This excerpt from "Deep Value Investing" by Tobias E. Carlisle explores the investment philosophy of seeking undervalued companies, particularly those facing distress.

It contrasts this "deep value" approach, championed by Benjamin Graham, with the strategy of investing in "wonderful companies" at fair prices, popularized by Warren Buffett and Charlie Munger.

The text examines historical examples of deep value investing and activist investing, where investors take significant stakes to push for changes that unlock shareholder value in underperforming businesses.

Furthermore, it analyzes the behavioral biases that often lead investors away from deep value strategies and discusses empirical evidence supporting their potential for superior returns through mean reversion.