Value Dislocation and the Case for Systematic Value Investing
Value strategies in single stocks have faced a long stretch of underperformance, and that pressure has opened unusually wide gaps between cheap and expensive companies. In our view, these gaps matter, because systematic value investing rests on the idea that extreme valuation spreads tend to normalize over time. This recorded session examines why spreads reached levels last seen at the end of the technology boom, what history suggests about how they resolve, and why a rigorous, multi-metric definition of value can behave very differently from a simple value-minus-growth index. We also discuss why a market neutral structure lets the value idea drive returns independent of market direction. The aim is not to forecast any single stock or the broad market. Instead, the session shows how a disciplined, rules-based process measures mispricing consistently and positions for a return to more normal valuations.
What We Cover
- Why valuation spreads between cheap and expensive stocks widened to historically extreme levels.
- What the historical record suggests about how wide spreads tend to normalize, and over what horizon.
- How a sophisticated, multi-metric definition of value differs from simple index-based value.
- Why comparing companies within industries, rather than across them, isolates genuine value differences.
- How a market neutral construction seeks returns that do not depend on the market rising or falling.
Key Takeaways
- Extreme valuation spreads tend to normalize. Valuation offers a rare, measurable sense of how far prices sit from fair value, and when spreads reach extremes, history suggests they compress back toward normal.
- Spread compression has historically driven strong value returns. When wide spreads narrow, returns to value tend to follow, though the timing of that normalization is less predictable than the eventual direction.
- How value is measured matters as much as the decision to own value. A refined, multi-metric definition of value has historically proven more resilient than a simple value-minus-growth approach, with lower downside.
- Like-for-like comparison isolates real mispricing. Comparing companies only with their industry peers, rather than across sectors, avoids mistaking sector composition for genuine value.
- Cheapness alone is not enough. Additional signals help steer a portfolio away from value traps, where a stock is persistently cheap for a reason.
The Presenters
Deepak Gurnani, Founder and Chief Investment Officer
Deepak Gurnani is the Founder and Chief Investment Officer of Versor Investments. Deepak has three decades of experience in applying quantitative methods to uncover alpha across global equity markets. Over the past decade, he has focused on pioneering the use of AI and alternative data in equity investing.
DeWayne Louis, Founding Partner, Capital Formation
DeWayne Louis joined Versor Investments as a Founding Partner and is based in New York. DeWayne has over 20 years of experience in quantitative investment strategies, investment banking, private equity and hedge funds.
Ludger Hentschel, Founding Partner, Investment Advisor
Ludger Hentschel joined Versor Investments as a Founding Partner and is based in New York. Ludger has over 20 years of experience in quantitative research and investing.
Disclaimer: Past performance is not necessarily indicative of future results. Participation in this webinar is limited to Qualified Eligible Participants (QEPs) as defined under applicable regulations. For informational purposes only. Not an offer to sell or a solicitation of any type with respect to any securities or financial products. This webinar was conducted in collaboration with Middlemark Partners.
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