Global Opportunistic Equity
At a Glance
- Benchmark: MSCI ACWI and/or Russell Global Index
- Combines top-down macroeconomic guidance with rigorous bottom-up fundamental research in a comprehensive, integrated process
- Targets multiple sources of return by actively applying macro themes, currency analysis, and fundamental research in the strategy
- Seeks companies priced significantly below intrinsic value, with strong balance sheets, cash flow, and business models
- Typically invests in 60 to 100 companies with position size limited to 5% at purchase
We seek to outpace the long-term performance of the MSCI All Country World Index or the Russell Global Index using a distinct process that combines top-down macroeconomic research and bottom-up fundamental analysis to capture diversified sources of return.
Rigorous, proprietary global macroeconomic research combined with the investment team’s fundamental equity views produce a holistic, comprehensive approach that helps identify and assess opportunities and risks that solely top-down or bottom-up strategies may miss. The process is designed to capture differentiated sources of return:
MACROECONOMIC INSIGHTS: Macro analysis is supported by a comprehensive internal research framework that compiles and analyzes proprietary econometric modeling and forecasts, country data, monetary and fiscal policies, economic indicators, valuation tools, and other inputs. By applying this understanding of primary global growth drivers and individual country business cycles, the fundamental equity investment team can focus on countries, regions, or sectors poised to benefit from macroeconomic trends.
CURRENCY VALUATION: When investing globally, currency can be an important driver of returns at both the company and portfolio levels. The investment process leverages the firm’s insights on currency valuation levels and experience in adding significant value through actively managing currency exposures. Generally, currency exposures in stocks with attractive currency valuations are left unhedged while exposures with unattractive currency valuations are hedged using currency forwards.
COMPANY RESEARCH & VALUATION: Within each identified country, rigorous fundamental equity research is used to identify undervalued companies with solid balance sheets and strong free cash flow, favoring sectors believed to be well positioned to capitalize on key macro catalysts.
Top-down macroeconomic research is used to establish initial investment ideas by identifying key macro themes and countries deemed attractive due to a favorable macro outlook, typically in combination with undervalued currencies and stable inflationary and political environments. Macro analysis helps to efficiently focus additional fundamental research on these select countries and to formulate our currency strategy.
Fundamental analysis seeks to identify undervalued companies. The team places an emphasis on cash flows and balance sheet characteristics, establishing an estimate of intrinsic value through a complete due diligence of business operations based on publicly available documents. We also speak with management and utilize knowledge of competitors, suppliers, and customers to better understand a company’s business and risks. Our macro insights on currency and business cycles are often a primary input.
We generally sell a stock when:
- The stock appreciates to our target price without commensurate gain in intrinsic value
- The anticipated catalysts fail to happen within a reasonable period
- An unanticipated event, change in fundamentals, or deterioration in intrinsic value undermines our thesis
- Our macroeconomic thesis for the country changes significantly