The November 1985 prospectus of the Merrill Lynch Phoenix Fund, Inc., a mutual fund, stated the following invesiment objective:

Based upon the belief that the pricing mechanism of the securities markets lacks perfect efficiency so that prices of securities of troubled issuers are often depressed to a greater extent than warranted by the condition of the issuer and that, while investment in such securities involves a high degree of risk, such investments offer the opportunity for significant capital gains.

What does this strategy assume about the pricing efficiency of the stock market?