I do not know much about this asset manager named “Euclidian Technologies” other than they invest in quantitative value strategies, but their fourth quarter 2015 investor letter has some interesting evidence that now is the time to invest in “value” stocks (versus “growth” stocks). The piece is long, but I am looking through and finding interesting tidbits!
We believe that now is a very attractive time to invest in value strategies. Following similar times in the past, value investors achieved both strong absolute returns and robust relative performance versus the broad market indexes. In this letter, we explore what history can teach us about what is to come. We also review Euclidean’s investment approach to explain how we are positioned to capitalize on this opportunity.
Our confidence in Euclidean’s investment philosophy comes from using machine learning to study the history of public companies and their market values. Over the past 50 years, abundant evidence shows that it would have been fruitful to buy companies that were priced very low in relation to their earnings. Moreover, our own research suggests that this has particularly been the case for companies that also have a combination of consistent operations, good returns on capital, and balance sheet strength. This is why we formed Euclidean: to oversee a systematic process that seeks to invest in good companies at very low prices.
[Continue reading on Euclidian’s website]
Learn More!