ClearBridge Value Strategy Q4 2024 Commentary

2025-01-10 03:40:00 ET

Summary

• ClearBridge is a leading global asset manager committed to active management. Research-based stock selection guides our investment approach, with our strategies reflecting the highest-conviction ideas of our portfolio managers.
• The Strategy outperformed its benchmark during a volatile quarter, as strong contributions from our financials and energy holdings overcame detractors in consumer staples.
• As they age, bull markets often find investor confidence increasing while valuation excesses remain hidden, but these excesses and related risks are quickly growing too large to ignore.
• We do not position the portfolio for any one future scenario or outcome but have identified three possibilities for 2025: Continued Goldilocks, Increased Inflation and Recession.

By Reed Cassady, CFA, Sam Peters, CFA & Jean Yu, CFA

Market Extremes Paint a Concerning Picture

Market Overview

Reflecting on 2024 and the state of value entering 2025, we are reminded of the titular character from Oscar Wilde’s The Picture of Dorian Gray . Much like Dorian, whose portrait would grow old and ugly while he stayed young and lived a life free of consequences, bull markets often grow divided, with investor confidence increasing on the surface while the market cycle ages and ugly valuation excesses remain hidden and are increasingly ignored. That is until, much like the portrait confronting Dorian, the valuation excesses become too much to ignore. If this is again the case, we believe that 2025 may be the year that exposes the market’s portrait, revealing to investors the historic valuation levels and growing risk factors that can no longer be ignored....

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