Rich Pzena on the Outlook for Value Investing
Pzena Investment Management is well-known among financial institutions but is new to the advisor community. The firm was started by Rich Pzena, my guest today, in late 1995. It ended the first quarter of 2021 with $49.2 billion in AUM, which is an all-time high, and it has had positive net flows for the past four years. Rich and I will talk about the global deep value discipline his firm is known for, as well its concentrated, high-active-share strategies, and its bottom-up methodology that is focused on company-level research.
Examining the Environment for Microcap Stocks
The smallest companies in the market may be overlooked by many investors, but can offer big potential. Here, we posed some questions about micro-capitalization (microcap) stocks to Franklin Mutual Series Portfolio Manager Oliver Wong, who explains how they have fared recently and where he’s finding opportunities.
Consumer Price Index: April Headline at 4.16%, Largest Increase Since 9/2008
The Bureau of Labor Statistics released the April Consumer Price Index data this morning. The year-over-year non-seasonally adjusted Headline CPI came in at 4.16%, up from 2.62% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 2.96%, up from 1.65% the previous month and above the Fed's 2% PCE target.
Concentrating on Success
Outperforming the market, requires looking different than the market. Actively managed, concentrated portfolios are one way to help diversify risk while adding to alpha potential and can be a welcome complement to passive allocations. At Diamond Hill, our equity strategies range from concentrated to highly concentrated—learn more about two of our highly concentrated strategies: Large Cap Concentrated and All Cap Select.
Inflation: It’s Just the Start
To say that we were surprised by some of the discussion at the Berkshire Hathaway Annual Meeting would be an understatement. The conversation Warren Buffett and Charlie Munger leaned into on inflation was possibly the most interesting. Warren and Charlie gave large credit to Larry Summers for his willingness to stand alone on the effects of today’s fiscal and monetary policy on prices. We thought this was an ideal time review Buffett and Munger’s discussion and see what conclusions we could draw.
The Fall of the Titans!
The performance of a market-cap-weighted index is driven by a handful of stocks with the largest capitalizations, but these stocks do not remain at the top for long. A smart beta multi-factor strategy is a good solution for investors concerned about the concentration risk of a passive market-cap tracker.
Long-Term Trends in Employment by Age Group
The Labor Force Participation Rate (LFPR) is a simple computation: You take the Civilian Labor Force (people age 16 and over employed or seeking employment) and divide it by the Civilian Noninstitutional Population (those 16 and over not in the military and or committed to an institution).