In September of last year, Nick Train of Lindsell Train commented in his UK Equity Fund report to shareholders:
“Broadly September in the UK stock market saw a sell-off in international “growth” stocks – after an amazing run, lasting years in some cases – and a rally in domestic “value” stocks.
More recently, an article written by Mark Donovan of Boston Partners and published on Robeco’s website caught my eye. In it, Donovan argues the case for a resurgence in value investing and points to a “subtle change in factor leadership towards value metrics.” He claims that all of the 31.5% gain in the Samp;P 500 last year came from multiple expansion and that “the last time such a multiple-fueled rally occurred in 1991 and 1998, it triggered periods in which value stocks outperformed for many years.”
I’ve seen similar comments from various sources in recent months. Certainly, there are high margin quality companies today that generate lots of free cash flow but look expensive – Unilever (LON:ULVR) for example – and low margin, capital intensive value shares that look cheap, such as J Sainsbury (LON:SBRY) .
But if we take the share price performance of…
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