Equity Dislocation Strategy

Ben Inker addresses some of the objections we hear from investors who are hesitant to join us in betting strongly on value today.

We share our thoughts about the Equity Dislocation Strategy’s results thus far and current opportunity at the 9-month anniversary.

Profitable trades never happen in a straight line. Growth may have beaten Value in June, but our Equity Dislocation thesis remains intact. Value still deserves to win, by a lot.

The S&P 500 is full of great companies with great prospects. We don’t dispute that. But that is missing the point. Our worry is the prices you are paying for that growth.

The signs of speculative excess in the stock market today are obvious. Speculative booms provide entertainment and outsized profits while they are happening, but they do generally burst painfully.

We believe Value is priced to repeat the same dominance over Growth that we witnessed in the period after 1999.

Growth still looks extremely expensive relative to Value. An actively managed long Value/short Growth portfolio can exploit this phenomenon.

It is commonly assumed that growth stocks are longer duration than value stocks, but an analysis of the drivers of return for value and growth shows that their durations are much closer than most realize.

After more than a decade of disappointing performance, Value stocks just experienced their worst 12-month performance in history. This has left these stocks trading at some of the cheapest levels relative to the market we have eve...