(Bloomberg)The widening gap between Europe’s cheapest and priciest companies is reviving hopes that beaten-up value shares can break their near decade-long laggard status — and even boost active investing along the way. Risk aversion and slowing economic momentum have pushed up the premium of safe stocks relative to cheap peers. The valuation rift reached the widest since 2012 at the end of last year, according to Bank of America Merrill Lynch. Now, hedge funds are looking to profit from arbitrage trades, driven by stretched relative prices while shifts in the market cycle spur a rotation in investing styles.
Hedge Funds Fired Up on Bets Against Decade-Long Stock Strategy
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