Value Returns

“As the opportunities to add value increase so does the personal risk, the career risk and the business risk, until finally there will be incredible opportunities to make money . . .  that no one will dare to take advantage of. We would like at least to be the last ones trying.”

– Jeremy Grantham

In their most recent quarterly letter, GMO’s Ben Inker speculates that future financial historians may declare that the release of vaccine trial data in November 2020 marked the start of the great Value rally of the 2020s.

That would be consistent with our experience, as we outlined for investors on Broyhill’s quarterly call last month.  The first word of an effective vaccine sent the world’s cheapest stocks surging the most on record relative to their faster-growing peers, as investors rotated out of expensive COVID beneficiaries and into depressed value stocks poised to gain from a COVID recovery.

Given the magnitude of their underperformance and the scale of the discount at which Value stocks are trading, we think November’s initial surge was just a hint of what’s to come. 

We quantified the upside potential for value stocks on our recent call.  Click here or on the image below to access the presentation. And if you’d like to dial into future calls, you can send a request to Tim LeRoux at tim@broyhillasset.com