Value management consists of selecting stocks at a discount, i.e. stocks whose price is lower than it should be in relation to the intrinsic value of the company. This management style relies on the correction of this market anomaly which will revalue the stock at its fair value over the medium to long term.

What are the reasons for a long-term interest in this strategy?

• Any company can go through difficulties whether they are economic, strategic, competitive or managerial. This often leads to a lack of interest from investors and therefore to undervaluation. Any company, whatever its sector of activity, its level of growth and its level of margin, may find itself at a loss.
• In the short term, markets tend to overreact. Value management allows for the implementation of rigorous analysis methods in order to avoid following these movements and to focus on the real value of the company. Indeed, value management is a long-term investment approach that focuses on the valuation of a company in relation to its normative profitability. This management style follows a rigorous process with the objective of participating in market excesses, while relying on an in-depth knowledge of a company's business, from a valuation, balance sheet quality and extra-financial analysis point of view.
• "Growth" management has particularly benefited since 2014 from the various accommodating monetary policies as well as the sharp drop-in interest rates. Indeed, the constant revision of the value of future cash flows due to lower discount rates has benefited this management style. The recent return of investor interest in value management is primarily due to the sudden reversal of inflation expectations and interest rate movements.
• Investors often confine value management to certain iconic sectors such as banking or energy. In reality this management approach can and should be applied to any type of company and should not be limited to certain sectors in order to take advantage of discounted opportunities.
• Value management is not to be opposed to growth management because it offers complementary exposure to those obtained by the growth management style. Value tends to outperform in different cycle periods than growth management, which argues for a diversification of styles in the context of long-term management where cycle changes are very difficult to predict. The combination of the two styles would therefore allow for portfolio diversification, favoring a reduction in volatility and an optimization of returns over the long term.

In conclusion, investors have tended in recent years to forget this cyclicality of equity markets, which favor one style over another at different times. The ongoing withdrawal of extraordinary monetary policies should bring equity markets back to more "normal" alternating cycles, forcing investors to combine both styles in their portfolios.