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Equity Insights

Exploring the value anomaly in European equity markets
27 November 2023
    Download the full reportPDF, 3.86MB

    The purpose of this paper is to show that there has been a misallocation of capital in recent years. Investors have been obsessed with growth stocks no matter what the price. They have also been avoiding lower growth companies no matter what the price. The result is overcrowded trades in the growth segment with no room to disappoint versus a wide range of neglected stocks in the value segment with ample room to improve and positively surprise.

    To illustrate our point of view, we analyse the relationship between stocks’ prices and their fundamentals. Looking at value stocks’ performance over the past 25 years, we also demonstrate that the last 5 years look like an anomaly, which has gradually created an investment opportunity.