000—when the Nasdaq bubble peaked, and EM debt was ebbing near its lowest points—and that’s reason for some cautious optimism.” Here are some highlights: Noting that performance of some… Read More

Shift from Momentum Proves Boon or Einhorn’s Greenlight Capital

David Einhorn’s Greenlight Capital hedge funds gained 8.4% in September, bringing average weighted returns for the year to 24%, the company reported. This according to a recent article in Bloomberg. “Einhorn, who has remained committed to his strategy of buying beaten-down stocks while shorting growth companies, is in the midst of a resurgence following his worst year on record,”‘ the article  reports, adding that in 2018 his firm lost 34% in its main fund. That… Read More

O’Shaughnessy Insights on Value’s Terrible Performance

In a recent interview on the Bloomberg Markets Odd Lots podcast, O’Shaughnessy Asset Management (OSAM) co-CIO Chris Meredith talked about value’s long period of underperformance and shared some insights regarding the outlook and potential catalysts for a reversion. Here are some highlights from Meredith’s comments: Big technological discoveries have led to value’s underperformance. To gain perspective, OSAM looked at data going back to 1926 to see if there were any other periods with similar characteristics.… Read More

The Revival of Value Stocks Could Be the ‘Real Deal’

Some signs are pointing to a value-stock rotation, according to a recent article in Barron’s that says, “value stocks are acting like a tightly wound spring that has started to uncoil.” The article reports that value has outperformed momentum by 9 percentage points in September, the “widest divergence in performance between the two factors (for stock attributes) since 2010, wrote Bank of America Merrill Lynch head of U.S. equity and quantitative strategy Savita Subramanian in… Read More

Why Return Skewness Offers Some Hope for Value Investors

By Jack Forehand, CFA (@practicalquant) It is no secret that value investing strategies have struggled for a long time now. The extended period of underperformance has tested the patience of many value investors and has led some to abandon the approach entirely. Adding to the frustration have been the frequent calls from some well-known value investors that we are at or near the end of this period of underperformance and that value is about to… Read More

Cheap Stock-Hunting Back in Favor

Value stocks have underperformed growth “in all but one year,” but saw a shift last week. This according to a recent article in The Wall Street Journal.  On Monday, September 9th, the article reports that value stocks “had one of their best days relative to growth shares since the financial crisis,” with the trend continuing into Tuesday the 10th. The article suggests that one possible factor is the rebound in Treasury yields, “as investors sold… Read More

Value Investing: Improving the Odds

The yield curve may identify periods where the value premium is more attractive, according to research published by quant firm FactorResearch. The article presents findings from a study using data from the Kenneth French library and the U.S. Federal Reserve showing that, since 1971, the “performance of the Value factor was negative when the yield curve was flattening:” “We observe that the returns of the Value factor were negative when the yield curve was flattening… Read More

Swedroe: Keep Believing in Warren Buffett Despite Berkshire’s Underperformance

The stock market may be “crushing” Berkshire Hathaway, but that doesn’t mean Warren Buffett has lost his touch, according to a recent MarketWatch article by Larry Swedroe, chief research officer at the Buckingham Family of Financial Services. The problem isn’t that Buffett is off his game, writes Swedroe, but rather that “the value premium in U.S. stocks has been negative for more than a decade. Since Buffett’s investment strategy has always been value-oriented, this might… Read More