Uploaded August 2024 | Updated September 2026, 1 week ago
Session Description: In this session, I look at value investing, at least as practiced by many in the space, as focused primarily on middle aged firms, trading at attractive prices. While value investing has an appealing mix of story and numbers, I look at the returns earned by value investors and find little cause for celebration. Active value mutual funds underperform value index funds by more than active growth mutual funds underperform their index counterparts. While there are pockets of outperformance among individual and activist value investors, the overall conclusion that I reach is that active value investing does not deliver on its promise. We close the session by looking at possible reasons for this gap between promise and practice.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch16.pdf
Exercise:
a. If you had the capital and the capacity, do you think you would be an activist value investor? If yes, why? If no, why not?
b. As a public market investor, what approach to investing in mature companies offers the best odds for you? Why?
Session Description: In this session, I look at value investing, at least as practiced by many in the space, as focused primarily on middle aged firms, trading at attractive prices. While value investing has an appealing mix of story and numbers, I look at the returns earned by value investors and find little cause for celebration. Active value mutual funds underperform value index funds by more than active growth mutual funds underperform their index counterparts. While there are pockets of outperformance among individual and activist value investors, the overall conclusion that I reach is that active value investing does not deliver on its promise. We close the session by looking at possible reasons for this gap between promise and practice.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch16.pdf
Exercise:
a. If you had the capital and the capacity, do you think you would be an activist value investor? If yes, why? If no, why not?
b. As a public market investor, what approach to investing in mature companies offers the best odds for you? Why?
