Hotchkis & Wiley believes their recent under-performance is temporary. An excerpt from their semi-annual letter highlights the fact that their small-cap fund is making a big bet on Financial and Consumer Discretionary stocks:
In our opinion, many consumer and financial stocks are now grossly undervalued while many commodity-based companies have poor valuation support. As price momentum carries the performance of these sectors further apart, distortions in valuation measures may grow. History indicates that this type of emotional/irrational environment invariably reverts to a market supported by fundamental valuation. We believe it is this shift in the market that should ultimately provide the patient investor with sizable return opportunities.
(Value investing team HOTCHKIS & WILEY focuses on a company's tangible assets, sustainable cash flow, and potential for improving business performance.)
Posted by brent at March 17, 2008 10:18 AM | TrackBack