Factor/Style Investing
More Superstar Investors: Spain’s Value Investors
September 2020
Topics - Factor/Style Investing Value Portfolio Construction
In our 2019 article “More Superstar Investors: Francisco Garcia Paramés” we extended the work of Brooks, Tsuji and Villalon’s “Superstar Investors,” 1 1 Close Brooks, Tsuji and Villalon, (2019), “Superstar Investors,” The Journal of Investing, Vol. 28, No. 1. by examining the track record of Spanish investor and founder of Bestinver Asset Management, Francisco Garcia Paramés. As in the original paper by Brooks et al., we found that a large part of Paramés’ long-term success was attributable to patient exposure to well-rewarded factor premia (i.e., “fishing in the right pond”).
In this short article, we come back to Paramés and study his more recent track record since founding Cobas Asset Management in 2016. We also study the work of some other well-known value investors in Spain; firstly Beltrán de la Lastra, who took over as CIO and portfolio manager at Bestinver when Paramés departed in 2014; secondly, ex-colleague of Paramés, Álvaro Guzmán de Lazaro, who now manages funds at azValor Asset Management; and last but not least Iván Martín Aránguez, who founded Magallanes Value Investors in 2015.
We once again stress that after-the-fact studies do not detract from real performance, but we additionally stress here that it is difficult to assess a manager’s performance over short horizons. Each of these managers are stated value investors, a strategy which we know has struggled in recent history, so the relatively short time periods we study here will be dominated by Value’s drawdown. Brooks et al. concluded that “investors may be able to become more superstar-like by identifying edges such as the ones we analyze here, and having the patience to stick with them over the long term.” At least for Value, now is a time when such patience is warranted.
This document is not intended to, and does not relate specifically to any investment strategy or product that AQR offers. It is being provided merely to provide a framework to assist in the implementation of an investor’s own analysis and an investor’s own view on the topic discussed herein.
This document has been provided to you solely for information purposes and does not constitute an offer or solicitation of an offer or any advice or recommendation to purchase any securities or other financial instruments and may not be construed as such. The factual information set forth herein has been obtained or derived from sources believed by the author and AQR Capital Management, LLC (“AQR”) to be reliable but it is not necessarily all-inclusive and is not guaranteed as to its accuracy and is not to be regarded as a representation or warranty, express or implied, as to the information’s accuracy or completeness, nor should the attached information serve as the basis of any investment decision. This document is not to be reproduced or redistributed to any other person. The information set forth herein has been provided to you as secondary information and should not be the primary source for any investment or allocation decision. Past performance is not a guarantee of future performance. Diversification does not eliminate the risk of experiencing investment losses.
This material is not research and should not be treated as research. This paper does not represent valuation judgments with respect to any financial instrument, issuer, security or sector that may be described or referenced herein and does not represent a formal or official view of AQR. The views expressed reflect the current views as of the date hereof and neither the author nor AQR undertakes to advise you of any changes in the views expressed herein.
The information contained herein is only as current as of the date indicated, and may be superseded by subsequent market events or for other reasons. Charts and graphs provided herein are for illustrative purposes only. The information in this presentation has been developed internally and/or obtained from sources believed to be reliable; however, neither AQR nor the author guarantees the accuracy, adequacy or completeness of such information. Nothing contained herein constitutes investment, legal, tax or other advice nor is it to be relied on in making an investment or other decision. There can be no assurance that an investment strategy will be successful. Historic market trends are not reliable indicators of actual future market behavior or future performance of any particular investment which may differ materially, and should not be relied upon as such. Diversification does not eliminate the risk of experiencing investment losses.
The information in this paper may contain projections or other forward-looking statements regarding future events, targets, forecasts or expectations regarding the strategies described herein, and is only current as of the date indicated. There is no assurance that such events or targets will be achieved, and may be significantly different from that shown here. The information in this document, including statements concerning financial market trends, is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons.