CEO of Pzena Investment Management, Richard Pzena (Trades, Portfolio), released his third-quarter letter to shareholders this week.
Pzena’s firm had assets under management of $25.5 billion at the end of September, down slightly from $26.4 billion the same month last year. The global firm is value-oriented and was founded in 1995. At the end of the second quarter, its top positions were: Hewlett-Packard Co. (HPQ, Financial), Citigroup Inc. (C, Financial) and American International Group Inc. (AIG, Financial).
The third quarter letter discusses value and its relation to recent market behavior in-depth by describing how value cycles occur every 50 years, similar to macro cycles. But the new cycle, started in February 2007, does not conform to the expected pattern, he said. Pzena also goes into why he believes research and active management are necessary to outperform, in contrast to passive strategies.
He is optimistic about the approach’s ability to uncover opportunities and about the next value phase.
“What we do know is that valuation spreads today support the prospect for an outperformance phase of the value cycle,” he said.
Read Pzena’s third-quarter 2015 newsletter commentary here.
