Why don't value investors hold value stocks?
Why don't value investors hold value stocks? I tracked the buying activity of Warren Buffett, Bill Ackman, Terry Smith, Mohnish Pabrai, and Seth Klarman, to see how much their portfolios overlap with value indices. I thought overlap would be high as these are the most well-known names in value investing. However, the results suggest otherwise. Does this mean these icons have moved on from value or are indices missing the mark? Admittedly, most would classify Ackman and Smith as more quality investors, looking for compounders rather than cigar butts. Regardless, I kept them in as a fun exercise. Afterall, both Smith and Ackman mostly follow the core tenet of value investing, buying companies for less or equal to than intrinsic worth. Data and methodology I sourced the last 5 years of holdings from 13F’s, filtering for buying activity only. Sells were not considered as they can due to non-valuation factors, like redemptions or rebalancing, whereas buys are the cleanest signal of an ...