Much has been made of the demise of value investing in recent years. This paper will highlight:
Hotchkis & Wiley explores potential catalysts for improvement in an unloved industry.
US valuation spreads are currently at levels last seen during the depths of the financial crisis, creating an unprecedented opportunity for value investors. In the equity markets, the ratio of the lowest quintile of stocks to median stock PE ratios is well over three standard deviations, a level that bodes well for future returns of value stocks. For instance, the Russell 1000 Value Index’s P/B and P/E are currently in the lowest quintile compared to its own history. Similar observations have been made across the market cap spectrum. Extreme value dislocations like we are currently witnessing are rare, and history suggests these market dislocations tend to revert to normal levels, particularly coming out of a significant market downturn like the one we are experiencing now.
Learning Objectives:
Participants will learn:
2019 was a very unusual year. Domestic growth whipsawed from strong (over 3%) to concerning (just over 1%). This volatility was compounded by both domestic and global headline factors: a very public trade dispute and very weak global growth.