"Rather than succumb to the fear that is driving undervaluation, a true value manager gets excited when value opportunities abound. Today, many of our developed markets portfolios are among the cheapest in our firm's history. However, one characteristic of value investing - especially when investing before the catalyst for share price improvement is apparent - is that it requires time for improvement to be recognized and rewarded in share prices.
We believe we continue to be in the early stages of a value cycle, a cycle which is testing the pain threshold of even the most hardened, long-term investors. We remain true to our beliefs. Our conviction is supported by past experience and the rewards that eventually follow such periods of pain. Timing is impossible to predict, of course. All we can do is thoughtfully position our clients' portfolios in today's deepest value opportunities, having carefully assessed the range of potential outcomes for each company we own, and sized the positions accordingly. Underpaying for quality franchises is a long-term investor's true ally. The sign on our head trader's desk says it all: "Patience equals Profits." "
Link to Entire Letter: http://www.pzena.com/investment-analysis-9