▶ Full Post Text
How This Old-School Value Fund With No Tech Stocks Is Beating the Market - Barron’s
By Lewis Braham
https://www.barrons.com/articles/how-this-old-school-value-fund-with-no-tech-stocks-is-beating-the-market-595a331e
June 17, 2026 2:00 am EDT
During today’s extreme bull market dominated by the artificial-intelligence and SpaceX frenzy, even value managers who are supposed to buy cheap stocks might be tempted to slip some tech names into their funds’ portfolios to avoid lagging behind their peers.
Not Amit Wadhwaney. “The valuations make no sense,” the manager of Moerus Worldwide says about AI stocks. “The business models make no sense.” Yet somehow his fund’s 17.9% five-year annualized return beats the 13.8% of the S&P 500 index, which is full of the hottest tech stocks. Its performance is also almost double that of the average fund’s 9.6% return in Morningstar’s foreign small-/mid-cap value category, although the Moerus fund—which is really a go-anywhere global value fund—doesn’t quite fit that category.
Right now, Wadhwaney isn’t finding much that’s attractively priced in the U.S., which comprises only 15% of his portfolio. He also has a 0% tech weighting, although he admits that one long-term holding, Aker , a Norwegian oil company, announced the launch last July of a joint venture to develop energy-efficient AI infrastructure, including modular AI data centers on its oil rigs. The stock is up almost 80% in the past year.
Still, Wadhwaney isn’t happy in general about any AI hype. “The warning signs have been everywhere,” he says. “People just are so swept up. It always happens like that.”
Wadhwaney and his two co-managers, Michael Campagna and John Mauro, seek the opposite of hype. They want companies with what Wadhwaney calls “hair” on them. “When we say ‘hair,’ we mean we don’t buy perfect companies,” he says. “We buy companies that have stumbled.
Something has happened, but they’re fixing it.” That could be overall industry problems that are temporary, a poor acquisition or two, or too much leverage that now is being paid off.
Essential to such a deep-value strategy is an investment’s financial viability. Wadhwaney wants companies with either strong balance sheets, or improving ones that can withstand distress. This plays to his background and strengths. Before founding Moerus Capital Management in 2015 with Campagna and Mauro, the entire team worked at Third Avenue Management with Marty Whitman, whose investment philosophy was based on studying balance sheets and valuing companies based on their assets as opposed to just their earnings growth
Italian bank UniCredit is one example of a “hairy” company. When Wadhwaney bought the stock for about five euros ($5.81) a share in 2016, Italian banks “looked as though they were going bust” because they had terrible balance sheets, he says. But UniCredit did a massive equity issue to raise capital, write off its bad loans, and pay its debt. Today it trades at €78.
Since 2016, “Italy has gone through a variety of crises, changes in government, and economic policy, ” Wadhwaney says. “But a good balance sheet can take you through that. UniCredit has not just survived, but thrived from crisis to crisis, continuing to build its business.”
The fund’s largest holding is Brazilian cosmetics company Natura Cosmeticos. The stock has fallen 77% in the past year, yet Wadhwaney is bullish. After being “wildly successful” for decades selling natural cosmetics throughout Latin America, management grew overconfident and started to make a series of acquisitions, he explains: “All except one, I would say, were abject failures.” The costs of those acquisitions made the company’s debt load unmanageable.
Natura began the long process of restructuring by selling its acquired Body Shop division in 2023 to a private-equity buyer. More recently, it has been selling off its also-acquired Avon divisions outside of Latin America. It’s now in the final stages of integrating its Avon Latin America workforce with its Natura one.
“I don’t think this is a short-term payoff by any means,” Wadhwaney says. The final restructuring “will take time—one or two quarters.” On top of that, Brazil’s economy is “wobbly,” with high interest rates affecting Natura’s cosmetics sales. But he believes the company has cleaned up its balance sheet while its core business remains strong.
There’s a similar balance-sheet-cleanup story for Canadian fossil-fuel company Greenfire Resources, which Wadhwaney began buying in November. It’s now the fund’s second-largest holding. Greenfire has “bituminous rich properties that have not been brought to commercialization, because the previous owners were highly leveraged, so the control changed,” he says.
“There was a very big \[stock rights offering\] issue done last year. The balance sheet was cleaned up so that they could bring all their assets into production. That was the starting point of our investment.”
Moerus has done well in recent years partially because of high weightings in precious metals and energy stocks, but Wadhwaney didn’t invest in them based on any macroeconomic predictions of future oil and gold prices. One of his largest precious-metals positions, Dundee, was really a family-run Canadian conglomerate that owned more than just mining operations when he bought it back in 2020. But the founder’s son, Jonathan Goodman, began selling off non-mining divisions after he became CEO in 2018.
“What was interesting to us was Goodman was selling all these businesses, so the balance sheet became quite cash-rich, and for a period of time you could buy \[Dundee\] at less than the value of its net current assets,” Wadhwaney says. “It was absurdly cheap.”
Cheapness with a margin of safety from a resilient balance sheet is the goal. Valuation-wise, the fund’s portfolio currently has a 12.7 average price/earnings ratio and a 1.1 price/book ratio. The S&P 500 has a 22 P/E and a 4.7 price/book ratio.
The fund charges a high 1.50% expense ratio, versus the Vanguard S&P 500 exchange-traded fund’s 0.03%, but everything else about it in the portfolio is cheaper. Its stocks and managerial style are nothing like an S&P 500 fund, or even an international index one.
One possible concern is that Wadhwaney is 72 years old, so there’s key-man risk. But his two co-managers are in their 40s and have been with Moerus as partners since the firm’s founding. Moreover, Wadhwaney shows little interest in retiring. This old-school value manager is finding plenty of unloved bargains in a market besotted with AI.