TOELY - David Herro's International Equity Market Commentary - Q1 2024

2024-04-09 05:15:00 ET

Summary

• We are value investors. In constructing portfolios for our clients, we seek out companies that we believe are trading in the market at significant discounts to their underlying value. These businesses must offer significant profit potential and be run by managers who think and act as owners.
• We believe in the importance of intensive, fundamental research. Our research process is based on a disciplined quantitative and qualitative screening process.
• After a relatively strong 2023, both the Oakmark International Fund and Oakmark International Small Cap Fund had positive performance in the first quarter, but just barely.
• As long-term investors who make decisions based on the underlying intrinsic value of an asset based on its balance sheet and cash generation, we are not disappointed that we tend to underperform in momentum-driven markets.

Granolas, Japan and Crypto - why we don't chase momentum

Fellow Shareholders,

After a relatively strong 2023, both the Oakmark International Fund and Oakmark International Small Cap Fund (collectively, the "Funds") had positive performance in the first quarter, but just barely - both earned less than 1% and underperformed their respective bogeys (see individual Fund letters for more details). Despite the muted quarter, we remain very optimistic about the future given the extremely attractive valuations at which these international portfolios are selling. As an example, both Funds are trading at around 53 cents on the dollar (at 100 cents on the dollar, the portfolios would be fully valued by our measurement), which - outside of extremes - is near the low end of their historical ranges. These levels are even more meaningful as we expect acceptable growth in earnings and value over the next one to two years....

For further details see: