Are European small- and micro-caps on the cusp of major outperformance?
Brian Chingono of Boston-based asset manager Verdad presents the in-depth research that backs up such an assertion.
Thesis Summary
Based on Verdad’s analysis,
Europe offers a unique opportunity because the region has been under-allocated within global indices and is undervalued relative to fundamentals, particularly among small- and micro-cap equities
A potential unwinding of hyper-concentration in the US would favor international markets
The size premium and value premium in Europe have significant room for upward mean reversion after a seventeen-year drought
Valuations are especially attractive among European micro-caps
Brian serves as Partner, Director of Quantitative Research, and Europe Portfolio Manager at Verdad, a highly regarded global asset management firm. Previously, he worked at Dimensional Fund Advisors and Credit Suisse. He holds an AB from Harvard College and an MBA with honors from the University of Chicago. As a graduate student, Brian co-authored two research papers related to Verdad’s investment strategy: Leveraged Small Value Equities and Forecasting Debt Paydown Among Leveraged Equities.
In addition to his thesis on the likely outpeformance of European small- and micro-cap equities in general, Brian lays out his investment thesis on one such stock, Zumtobel Group (Austria: ZAG).
Slides
This session was held at European Investing Summit 2024, hosted by MOI Global from October 29-31. Let’s listen to the full session and look over the transcript, which has been augmented with key figures and tables by our research team.
