Alma Hotchkis & Wiley Global Value Equity Fund
Alma Hotchkis & Wiley Global Value Equity Fund seeks current income and long-term capital appreciation by investing in a portfolio of global companies.
Investment manager: Hotchkis & Wiley Capital Management, LLC
Hotchkis & Wiley is an SEC-regulated, Los Angeles-based investment adviser founded in 1980, specialised in value equity and high yield bond strategies.
Cumulative Performance (%)
Fund Inception 28 February 2019
The performance data shown represents past performance. Past performance is not a guarantee of future results. Current performance may be lower or higher than the performance quoted. The investment return and the principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
Strategy & Manager
Investment objective: seek current income and long-term capital appreciation by investing in a portfolio of global companies
- Investment process: analyse long term company fundamentals through in-house bottom-up research aiming to identify undervalued stocks
- The fund typically holds 40 to 80 securities and generally invests in companies with a market capitalization above $1 billion
- The fund invests primarily in companies located in developed countries, with at least 40% outside the U.S. Emerging markets: up to 20%
Hotchkis & Wiley is a SEC-regulated, Los Angeles-based investment adviser founded in 1980, specialised in value equity and high yield bond strategies
- Employee owned firm: 90% of the investment team and 67% of all employees own equity
- Investment team has over 23 years average investment experience and 15 years average tenure at Hotchkis & Wiley
- Hotchkis & Wiley manages $25 billion
Scott McBride, CFA Portfolio Manager and President
Scott McBride is President of Hotchkis & Wiley and serves as a portfolio manager on the Large Cap Fundamental Value, Large Cap Diversified Value and Global Value portfolios. He covers technology companies and is a member of the consumer, technology, healthcare and financial sector teams. Prior to joining the firm in 2002, Mr. McBride was an associate consultant with Deloitte Consulting and worked as an investment marketing analyst with Fidelity Investments. Mr. McBride, a CFA charterholder, received his BA in Economics from Georgetown University and MBA from Columbia University
Patrick Meegan, CPA Portfolio Manager
Patrick Meegan serves as a portfolio manager on the High Yield portfolios. He is a member of the financials and healthcare sector teams. Mr. Meegan began his career at H&W as an investment analyst and became portfolio manager in 2001. Prior to joining the firm, Mr. Meegan was an audit manager at Arthur Andersen and specialized in financial statement audits and advising clients on SEC reporting issues. Mr. Meegan, a Certified Public Accountant, received his BA in Business Administration from California State University, Fullerton and his MBA from the Anderson School of Management at the University of California, Los Angeles.
Scott Rosenthal, Portfolio Manager
In his role as portfolio manager, Mr. Rosenthal plays an integral part in the investment research review and decision-making process. He coordinates the day-to-day management of Global Value and International Value portfolios and represents these strategies to current and prospective clients. He also provides expertise and insight into the capital goods, energy and financials sectors. Prior to joining the firm, Mr. Rosenthal was a member of the investment team at FLAG Capital Management where he worked to identify and evaluate fund-of-funds investment opportunities in venture capital and private equity. He began his career as an analyst with UBS’ Health Care investment banking group. Mr. Rosenthal received his BA in Economics from Boston College and MBA with honors from Columbia Business School.
Statistics & Commentary
The performance data shown represents past performance. Past performance is not a guarantee of future results. Current performance may be lower or higher than the performance data quoted. The investment return and the principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.
Sector Breakdown as a % of AUM
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Top 10 Position Details
Investment Manager's Commentaryas of 29/05/2020
Market Review and Outlook
The MSCI World Index rose 7.7%, closing the second quarter of 2021 just shy of an all-time high. It is up +13.1% since the beginning of the year. While the threat of new COVID variants persists, vaccination levels increased and new cases slowed in most regions. Consequently, governments continued to ease closures/restrictions, accelerating economic activity around the globe. Manufacturing and labor markets showed signs of improvement, highlighting the potential for tight supply conditions. Consumer prices in the US rose at the fastest level in years. Brent crude oil touched $76/barrel, its highest level in more than two years. Corporate earnings continued to show strength, with 77% of MSCI World companies outperforming consensus expectations.
The yield on most developed market government bonds fell during the quarter (Germany Bunds were a slight exception), particularly for long-dated bonds. Real estate was among the top-performing sectors in the MSCI World index as REITs often trade inversely to interest rates, though at 2.7% it entered the quarter as the index’s smallest sector. Technology was the top-performing sector. The 8 largest individual contributors for the MSCI World were all technology-driven companies, though technically 3 of them reside in other sectors (Google and Facebook = communication services; Amazon.com = consumer discretionary; the others were Microsoft, Apple, Nvidia, PayPal, and Adobe). Utilities was the only sector that declined in the quarter, though industrials, materials, and consumer staples also lagged.
The MSCI World Growth Index outperformed the MSCI World Value Index (+10.9% vs. +4.7%) in the second quarter. This does not mean that value’s recent, limited stretch of outperformance has come to an end. Nearly all prolonged value-led markets contain stints when growth outperforms value. In perhaps the strongest value rally ever, for example, the MSCI World Value outperformed the MSCI World Growth by 78 percentage points from March 2000 through December 2006. However, growth outperformed value in more than one-third of those months (31 out of 82 months).
We continue to observe value spreads that are considerably wider than average. So too is the spread between the portfolio and the value benchmark, which means the spread between the portfolio and either the core or growth index is extreme. We believe this bodes well going forward as value relationships normalize. We continue to focus on companies trading at large discounts to intrinsic value but that have strong balance sheets, quality businesses, and employ appropriate corporate governance—a combination that we believe should continue to benefit our clients.
ATTRIBUTION: 2Q 2021
The Hotchkis & Wiley Global Value portfolio underperformed the MSCI World Index in the second quarter. The portfolio’s value focus hurt performance relative to the broad benchmark as global growth stocks outperformed global value stocks by a wide margin. The portfolio modestly underperformed the MSCI World Value Index. Relative to the broad benchmark, stock selection in technology and communication services detracted from performance, along with the overweight position in industrials. Positive stock selection in energy and consumer staples, along with the lack of exposure to utilities helped. The largest detractors to performance were F5 Networks, Discovery, Euronet Worldwide, Citigroup, and General Electric; the largest positive contributors were Wells Fargo, Heineken, Hess, Royal Mail, and Oracle.
LARGEST NEW PURCHASES: 2Q 2021
Babcock International Group is a U.K. government outsourcer with a focus on Ministry of Defense (MoD) contracts. Babcock’s 35k employees generally perform complex technical work with high barriers to entry and limited competition. The business saw productivity—and as a result margins—decline due to COVID-related health and safety measures put in place. Additionally, a few of Babcock’s key end markets, mainly Training and Aviation, have experienced depressed demand. With new leadership refocusing the business, we expect a significant recovery in profitability. Trading around 6x our view of normal earnings, we believe this is an attractive opportunity.
CVS Health operates fast growing insurance and pharmacy benefit management businesses. These well-positioned businesses should deliver strong earnings growth. Yet the value of these assets has been overshadowed by concerns regarding CVS’ front-end retail business. While the headwinds facing retail are real, this business is ultimately a very small piece of CVS Health’s value. We believe that CVS Health’s sum-of-the-parts valuation is attractive.
Gruma is the world’s largest tortilla and corn flour company. It competes in a small but growing category that benefits from favorable secular trends. The Company’s brands are well-positioned: nearly all of Gruma’s business has #1 or #2 market positions. Gruma is unusual among Mexican consumer staples companies in that 75% of its sales and profits are earned outside of Mexico in hard currency rather than pesos, with the U.S. representing more than half of EBITDA. The balance sheet is healthy, cash flow generation strong, and we trust management to be good stewards of shareholder value.
Facts & Documents
Fund Domicile: Luxembourg
Fund Type: UCITS SICAV
Fund Launch: 28 February 2019
Base Currency: USD
Depositary, Administrator, Transfert Agent: BNP Paribas Securities Services (LU)
Dealing: Each day with a 1-day notice
Cut-off time: 5 pm CET
Management Company: Alma Capital Investment Management
Investment Manager: Hotchkis & Wiley Capital Management, LLC (US)
The information related to the integration of sustainability risks and to the potential adverse sustainability impacts at the sub-fund level can be found in the prospectus of the Fund.
Institutional USD Capitalisation share class
ISIN: LU1907586306 Ticker: ALHWGIU LX Launch: 28 Feb 2019
available upon request