Excess Returns Broken Data. Hidden Opportunity | GMO's Warren Chiang on Deep Value’s Historic Setup
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Jun 15, 2025 Warren Chiang leads portfolio management for GMO's systematic equity team, specializing in value investing. He dives into the evolution of value strategies, highlighting how traditional methods adapt in a world driven by intangibles. Chiang explains why deep value is historically low and discusses the blending of ESG, macroeconomic factors, and geopolitical shifts in portfolio construction. He also explores the implications of passive investing and the emerging trends in global manufacturing as firms shift away from China, presenting a fresh perspective on today’s market dynamics.
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Improve Value Investing During Slumps
- Investing themes can struggle for long periods but always improve within your chosen theme.
- Value investing evolves by refining valuation methods rather than abandoning the core concept.
Restating Financial Statements Matters
- Raw financials often misrepresent reality due to intangible assets and acquisitions.
- Restating financial statements improves valuation by capturing hidden intangible value.
Capturing Deep Value Opportunities
- Deep value stocks are historically cheap and offer a unique opportunity.
- Distinguishing quality companies within deep value is key to avoiding value traps.