Deep Value Equity Investing from Donald Smith & Co.

What is Deep Value Equity Investing?

Less than 1/10th of 1% of all money managers
invest in the lowest decile of stocks by price-to-tangible book value.*

Our investment strategy targets out-of-favor companies valued in the bottom decile of price-to-tangible book value ratios. Studies have shown, and our long record of outperformance has confirmed, that this universe of stocks substantially outperforms the broader market over extended cycles.

A 2023 study that we conducted with Compustat data showed that from 1951-2022, stocks in the lowest price-to-tangible book value decile outperformed both the market and other deciles.

The Compustat Study
Returns by price-to-book ratio decile, 1951-2022 (71 years)

Stocks in the Lowest price-to-tangible-book decile delivered the highest returns over the long term.

* Results of a study conducted by professors Lakonishok, Shleifer and Vishny of the University of Illinois, Harvard and the University of Chicago, respectively, entitled, “What Do Money Managers Do?” and circulated as a working paper by the University of Illinois in February, 1997.

Less than 1/10th of 1% of all money managers invest in the lowest decile of stocks by price-to-tangible book value.*

Less than 1/10th of 1% of all money managers
invest in the lowest decile of stocks by price-to-tangible book value.*