Pzena

Value stocks are hit harder in market drawdowns but come out of them faster and harder, according to research from Pzena Investment Management.

Valuations are so high in India that people need to have “completely given up hope” before Pzena wades in and makes an investment. It’s shopping in China while it waits.

For those looking to chase the growth tail and tip into what are a small clutch of highly priced equities, Pzena has a sobering history lesson. Meanwhile, the bounce-back for value portfolios could be “quite extreme”.

It’s been one of the most disappointing regions in the world in terms of performance, but Pzena Investment Management thinks China’s bombed-out equity market presents “a real win opportunity”.

The big technology companies are probably good companies, but the disconnect is in their valuations. For Pzena Investment Management, it’s 2000 all over again.

Owning the largest stocks has historically been a recipe for underperformance over every period, according to value house Pzena, but the madness of benchmark construction means some investors have few choices but to.

Rising interest rates and elevated stock multiples have brought down the equity risk premium and created a highly advantageous environment for value investors, according to Pzena Investment Management.

Teams from Pzena and Invesco scored highly against the Northern Trust-backed Essentia Analytics’ Behavioural Alpha Benchmark, a system designed to differentiate between luck and true investment nous.

Value investing is a lonely road, especially for those practitioners who are looking for real deep value rather than small arbitrages. The stocks they buy are very unloved, and they can stay that way for some time, while everyone else in the market thinks they are nuts.

A punishing, indiscriminate sell-off has left opportunities lying on the floor. After a 13-year “anti-value phase”, the style is coming back into style.