02.04.2021
The Lead - "Defensive Investing – 20 Years Later"
- The dynamics of market participants paying rich valuations for fashionable stocks are evident in 2021, just as they were when Benjamin Graham wrote his book on value investing in 1949 and in one of our first investor communications titled “Defensive Investing” from 2001.
- Bloomberg noted this month that trillions of dollars are pouring into market capitalization-weighted index funds, and that, as a team of researchers from Michigan State, the London School of Economics, and California-Irvine noted, fund flows over the past 20 years may have disproportionately increased the price of the largest stocks in the market relative to smaller-cap companies.
- We would note that these disparities appear to be impacting relative valuations as, per month end, the top ten companies (ranked by weight) in the S&P 500 Index were trading at 29x their forward earnings estimate, while the other 490 companies were trading at over a 30% discount.
- Just as when we started 20 years ago, we remain committed to the same investment approach that served us well over that timeframe, as we seek to take advantage of these opportunities to source promising investments for our clients.
01.07.2021
The Lead - "Value in Perspective"
- We look beneath overall market performance to highlight potential opportunities pertaining to disparities between growth and value as well as large caps and small caps, amidst some historic anomalies.
- While the outperformance of growth stocks relative to value stocks over the past 14 years is among the longest in terms of style cycles, the performance difference between large growth and small value is even more pronounced.
- We highlight the concentration of the S&P 500® Index and institutional investors in a relatively small number of stocks.
- With relatively low portfolio turnover in our fundamental equity strategies, and by owning stocks that differ from the benchmark, we adhere to processes that Empirical Research Partners suggests may enable investment managers to generate outperformance over time.
12.03.2020
The Lead - "The Health of Healthcare Stocks"
- The S&P 500® Index was up 14% at the end of November, but healthcare was one sector that did not fully participate.
- However, we would note that in many instances, underperformance ahead of presidential elections tends to be followed by outperformance, as healthcare was among the most consistent outperformers of any S&P 500 sector (75% of the time) after a presidential election, per Ned Davis Research.
- Several of our equity strategies have added healthcare positions in 2020 in anticipation of brighter days ahead.
