![\"John](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/07\/Pzena-Evan-Fox_John-Goetz_AI-chip-nvidia_inline.jpg\")
<\/p>\n <\/p>\n
John Goetz & Evan Fox of\u00a0Pzena Investment Management\u00a0<\/p>\n
While many investors are obsessed with AI\u2019s mega-cap winners, value house Pzena Investment Management is looking in the opposite direction: toward companies everyone fears AI will destroy.<\/p>\n
\u201cWe\u2019re not chasing Nvidia to US$5 trillion; we look for where AI fear is overblown,\u201d says Evan Fox, Portfolio Manager at Pzena.<\/p>\n
One of those contrarian bets is Concentrix (NASDAQ: CNXC), a global call centre operator whose share price was crushed to five times earnings as markets assumed AI would make human customer support obsolete.<\/p>\n
\u201cWhat we’ve really seen is that people still want to reach out to humans \u2014 but with AI, the humans can be more efficient,\u201d says Fox.<\/p>\n
More than half of Concentrix\u2019s clients are already using AI to cut wait times, with the technology helping human agents resolve queries faster and more accurately.\u00a0<\/p>\n
Those clients are growing faster than those that aren\u2019t – and with only a third of the industry currently outsourced, Fox argues AI is making outsourcing more attractive, not less.<\/p>\n
\u201cWe like being the idiots buying the company that everyone thinks AI will disrupt,\u201d he says.\u00a0
\nFear is the fuel for value investing<\/p>\n
This willingness to run toward fear rather than away from it has been Pzena\u2019s hallmark for three decades.\u00a0<\/p>\n
John Goetz<\/a>, the co-Chief Investment Officer, points to history; across 17 periods of extreme volatility over the past 50 years, value stocks underperformed initially but delivered almost double the broader market\u2019s return over the following five years.<\/p>\n He likens the best moments of value investing to being stuck in a dust storm \u2013 uncomfortable, but lucrative for those who can see through the chaos.<\/p>\n \u201cYou can\u2019t wait to feel comfortable to make investments. By the time the dust settles, you\u2019ve missed the biggest returns,\u201d says Goetz.<\/p>\n But to navigate the dust and get to the other side requires deep, bottom-up research.<\/p>\n \u201cOur job is to do the math. Which of these businesses are priced for bankruptcy but are actually sound? That\u2019s where the mispriced fear lives,\u201d he says. If there\u2019s one dominant source of fear in 2025, it\u2019s tariffs. But the Pzena Global Focused Value Fund<\/a>\u00a0is backing two stocks where value has been distorted by tariff-related sentiment, rather than by fundamentals.<\/p>\n \u201cWhat does it look like if tariffs are this bad? And what does it look like if they mean-revert to something more sensible? The key is we have to look at this on a company-by-company basis and, as I like to call it, do the math,\u201d says Goetz.<\/p>\n Groupe Michelin (EPA: ML)<\/p>\n The French tire-maker has faced a wall of bad news: sluggish European growth, labour issues, and post-COVID demand fears. Tariffs looked like the final nail in the coffin \u2013 but Pzena\u2019s research found the opposite.<\/p>\n \u201cMichelin sells more where they produce, unlike Korean and Chinese rivals who rely heavily on exports. Even in a bad-case scenario, their positioning is better than peers,\u201d says Goetz.<\/p>\n Haverty Furniture Companies (NYSE: HVT)<\/p>\n This 100-year-old furniture retailer has been suffering from a 30-year low in US housing turnover, which has slowed sales. Tariff concerns compounded the sell-off, creating an opening for Pzena.<\/p>\n \u201cThis is a company with no debt and a tonne of cash. A few months ago, the cash on its balance sheet plus its real estate was worth about two-thirds of the market cap,\u201d says Fox.<\/p>\n The tariff narrative itself, he argues, is overstated: the company sources from Vietnam and caters to upper-middle-class consumers, who are less sensitive to a price jump from $999 to $1,100 for a couch.<\/p>\n The small-cap comeback?<\/p>\n Within the set of value opportunities, Pzena says one of the biggest globally is in small-caps, which have lagged large-caps for 14 straight years, as shown below.<\/p>\n \u201cOne company \u2013 Nvidia \u2013 is now bigger than the entire Russell 2000. Small caps are at huge discounts to large caps, levels we\u2019ve only seen in the 1970s Nifty Fifty era or the dot-com bubble,\u201d says Fox.<\/p>\n Historically, the Russell 2000 has been 11\u201313% of the S&P 500 by market cap; today, it\u2019s less than half that. This valuation gap is creating what Pzena calls a \u201crich universe\u201d of opportunities for disciplined investors willing to endure volatility.<\/p>\n \u201cWe can buy companies at discounts we haven\u2019t seen in decades, and that\u2019s something we\u2019re excited to take advantage of,\u201d he says.<\/p>\n Beyond the obvious: Healthcare, groceries and\u2026 China<\/p>\n Pzena\u2019s portfolios today look surprisingly diverse for a deep value manager. Goetz says that\u2019s because fear has spread to unusual places:<\/p>\n Healthcare: Fresenius (ETR: FRE), a German dialysis company, remains priced for post-COVID pain despite improving fundamentals.<\/p>\n Consumer staples: UK grocer Sainsbury\u2019s (LON: SBRY)\u00a0is trading at depressed valuations due to competitive pricing wars.<\/p>\n China: Despite geopolitical risks, less than 4% of China\u2019s GDP now depends on US exports.<\/p>\n \u201cIs China uninvestable because of the politics? That\u2019s what many committees are asking. But absolute outflows create absolute opportunity,\u201d says Goetz. Goetz concluded the webinar by stressing that risks in markets are being underappreciated. While investors are pumping up AI-related stocks on hope, he argued, the real opportunity lies in the dissipation of fear.<\/p>\n \u201cThe dark clouds are still all around us \u2013 tariffs, wars, healthcare fears. But that\u2019s exactly why we\u2019re excited. Volatility isn\u2019t going away, and that\u2019s where value thrives,\u201d he says.<\/p>\n Fox agrees: \u201cThese periods of fear are when you really see the biggest dislocations. Having a team that\u2019s been through the GFC, COVID, and now this, gives us the confidence to lean in.\u201d<\/p>\n
\nTariffs, geopolitics and mispriced pain<\/p>\n<\/p>\n
\nKeep your seatbelt on<\/p>\n
![](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/07\/Pzena_logo_blue_square.png\"){kind=logo}
<\/p>\n