Investing in assets trading at extreme discounts to intrinsic value — typically distressed, neglected, or unloved — seeking the highest possible margin of safety.
Deeper Explanation
Deep value investors seek situations where the gap between price and value is so large that the investment is safe even in a worst-case scenario. These situations arise in market panics, sector rotations, company-specific crises, or genuinely neglected corners of the market where few analysts look. The canonical deep value trade: a business with tangible assets worth ₹100 trading at ₹40 in a panic. Even if the business earns nothing for two years, the asset backing provides a floor. Deep value requires patience and the ability to endure significant paper losses during the time it takes for value to be recognised. The typical holding period is 2-5 years, during which the position may look wrong before it looks right.
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