2025 Ben Graham Conference: 4 Long Value Stocks & 1 Short Idea

At the 2025 Ben Graham Conference, the panel “Value Selection in the US Stock Market” examined how seasoned value investors are navigating elevated market concentration, shifting consumer trends, and valuation extremes. Moderated by Paul La Monica, Senior Markets Analysis Writer at Barron’s/Dow Jones, the panel featured insights from Michael Gallant, Portfolio Manager and Director of Research at Schafer Cullen Capital Management; Francis D. Gannon, Co-Chief Investment Officer and Managing Director at Royce Investment Partners; Curtis Jensen, Portfolio Manager at Robotti & Company; Charles Lemonides, Chief Investment Officer at ValueWorks; and Macrae Sykes, Portfolio Manager at GAMCO.

Also our coverage of the 2025 Sohn Monaco Conference, 2025 Global Alts New York and the Best Alternative Investment Fund Conferences for 2025.

2025 Ben Graham Conference - Michael Gallant, Francis Gannon, Curtis Jensen, Charles Lemonides, and Macrae Sykes

Valuation and Market Concentration

Michael Gallant states that he has been a value investor for over 20 years and while growth has largely outperformed value since around 2010, he believes a shift is now nearing. He points to stretched valuations across various metrics like price-to-earnings (PE), price-to-sales, price-to-book value, and price-to-free cash flow. He particularly favors the market cap to GDP metric (Wilshire 5000 vs. US GDP), noting it was 140% at the dot-com bubble peak and is currently 200%, indicating a very stretched market.

Francis D. Gannon echoes this sentiment, mentioning he's been "praying for" a broadening of the market and views the current extreme market concentration as a major risk. He compares it to historical periods like the Nifty 50s and the tech bubble, noting the "Magnificent 7" stocks' significant size, with some being larger than the entire Russell 2000 index. He highlights that at the end of the first quarter, the Russell 2000 was only 4.4% of the Russell 3000, starkly contrasting with its typical 8%??.

Francis also points to earnings as a key factor for market broadening, specifically noting an "earnings recession" in the small cap space that he believes is changing. He states that when the three-year return for the Russell 2000 is low (like the 52 basis points at the end of Q1), historical data suggests strong outperformance of about 600-700 basis points over the next three years. He believes small caps, especially small cap value, will participate in this outperformance.

Curtis Jensen admits that he has been "wrong for nine years" since joining Robotti in 2016 regarding the value pendulum, but now sees "cracks starting to show". He suggests that the S&P 493 (S&P 500 excluding the Magnificent 7) is outperforming.

Charles Lemonides acknowledges that value has had "short periods" of outperformance over the past 15 years. However, he questions the current relevance of historical market cap to GDP comparisons (like Warren Buffett's measure from the 1990s), arguing that today, much of the market cap is in global exposure, not solely US exposure (as it was in the 1990s). He gives examples like Nvidia, which he states is "not a US company in any meaningful way" but would be included in the Buffett metric. Lemonides suggests that market cap should be compared to global GDP. He does not have the figure off the top of his head but believes it would be closer to 50% when adjusting for this fact.