Swimming against the prevailing investment tide is often fairly difficult. Humans by their nature feel safer in the crowd and standing out from said crowd has been shown to cause physical discomfort in certain people. Value investors typically pride themselves on their ability to be a contrarian. But, in our view, developing that trait by itself is not sufficient to consistently unearth profitable investment ideas that other people are ignoring or underappreciating. Not only do you need to figure out what you are thinking that is different from the market, but you also need to put on the contrarian hat and assess where your own beliefs, narratives and research could be flawed. This process of actively seeking disconfirming evidence and consistently challenging the core investment premise is baked into the Cove Street investment process—with specific focus on behavioral bias mitigation.

I discussed this important topic—and a number of others—in my recent conversation on the Planet Microcap podcast. Please enjoy the conversation here.

– Ben Claremon, Portfolio Manager