PWV - PWV: A Growth-Agnostic Bet On Undervalued Bellwethers

2024-04-30 20:10:22 ET

Summary

• Index-based PWV is a rather concentrated bet on undervalued old-economy bellwethers.
• Investors seeking low-EV/EBITDA, high-EY large-cap and especially mega-cap names will find them aplenty in this portfolio.
• Quality investors will likely not be disappointed with this mix, in sharp contrast to growth- or GARP-style enthusiasts.
• There is nothing special about PWV's past performance, as it did a great job in 2022 but underperformed the S&P 500 ETF since its inception. Its edge over peers is questionable.
• While I believe PWV has a solid EY and robust quality, I initiate coverage with a conservative Hold rating.

Earlier this year, the market environment was not especially accommodative for value-focused strategies. But at some point this April, as longer-duration equities have somewhat lost steam, value investors have started cranking up their bets on a profound market correction driven by the reinflation trade, assisted by a recovery in cheaper stocks....

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