Resources/Weekly Insights

Volume 15, Edition 14 | May 4 - May 10, 2026

At the Intersection of Momentum and Value

Doug Walters, CFA

Momentum funds continued their steady climb last week, with one name inside them catching our eye: Micron. The company shows how momentum can capture value opportunities and avoid the traps.

Contributed by Doug Walters, David Lemire, Max Berkovich, Matthew Johnson

Picking up where I left off last week, the momentum theme has continued to do its quiet work. Both of our core momentum holdings, MTUM and VFMO, touched fresh 52-week highs to start the week and held most of those gains through Friday. Nothing dramatic, just the slow accumulation of being in the right names at the right time.

What caught my eye this week, though, was an interesting case within both of our momentum funds: Micron.

Micron is not new to the momentum portfolios; it has been there for months. But this past Friday, the stock jumped roughly 15%, capping a week where the stock rose 38%. The company’s memory products have found themselves at the center of the AI buildout, with not enough supply to meet the unprecedented demand.

But that’s not what is interesting about Micron (at least for our purposes). For some time, Micron has been a “cheap” stock by many traditional measures. In other words, it was a value stock at risk of being a value trap.

A value trap, in plain English, is a stock that looks cheap, stays cheap, and never actually pays off, because the cheapness reflects a real underlying problem the market saw and priced in. Think about physical video rental businesses like Blockbuster back in the day… cheap, but for good reason. Cheap is not the same as undervalued.

This is another way in which momentum quietly earns its keep. A pure value screen will find both kinds of cheap stocks, the misunderstood bargains and the melting ice cubes. It cannot tell them apart. A momentum process does not pretend to. It simply waits for the price to confirm that something has changed. By the time a name like Micron shows up in MTUM or VFMO, the chart is already saying what value investors had been hoping the fundamentals would eventually say.

This is not a new observation. The academic work on combining value and momentum (most notably the Asness, Moskowitz, and Pedersen research¹) has long argued that the two factors complement each other precisely because each one’s weakness is the other’s strength.

We’ll spare you the wonky details, but for our purposes here, the point is that momentum is one of the most flexible proven factors. It is non-discriminatory. It has no problem bringing a classic value name into the fold if it’s starting to work. When the cheap names are on the move, momentum will own them. When they are stuck, it will not. Either way, our clients are positioned for what the market is actually doing rather than what we hope it will do.

In a year of loud headlines, momentum has been doing a good job quietly sifting through the market for what is genuinely working.

1. Asness, Moskowitz, and Pedersen, “Value and Momentum Everywhere” (Journal of Finance, 2013)

It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
Warren Buffett

Headline of the Week

Markets Hear Stability, Policymakers Hear Caution

The first full week of May offered a familiar but increasingly delicate contrast. Markets focused on signs that nothing had broken. Policymakers focused on what still has not healed.

The May jobs report helped anchor that divergence. Payroll growth remained positive and unemployment held steady, reinforcing the view that the labor market continues to absorb slower growth without visible stress. Wage gains moderated, helping contain near-term inflation pressures. For markets, the takeaway was straightforward: stability, even if uninspiring, is enough to justify patience.

Policymakers heard something slightly different. Beneath the steady headline, labor force participation remains under pressure and job gains continue to show signs of concentration. The expansion persists, but with thinner margins. At the same time, ongoing energy and geopolitical uncertainty complicates the inflation backdrop. The result is best described as vigilance.

Financial conditions reflected that same split. Equity and credit markets remained resilient, suggesting confidence that policy can stay on hold. Treasury yields, by contrast, continued to price unresolved tension, balancing growth concerns on one side with inflation persistence on the other, without committing decisively to either outcome.

For now, both views are coexisting. The gap between confidence and caution has become one of the defining features of the current cycle, and one that will matter more if the data stop cooperating.

The Week Ahead

Another uneventful week for earnings, until Nvidia and retailers report the week after. Next week’s focus shifts to the inflation report and Presidents’ trip to China. Of course, developments from Persia matter more than anything else right now.

Pumped Up

Consumer Price Index (CPI) and Producer Price Index (PPI) are out next week.

CPI will be closely watched by investors as current expectations are calling for a 0.6% increase in April prices from March and moving the annual inflation read to 3.7%, from 3.3% in the previous reading.

The core CPI, which excludes volatile food and energy, is projected to rise, though not sharply, with a monthly increase of 0.2% and a year-over-year change of 0.1%.
Thursday’s Retail sales report should offer a taste of how the consumer is doing, especially since the University of Michigan’s Consumer Sentiment report was weak.
While gas prices at the pump continue to rise, the increase is less dramatic than it was in March and higher tax refunds, and tax cuts may soften the hit.

Trip to China

President Trump will make his first visit to Beijing in eight years at the end of the week.

The President hopes to reinforce the trade truce reached in South Korea in October.
The Iran war will be a topic, as China imports oil from there, and since there are reports that China is not complying with sanctions.
Taiwan is likely to come up as well.
Chinese exports are strong right now, and factory activity has surged since the war in Iran started, which may be a point of strength, but reports indicate China is interested in improving relations with the U.S.

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