Funny enough
mick i think this factor has become more relevent over the years for some reason, i only backed mainly lto winner in the 60s and 70s and then towards the mid 80s i found a gradual change and many of my bets were like your own from hidden form more, and i bet very few lto out winners unless in higher class events of stakes races. So i for one can see where you are coming from with this view, and even more so in lower class h'caps because horses of lower abillities are generally found out quicker when more weight is added i feel.
Yes also with the easily win one can still not be sure, that is why i found as the the years went by i needed to search for value more because everybody else can see this easily form also and not to be drawn in and still look for good value on these even as well.
Reading through this really interesting thread.
I would say that backing lto winners in handicaps is also very dependant upon the type of horses taking part.
Tend to agree that in general it isn't the best ploy in 4yo + handicaps at the lower end of the scale. However, I would suggest that in 3yo, 3yo+ or 2yo nurseries, the winner is quite likely to be found amongst last time out winners. Reason being - there is quite likely to be an improver in these type of race which the handicapper has not caught up with, (of course, there could be in a 4yo+ handicap as well, but quite a bit less likely). The higher up the class level you go, I'd suggest the more likely it is the handicapper has caught up with these "improving" last time out winners.
Whether a fair proportion of these type of lto improvers are value, may well be another matter, of course. They sometimes can be though.
Other factors I like to consider in certain situations is why a powerful owner may have kept hold of an underperforming horse, (not talking about very exposed horses, but other types_).. With these type of horses, I tend to look at their race history quite closely to try and make an educated guess as to whether improvement is possible.
Maybe the horse's breeding offers encouragement, (particularly horse is trying something new, which pedigree suggests could well work), maybe there have been breaks in the horse's career, (not just the obvious days since last run - eg: perhaps a horse had a few runs as a two year old, then wasn't seen until the autumn of his two year old season, when having a couple of runs on bad ground and is now reappearing as a 4yo on decent ground).
Conversely, I don't like backing lto winners that have left a reasonably powerful owner since that lto win. Particularly if they are reasonably well bred. It suggests to me that the owner doesn't think there is anything more to come and have attempted to sell the horse at his/her peak, (some owners/trainers obviously being better at judging when that peak has arrived than others!).
Horses that have changed trainer are always worth a second-look to me, as a betting opportunity. I don't just mean on the first or second run for the new trainer - I tend also to consider how long it has been since the horse has changed yards, who the new trainer is, (and who the previous trainer was - perhaps considering what type of form the yard was in when the horse had last few starts for previous connections, how good the horse's old backform may be), etc.
Horses doing something different, (up or down in trip, trying a different surface, change of jockey, etc), are also something I like to look out for. I think the majority of pundits like to see that a horse is proven under conditions and that definitely has it's merits in many situations, but a horse doing something new interests me as well, (particularly but not exclusively with a less exposed horse).
The class horse in a race, (perhaps using VDW as an influence), is another thing I like to look out for.
The above can be quite overwhelming to my little brain sometimes and it is a labour-intensive way of betting, particularly when faced with the normally busy racing programme of the 2020s), but when in the right frame of mind for it, these are some of the things I like to look out for.
I'd say some of these type of approaches are quite contrarian