Our thoughts is that Deep Value works but we will give more allocation to Deep Value coupled with a Special Situation. The catalyst and optionality which are not price into such situation makes the upside more violent and quicker. In addition, we are trying to move away from a diversified portfolio towards a more concentrated portfolio. That require tons of conviction which Special Situation + Deep Value can give to me unlike just Deep Value... The ability to entertain a drift in thesis is a plus as well.

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Changing styles is often a difficult consideration. Too stubborn, and you end up losing money for decades. Too fickle, and you end up as a performance chaser that gets whip-sawed around.

My deep value component of the portfolio has similarly underperformed my expectations in the past 3-4 years (mid single digit CAGR). After some thoughtful considerations, I'm still allocating the same weight to the style, because it's worked so well for me for >10 years. Will probably rethink again if the underperformance persists for another 3-4 years.

I see it this way, Buffett is probably still a great investor despite a 10-year underperformance, because he had outperformed for 40-50 years. Similarly, I'll cut the deep value style more slack since it's done so well for me for a long time, while the poor performance has been short relatively speaking.

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