We're very unlikely to make the bet that a secular decline in an industry or that a company just won't be as bad as the market expects. You can make tempting valuation arguments at certain points for businesses with secular headwinds, but modeling the trajectory of the decline is very difficult. In the late 1990s [...]

Our process is meant to identify where short-term fears have created inefficiencies in pricing, and as you go down in market cap, the market reactions get more extreme. Because so many people are looking at large caps, when a stock gets even a little undervalued the market tends to take advantage of that. If you're [...]