Mundy's Moments: Why the odds of success are more in your favour when you invest in unpopular assets

Opportunity for company to improve

As a team, we invest in companies that are significantly out-of-favour and cheap, based on a sensible assessment of their normalised profitability.

A price we pay for doing this is that generally things look fairly unattractive when we invest. But as believers in reversion to the mean, we believe there is an underappreciated tendency for companies that are doing badly to do better and for companies that are doing well to do worse.  And importantly, because out-of-favour companies are doing badly, they tend to be cheap.  Drivers As an old stockbroker told me when I started out in investments: "We are not here to find good or bad companies, young man. We are here to find cheap and expensive ones." Not all currently out-of-f...