The largest five stocks in the S&P 500 collectively have increased in value this year by $2.8 trillion, which is 49% above where they began the year. The level of
Equity markets rose to start 2023 but experienced crosscurrents from very concentrated gains among a select few of the biggest stocks and weakness in the bank sector. In this environment,
Distillate Capital is built on a few core ideas gleaned from our decades of value investing experience and from the wealth of information and ideas emanating from the rigorous studies
Elevated inflation and rising rates are likely to cause economic activity to continue to moderate and even possibly contract, but from a longer-term perspective, this is not unusual and the
The title of this letter is an auto racing adage that aptly applies to investing. It highlights that much more than in the straightaways, it is in the turns, both
On measures of free cash flow, stocks have gotten notably less expensive in the first six months of 2022, and the first chart highlights the free cash flow yield now
Amid an uncertain economic future, equities offer an attractive advantage of being able to pass through inflationary costs over the longer-term, but their present relative valuation against bonds does not
In the first quarter of 2022, each of Distillate’s strategies (U.S. FSV, Intl. FSV, and Small QV) outperformed their primary benchmarks. Crucially, performance both recently and over prior years has
Distillate’s U.S. Fundamental Stability & Value (U.S. FSV) strategy outperformed its S&P 500 and iShares Russell 1000 Value ETF benchmarks again in 2021. For a further discussion of performance, portfolio
The largest 5 stocks in the S&P 500 Index accounted for 22% of its value at the end of last month vs. under 12% five years earlier. In this one-pager,
We review recent performance of Distillate’s U.S. Fundamental Stability & Value (FSV), International FSV and Small Cap Quality & Value strategies. Amid a backdrop of strong price gains and pockets
In the wake of strong equity price gains across geographies and market caps, and amid pockets of very rich valuations, we review performance, portfolio changes, and how Distillate’s strategies compare
Amid apprehensions about current valuations and their impact on prospective returns, we look at cash yields for various asset classes over time and relative to one another. In this framework,
In the U.S., 1Q21 brought a reversal in market leadership from the concentrated gains in “growth” stocks seen in 2020 to those commonly labeled “value.” After outperforming in an environment
Distillate’s U.S. and international strategies outperformed their respective benchmarks in 2020. In the U.S., substantial outperformance among the largest stocks presented a significant headwind and the resulting rich valuations are
In addition to strategy updates for our U.S. (US FSV) and International (INTL FSV) Fundamental Stability & Value strategies, we look at the evolution Apple Inc. (AAPL) from one of
We introduce our International Fundamental Stability and Value strategy (Intl. FSV) and discuss performance and portfolio changes in the U.S. FSV portfolio related to the attractive opportunity set we are
The economic impacts of the coronavirus crisis are extremely uneven. Estimates of free cash flow for stocks in hard-hit industries are down 90%. The free cash flow estimates for the
In addition to providing updates on strategy performance and portfolio changes, we look at the current economic crisis brought on by the outbreak of COVID-19 as well as the possible
While market prices, in theory, should reflect the discounted value of a very long stream of future cash flows, they are prone to panic and often overreact to near-term disruptions.
So-called “value” indexes have severely underperformed the broader stock market for more than a decade. While this is an often-told story, it typically comes without any compelling explanation of why
We provide an update of our U.S. Fundamental Stability & Value strategy’s performance, portfolio changes, and fundamental attributes. We also discuss the equity market’s recent performance in a longer-term historical
The U.S stock market has significantly outpaced major international indexes over the past decade. In this short paper, we look at the drivers behind this by splitting price gains into
We provide an update of strategy performance and portfolio positioning. We also look at equity market valuations in a historical context, relative to both underlying fundamentals and the valuations of
The composition of the economy and stock market has shifted from physical assets to intellectual ones. This change has significant implications for traditional valuation metrics, requiring a new approach.
We provide an update of strategy performance and the market environment, discuss the dangers of elevated debt levels, and describe the unintended risks investors might be taking as they seek
We provide an update of strategy performance so far in 2019, portfolio changes and positioning, as well as our thoughts on the mismeasurement of “Value” as it is commonly discussed
We relate Warren Buffett’s recent comments on book value to our own investment process and make the case that investors buying a “value” index might, unintentionally, simply be taking on
Our annual review of performance, recent changes to our portfolio, and comments on the outlook for equities in the years ahead.
Adhering to long investment time horizons is easily said but more difficult to do. Emotions and behavioral biases work to erode the otherwise attractive returns offered by equity markets when
The group of stocks known as the FAANGs (Facebook, Apple, Amazon, Netflix, and Alphabet) have garnered significant attention from investors and market pundits—often painted as a homogeneous, overvalued set of
Investors should consider investment risk as defined by an investment’s fundamental stability, level of indebtedness, and valuation, rather than simply its short-term price volatility.
Deeply rooted behavioral biases can offer exploitable opportunities for a thoughtfully designed, systematic investment approach.