| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 6.57% | -3.43% | -3.43% |
Cambiar International Equity Fund declined 3.43% in Q1 2026, underperforming the MSCI EAFE Index (-1.24%) as AI disruption fears dominated markets and Middle East conflict created volatility. The quarter saw notable style rotation from growth to value stocks, benefiting cyclical sectors like Energy and Industrials where international markets have greater exposure. AI concerns caused material valuation compression across software and technology companies, prompting Cambiar to sell Recruit Holdings while maintaining positions in SAP and Publicis based on their defensive moats. The team added to Airbus during investor overreaction and purchased Energias de Portugal to increase Utilities exposure. Private credit stress and elevated U.S. valuations add to macro concerns. With international equities trading at 14x P/E versus elevated U.S. multiples, the manager sees opportunity for outperformance if sentiment shifts. Portfolio construction emphasizes quality companies with pricing power and balance sheet strength, positioned for a market environment prioritizing margin of safety over upside participation.
Focus on quality international companies with pricing power, capital discipline, and balance sheet strength, trading at attractive valuations relative to U.S. markets, while navigating AI disruption fears and geopolitical uncertainty through disciplined stock selection.
With MSCI EAFE trading at ~14x P/E, international equities continue at deep discount to U.S. stocks. While valuation alone insufficient catalyst, low multiples can provide meaningful accelerator should sentiment improve. Manager expects diversification to become more important in uncertain periods, shifting from upside participation to margin of safety mindset.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 29 2026 | 2026 Q1 | 3064.T, AIR.PA, COLOB.CO, EDP.LS, PUB.PA, RYA.L, SAP, SWM | AI, energy, international, Quality, value | - | International fund underperformed amid AI disruption fears and Middle East volatility. Manager navigated by selling AI-vulnerable Recruit Holdings while adding to defensive positions like Airbus and utilities. Value rotation favors international markets given cyclical exposure. With international stocks at 14x P/E discount to U.S., focus remains on quality companies with pricing power. |
| Jan 26 2026 | 2025 Q4 | DEO, KYGA.L, LSEG.L, SW, TSM | AI, Currency, Europe, financials, international, semiconductors, staples, value | SW | Cambiar International delivered strong absolute returns but lagged benchmark due to elevated cash and Consumer Staples weakness. Fund maintains constructive outlook on international equities given valuation asymmetry versus richly priced U.S. markets. European stimulus should provide earnings tailwinds. Sold Taiwan Semi after 400% gains, added Smurfit Westrock. Expects more selective 2026 gains with cautiously optimistic stance. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
AIAI disruption fears dominated the quarter, causing material valuation compression across software and other businesses. Markets struggled to predict which companies could withstand AI displacement versus those at risk of substitution. Cambiar sold Recruit Holdings due to AI concerns but maintained positions in SAP and Publicis, viewing them as having defensive moats against AI disruption. |
Software Disruption Valuation Technology Enterprise |
ValueNotable divergence emerged as growth stocks struggled while value stocks provided downside protection. Cyclical sectors like Energy, Industrials, and Materials benefited from rotation away from Technology and Consumer Discretionary. This shift favors international markets given their greater exposure to cyclicals and value-oriented sectors. |
Cyclicals Rotation Energy Materials Industrials | |
EnergyEnergy sector registered strong returns in the quarter, with Cambiar benefiting from modest overweight allocation and solid stock performance. However, the manager remains hesitant to add to energy stocks given potential for oil prices to pull back as Middle East tensions de-escalate. |
Oil Middle East Geopolitical Commodities | |
Private CreditPrivate credit showing signs of struggle via defaults and loan markdowns after explosive growth. The combination of abundant liquidity and willingness to take risks that banks passed on is now constraining business investment and hiring as credit availability shrinks and financial conditions tighten. |
Credit Defaults Liquidity Banks | |
| 2025 Q4 |
RiskMarket concentration has led to increased risk contribution from the ten largest companies, now accounting for more than 50% of S&P 500 volatility. The largest stocks have become more volatile and correlated, creating uneven beta distribution that challenges traditional risk models. |
Volatility Beta Correlation Risk Models Concentration |
AIBreakthroughs in artificial intelligence have helped drive notably strong performance in mega cap stocks, contributing to increased market concentration. AI is identified as a key driver of the recent period of outperformance among the largest companies. |
Technology Performance Mega Caps Innovation |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 26, 2026 | Fund Letters | Brian M. Barish | SW | Smurfit Westrock plc | Materials | Paper & Packaging | Bull | New York Stock Exchange | Corrugated, Margins, Merger Synergies, Packaging, Self Help | Login |
| TICKER | COMMENTARY |
|---|---|
| AIR.PA | Airbus is one example of investor overreaction in the quarter. The company did miss production expectations due to supplier engine/component delays; however, the bulk of the 1Q decline was off in sympathy with airlines – whose earnings are more clearly impacted by higher jet fuel prices. The investment thesis for Airbus is very much intact – the company has a 10-year backlog of commercial plane orders and is a straightforward delivery execution story. We added to our position in the quarter. |
| SAP | As for SAP, it is challenging to envision a scenario where AI implementation in business processes delivers organizational value without an ERP backbone. The recent drawdown in the stock price results in a 7% free cashflow yield and 16x P/E (one year forward) for what we view to be a high-quality business. |
| PUB.PA | Assuming ad-sponsored tiers of non-linear programming will continue to be used to fund content, Publicis' dataset should be extremely valuable. |
| EDP.LS | We increased our allocation to Utilities with the purchase of Energias de Portugal (EDP). EDP is an integrated utility with exposure to power trends in the Iberian Peninsula, the U.S., and Brazil. Tailwinds include cost-advantaged power assets and exposure to high secular growth opportunities such as datacenters. |
| COLOB.CO | Coloplast sells a variety of healthcare products that include urology, wound treatment and voice/respiratory care. The drawdown in the stock was in response to weaker than anticipated sales growth. One of the company's key products (Kerecis - wound care) issued a soft sales forecast due to pricing caps in certain channels. At the time of purchase, we viewed Coloplast to offer an attractive risk/reward as we await an inflection in margins/earnings. |
| RYA.L | While higher jet fuel prices will impact Ryanair's profitability, pricing actions can be taken as an offset. |
| 3064.T | Monotaro is a Japan-based business-to-business company that sells a variety of industrial/construction/repair supplies (a U.S. proxy would be W.W. Grainger). The stock has underperformed in recent quarters due to concerns around top line growth trends, as well as higher yields in Japan – which leads to a higher cost of capital. Even after incorporating these two factors into our models, we believe Monotaro represents an attractive return opportunity, as the company continues to take share in what is a fairly fragmented industry in Japan. |
| SWM | AI cannot be a substitute for exploration & production companies in the oil patch, replace a national rail/freight transportation network, or serve as an alternative to corrugated containers produced by Smurfit Westrock. |
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