Removing Emotion From Value Investing | Scaling Alpha Ep. [20]

David Kaiser is founding and managing partner and chief investment officer of Methodical Investments, where he runs a disciplined, rules-based multi-factor small and mid-cap value strategy. He spent over two decades at Robotti & Company, evolving from a bottoms-up fundamental research analyst into the architect of their systematic structured value strategy before launching Methodical. His work centers on using systematic screens and portfolio-level metrics to strip behavioral bias, anchoring, and narrative out of value investing. Ben and David trace his path from an early fascination with technology and momentum investing to finding a home in fundamental value investing at Robotti, and the 2011 shift toward building a rules-based process that could remove human emotion from decision-making. They dig into why profitability screens matter, how COVID reshaped David's thinking on liquidity and risk management, and why he runs five multi-factor screens twice to avoid overexposure to financials. They also cover how style drift hides inside supposedly "value" benchmarks, why the Russell 2500 Value index includes a meaningful share of unprofitable companies, how David detects and manages value traps through rebalancing and diversification, and where he sees AI fitting into (and not fitting into) a systematic investment process. Topics covered: Learning value investing under Bob Robotti and building conviction through mentorship Why COVID reshaped how Methodical thinks about liquidity and risk management Running five multi-factor screens twice to control for financial sector overexposure How style drift hides inside Russell 2500 Value benchmark performance Detecting and managing value traps through rebalancing and portfolio dispersion Why the Russell 2500 Value universe offers underexplored small and mid-cap opportunity The difference between a data-driven, rules-based approach and traditional factor-model quant investing Where AI fits, and doesn't fit, into a systematic investment process Connect with David: Website: methodicalinvestments.com Scaling Alpha is powered by Rivela. Book a guest spot: https://rivela.ai/scaling-alpha