| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 8.96% | 8.28% | 1.04% |
Harris Associates' International Strategy returned 8.28% net in Q2 2026, underperforming the MSCI World ex USA Index which returned 10.22%. AI remained a defining market theme, with Samsung Electronics contributing strongly on record operating profit driven by AI-related semiconductor demand, particularly high-bandwidth memory where supply continues to trail robust demand. The memory up-cycle has been exceptionally strong. Cloud growth remained a positive driver, with Alibaba and SAP both showing strong cloud momentum despite near-term stock weakness. The manager initiated Bureau Veritas, a testing and inspection company, viewing its Q1 miss as creating an attractive entry point given its portfolio reshaping toward higher-growth end markets including data center commissioning and infrastructure. Key detractors included BMW, which cut guidance on weaker Chinese demand and Middle East headwinds, and Alibaba, where e-commerce results were soft due to heavy quick-commerce subsidies. The manager eliminated four positions and continues to focus on companies with competitive advantages, long-term cash-flow potential, and attractive valuations relative to intrinsic value.
Harris Associates maintains a disciplined value approach to international equities, focusing on companies with durable competitive advantages trading at meaningful discounts to intrinsic value, with particular emphasis on beneficiaries of AI-driven secular growth in semiconductors, cloud, and enterprise software, while opportunistically adding positions in quality businesses experiencing transitory headwinds.
The manager expects AI to remain a defining market theme and continues to evaluate companies based on their competitive advantages, long-term cash-flow potential, and valuation relative to intrinsic value rather than attempting to predict winners and losers. The tone is patient and disciplined, focused on fundamental value rather than momentum.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 24 2026 | 2026 Q2 | 005930 KS, ADS.DE, BABA, BMW.DE, BNP.PA, BVI.PA, SAP.DE | AI, Asia, Cloud, E-Commerce, Europe, international, semiconductors, value |
005930.KS ADS.DE BNP.PA BMW.DE BABA SAP BVI.PA |
Harris Associates' International Strategy underperformed in Q2 2026 despite strong contributions from AI-driven semiconductor and cloud positions. Samsung benefited from exceptional memory demand while Alibaba and SAP showed strong cloud growth. The manager opportunistically initiated Bureau Veritas at decade-low multiples following transitory headwinds. BMW and Alibaba e-commerce weakness detracted. The strategy maintains disciplined focus on competitive advantages and intrinsic value. |
| Mar 31 2026 | 2026 Q1 | 005930 KS, 8113.T, ADS.DE, CNHI, CPG.L, CPNG, DSY.PA, GLEN.L, HLN.L, LSEG.L, MC.PA, SAP.DE | AI, Asia, Europe, international, Mining, semiconductors, software, value | - | International value strategy underperformed in Q1 2026 despite strong semiconductor and mining contributions. Manager actively repositioned portfolio with six new initiations, focusing on companies trading at significant discounts to intrinsic value. Believes current market volatility and short-term noise create opportunities for disciplined investors emphasizing long-term business fundamentals over headlines. |
| Jan 26 2026 | 2025 Q4 | 005930.KS, 6301.T, AZN, BABA, BAYRY, CNHI, DASTY, DSV.CO, EXO.MI, IMCD.AS, MBG.DE, NVS, SAND.ST, SDR.L, SKF-B.ST, SNY, SY1.DE, UL, WLN.PA | Chemicals, Europe, international, Logistics, Pharmaceuticals, semiconductors, value | - | Harris Associates International Strategy returned 4.93% net in Q4 2025, driven by pharmaceuticals, semiconductors, and logistics. The manager initiated five new positions including AstraZeneca and specialty chemicals companies, capitalizing on attractive valuations. They believe the decade-long U.S. growth stock outperformance paradigm unraveled in 2025, with European equities fundamentals improving and valuation spreads narrowing in their favor. |
| Oct 28 2025 | 2025 Q3 | 035420.KS, AMS.PA, BABA, BNZL.L, CNHI, DSV.CO, DSY.PA, EDEN.PA, FMX, GLEN.L, HEXA-B.ST, ITRK.L, KER.PA, LLOY.L, OTEX, SHL.DE, SIE.DE, SMIN.L, SN.L, UHR.SW | Europe, fundamentals, growth, international, Quality, technology, valuation, value |
BABA GLEN LN BABA GLEN LN |
International value strategy returned 4.09% net in Q3, driven by luxury goods, Chinese AI, and copper strength. Manager initiated nine new positions at attractive valuations while eliminating nine others. Key thesis centers on narrowing valuation spreads between U.S. growth and international value stocks, with European fundamentals improving and driving increased investor interest in undervalued quality companies. |
| Jul 22 2025 | 2025 Q2 | 035420.KS, AMS.PA, BABA, BNZL.L, CNHI, DSV.CO, DSY.PA, EDEN.PA, FMX, GLEN.L, HEXA-B.ST, ITRK.L, KER.PA, LLOY.L, OTEX, SHL.DE, SIE.DE, SMIN.L, SN.L, UHR.SW | AI, Copper, Europe, international, Luxury, Mining, technology, value |
105560 KS CON GR BAYN GR BABA MC FP ASML 6273 JP |
International value manager underperformed in Q3 but remains confident in thesis that U.S. growth dominance is ending. Portfolio benefited from luxury goods, Chinese AI, and copper exposure while agricultural equipment struggled. Initiated positions in undervalued European quality companies. Expects continued compression of valuation spreads to benefit international value approach. |
| Mar 31 2025 | 2025 Q1 | 2502.T, 8802.T, BABA, BNP.PA, FLTR.L, GLEN.L, KER.PA, MC.PA, RTO.L, TKA.DE, WPP.L | Asia, Cloud, defense, Europe, Gambling, international, Luxury, real estate, value |
BNP.PA BABA TKA.DE 2502.T FLTR.L RTO.L 8802.T MC.PA |
Harris Associates' International Strategy outperformed with 7.86% net returns, driven by BNP Paribas banking strength, Alibaba's AI-fueled cloud growth, and thyssenkrupp's defense exposure. New positions in LVMH luxury goods, Flutter gambling, and Japanese real estate reflect opportunistic value investing. The manager maintains conviction that persistent value-growth valuation imbalances will drive continued outperformance. |
| Apr 15 2024 | 2024 Q1 | BAYN.DE, BXB.AX, CON.DE, DTG.DE, ISP.MI, MBG.DE, PRU.L, SKG.L, SN.L | Autos, Europe, financials, healthcare, international, value | - | Harris Associates International Strategy underperformed in Q1 2024 with a 0.20% return versus 5.59% for the benchmark. Strong performance from Daimler Truck and Intesa Sanpaolo was offset by weakness in Bayer and Prudential. The team initiated three new value positions in Brambles, Smurfit Kappa, and Smith & Nephew, all purchased at discounts to intrinsic value. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIAI remained a defining market theme in Q2 2026. Samsung Electronics benefited from strong AI-related demand across its semiconductor business, particularly in high-bandwidth memory for AI workloads. Alibaba's AI engine is performing well with Cloud growth remaining strong and newly disclosed AI product revenue scaling rapidly, though associated costs and capex are set to rise materially. SAP's CEO reassured investors that the AI transition will be incremental rather than a disruptive reset. |
Semiconductors Cloud Memory Data Centers |
Semiconductor CycleThe current memory up-cycle has been exceptionally strong as AI workloads have driven incremental demand for high-bandwidth memory. Samsung noted that memory chip supply continues to trail robust customer demand, supporting a favorable pricing environment. Samsung remains one of the leading memory companies in the world and is well positioned to benefit from increasing demand over the long term. |
Memory AI Samsung | |
E-commerceAlibaba's e-commerce results were soft, with subdued like-for-like growth and profits still pressured by heavy quick-commerce subsidies. Despite these near-term challenges, the manager continues to believe Alibaba is an attractive holding given its leadership in e-commerce and cloud, its rare full-stack AI capability, and management's ongoing capital return. |
Quick Commerce China Alibaba | |
CloudAlibaba's Cloud growth remained strong with management bullish on accelerating momentum. SAP delivered better-than-anticipated cloud growth ahead of guidance, with cloud current backlog growing ahead of consensus. The manager views cloud as a key component of both companies' investment theses. |
AI Enterprise Software SaaS | |
Testing & InspectionBureau Veritas is a France-headquartered testing, inspection, and certification (TIC) company operating in ~140 countries. The TIC industry's oligopolistic structure, accreditation-based barriers to entry, and mission-critical-but-low-cost services support durable organic growth and resilient through-cycle margins. The manager views Bureau Veritas as better positioned than perceived, with a portfolio reshaping toward higher-growth end markets including data center commissioning, fleet decarbonization, and infrastructure. A Q1 miss driven by transitory Government Services and Middle East headwinds has pushed the stock to near decade-low multiples, creating an opportunity to invest at a meaningful discount to intrinsic value. |
Data Centers Infrastructure Spending France | |
AutosBMW cut full-year guidance in June, lowering the Automotive EBIT margin on weaker Chinese demand, Middle East conflict fallout, and accelerated restructuring charges set to weigh on second half results. Despite this, the manager continues to view BMW as well positioned long term as the Neue Klasse vehicles are beginning to hit the market and management continues to take additional steps to support profitability and free cash generation. |
Electric Vehicles China Germany | |
| 2026 Q1 |
AIManager sees AI disruption risk as largely misapplied to certain software companies like Dassault, which simulates physical reality rather than managing information flows. Believes generic LLMs cannot easily bridge this distinction as it requires deep proprietary simulation datasets. Also notes AI-related employment disruption concerns affecting Compass Group valuation. |
Artificial Intelligence Software Disruption Enterprise |
Semiconductor CycleManager believes 2026 is likely to be the most profitable year yet for Samsung's memory business due to significant shortage of memory chips driven by insatiable demand from AI. Views this as thesis-affirmative and sees Samsung as one of the world's leading semiconductor companies with long runway for growth. |
Memory Semiconductors Samsung Supply | |
LuxuryLVMH delivered results broadly consistent with thesis, with healthy organic revenue growth and Fashion & Leather Goods segment slightly ahead of expectations. Manager believes negative share price reaction reflected overly optimistic investor expectations and sees the company as having a collection of iconic brands with long runway for future growth. |
LVMH Fashion Brands Growth | |
E-commerceInitiated position in Coupang, the leading e-commerce company in South Korea, comparing it to Amazon for wide product selection and best-in-class logistics. Manager believes Coupang's vertically integrated logistics model positions it well to capture market share and expand margins over the long term, despite recent cyber breach creating opportunity at attractive valuation. |
Coupang Logistics Korea Amazon | |
CopperGlencore benefited from supportive commodity price trends and strong Q4 production report for its copper business. Manager views Glencore shares as attractive on stand-alone basis thanks to significant and growing exposure to attractive copper assets, along with cash-generative coal business and differentiated marketing business. |
Glencore Mining Commodities Production | |
| 2025 Q4 |
AIManager believes AI revolution is fundamentally different from dot-com bubble due to current compute capacity constraints versus future demand. Views infrastructure buildout as most secure part of AI food chain, explaining continued investment in Nvidia, ASML, and new Micron position. Expects volatility but remains committed to AI thesis despite circular financing concerns around some players. |
Artificial Intelligence Data Centers Compute Infrastructure GPUs |
Trade PolicyManager notes 2025 saw global trade order rewritten through executive orders and tweets. Expects Supreme Court ruling on Trump tariff legality could invalidate IEEPA-imposed tariffs, though similar tariffs would likely be reimposed under other legal frameworks. Views tariffs as potential central topic for early 2026 but prefers they fade as investment concern. |
Tariffs Trade IEEPA Supreme Court | |
RatesFederal Reserve continued easing cycle with Fed Funds rate reaching parity with 2-year bond at 3.5%. Manager believes within 25-50 basis points of neutral rate. Disagrees with Trump's advocacy for several hundred basis point cuts, arguing it would steepen yield curve rather than reduce rates across all durations uniformly. |
Federal Reserve Interest Rates Monetary Policy | |
Enterprise SoftwareManager consolidated enterprise software exposure into platform companies ServiceNow and Salesforce while eliminating Adobe. Views platforms as better positioned than best-of-breed apps against AI disintermediation threats. Expects platform companies to deliver accelerating performance as AI solutions gain critical mass across enterprise. |
SaaS Platforms AI Integration | |
| 2025 Q3 |
ValueManager emphasizes investing in high-quality companies trading at attractive valuations below intrinsic value. Multiple positions initiated due to stocks trading at decade-low multiples despite solid fundamentals. |
Valuation Intrinsic Value Discount Quality Fundamentals |
AIAlibaba benefited from rapid Chinese AI growth with healthy Cloud segment revenue growth. The company is positioned as an early investor in Chinese AI with advanced capabilities and leading market position. |
Cloud Technology Growth China | |
CopperGlencore benefited from copper prices reaching near-record highs in September. Management expressed confidence that copper market conditions will grow more favorable with strong positioning to execute. |
Mining Commodities Metals Pricing | |
LuxuryKering rose in anticipation of new CEO leadership and Gucci collection debut. Manager believes new leadership can build on investments to strengthen luxury houses and return the group to growth. |
Consumer Brand Leadership Growth | |
| 2025 Q2 |
ValueManager emphasizes value investing approach and notes the unraveling of the U.S. growth/momentum paradigm that dominated for over a decade. European equities fundamentals have improved, driving more investor interest as valuation spreads compress. |
Value Valuation Europe Growth Momentum |
AIAlibaba Group benefited from rapid Chinese AI growth, with its Cloud segment posting healthy revenue growth. The company is well-positioned as one of the early investors in Chinese AI with advanced capabilities and leading market position. |
AI Cloud China Technology | |
CopperGlencore's stock price rose as copper prices reached near-record highs in September. Management expressed confidence that industry conditions in the copper market will grow more favorable, with Glencore well-positioned to execute. |
Copper Mining Commodities | |
LuxuryKering was a contributor during the quarter, rising in anticipation of new CEO Luca De Meo's tenure and Demna Gvasalia's debut collection at Gucci. New leadership is expected to build on investments to strengthen luxury houses and return the group to growth. |
Luxury Fashion Europe | |
| 2025 Q1 |
ValueThe manager argues that a large valuation imbalance remains present between value and growth equities, which will fuel better long-term performance for value stocks. They believe the weight of money has been heavily skewed to U.S. growth names for too long. |
Valuation Growth Outperformance Imbalance Long-term |
LuxuryThe portfolio includes positions in luxury goods companies LVMH and Kering. LVMH is viewed as a rare opportunity to purchase shares at a discounted valuation due to tariff fears and macro concerns, while Kering's management is trusted to identify creative personnel to extract value. |
Fashion Brands Premium Tariffs Recovery | |
CloudAlibaba's cloud revenue grew due to strong demand for cloud services and AI demand. The company has aggressively invested in AI and is one of the early leaders in China, being unique as a leader in both cloud computing services and large language models. |
AI Computing Services China Growth | |
Defense SpendingFollowing Germany's February general election, the newly elected government voted to increase spending with particular focus on defense. This benefits thyssenkrupp's Marine Systems segment, which should see significantly increased demand and orders going forward. |
Government Military Marine Orders Germany | |
GamblingFlutter Entertainment is the world's largest online gambling company with premier brands including FanDuel and Pokerstars. Online gambling favors scaled players and the company is well-positioned to capitalize on strong secular growth tailwinds as penetration continues to increase. |
Online Sports Betting Penetration Scale Secular | |
| 2024 Q1 |
ValueThe fund invests in businesses priced at substantial discounts to intrinsic value estimates. Multiple new positions were initiated at discounts to intrinsic value including Brambles, Smurfit Kappa, and Smith & Nephew. The strategy focuses on finding value regardless of what is in favor at any given moment. |
Intrinsic Value Discount Undervalued Fundamental Analysis Bottom-up |
AutosSignificant exposure to automotive companies including Daimler Truck Holding, Mercedes-Benz Group, and Continental. Daimler Truck showed margin resilience despite weaker global truck markets. Mercedes-Benz discussed electric vehicle market development and positioning. Continental continues on an accelerating pace of positive progress. |
Electric Vehicles Truck Manufacturing Automotive Parts EV Market Commercial Vehicles |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jul 24, 2026 | Fund Letters | Harris Associates International Equity Strategy | 005930.KS | Samsung Electronics | Consumer Electronics | Semiconductors & Semiconductor Equipment | Bull | Korea Exchange | AI infrastructure, Cyclical growth, High-Bandwidth Memory, memory chips, Pricing power, semiconductors, South Korea, technology hardware | Login |
| Jul 24, 2026 | Fund Letters | Harris Associates International Equity Strategy | ADS.DE | adidas | Footwear & Accessories | Textiles, Apparel & Luxury Goods | Bull | Xetra (Frankfurt Stock Exchange Deutsche Borse) | Apparel, Athletic Footwear, Brand, Consumer Discretionary, Geographic Diversification, Germany, growth, product innovation, Sportswear | Login |
| Jul 24, 2026 | Fund Letters | Harris Associates International Equity Strategy | BNP.PA | BNP Paribas | Banks - Regional | Banks | Bull | - | banking, capital return, CET1 ratio, European financials, france, net interest margin, retail banking, shareholder returns, Value | Login |
| Jul 24, 2026 | Fund Letters | Harris Associates International Equity Strategy | BMW.DE | BMW | Auto Manufacturers | Automobiles | Bull | Xetra (Frankfurt Stock Exchange Deutsche Borse) | automotive, China exposure, Cyclical, Electric Vehicles, Free Cash Flow, Germany, Premium Vehicles, Product cycle, restructuring | Login |
| Jul 24, 2026 | Fund Letters | Harris Associates International Equity Strategy | BABA | Alibaba Group | Internet Retail | Broadline Retail | Bull | New York Stock Exchange | Artificial Intelligence, capital return, China, Cloud computing, e-commerce, Full-Stack AI, Marketplaces, technology | Login |
| Jul 24, 2026 | Fund Letters | Harris Associates International Equity Strategy | SAP | SAP | Software - Application | Application Software | Bull | New York Stock Exchange | Artificial Intelligence, backlog growth, Cloud computing, Enterprise software, ERP, Germany, margin expansion, SaaS, subscription revenue | Login |
| Jul 24, 2026 | Fund Letters | Harris Associates International Equity Strategy | BVI.PA | Bureau Veritas | Consulting Services | Research & Consulting Services | Bull | - | business services, data centers, Decarbonization, france, infrastructure, margin expansion, oligopoly, secular growth, Testing Inspection Certification, Value | Login |
| Oct 28, 2025 | Fund Letters | David Herro | BABA | Alibaba Group Holding Ltd. | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | NYSE | AI, buybacks, China, cloud, e-commerce, growth, technology, valuation | Login |
| Oct 28, 2025 | Fund Letters | David Herro | GLEN LN | Glencore plc | Materials | Diversified Metals & Mining | Bull | NYSE | cash flow, Commodities, Copper, dividend, Electrification, Mining, valuation | Login |
| Oct 28, 2025 | Fund Letters | David Herro | BABA | Alibaba Group Holding Ltd. | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | NYSE | AI, buybacks, China, cloud, e-commerce, growth, technology, valuation | Login |
| Oct 28, 2025 | Fund Letters | David Herro | GLEN LN | Glencore plc | Materials | Diversified Metals & Mining | Bull | NYSE | cash flow, Commodities, Copper, dividend, Electrification, Mining, valuation | Login |
| Jul 22, 2025 | Fund Letters | David Herro | 105560 KS | KB Financial Group Inc. | Financials | Banks | Bull | New York Stock Exchange | banking, buybacks, dividends, Governance, Korea, valuation | Login |
| Jul 22, 2025 | Fund Letters | David Herro | CON GR | Continental AG | Consumer Discretionary | Auto Parts & Equipment | Bull | Xetra | Autosuppliers, Electrification, Margins, restructuring, Tires | Login |
| Jul 22, 2025 | Fund Letters | David Herro | BAYN GR | Bayer AG | Health Care | Pharmaceuticals | Bull | Xetra | conglomerate, Cropscience, litigation, pharma, restructuring, valuation | Login |
| Jul 22, 2025 | Fund Letters | David Herro | BABA | Alibaba Group Holding Ltd. | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | New York Stock Exchange | buybacks, China, cloud, ecommerce, Regulation, valuation | Login |
| Jul 22, 2025 | Fund Letters | David Herro | MC FP | LVMH Moët Hennessy Louis Vuitton SE | Consumer Discretionary | Apparel, Accessories & Luxury Goods | Bull | Euronext Stock Exchange | brands, cashflow, China, dividends, Luxury, Pricingpower | Login |
| Jul 22, 2025 | Fund Letters | David Herro | ASML | ASML Holding N.V. | Information Technology | Semiconductor Equipment | Bull | Euronext Stock Exchange | CapEx, Euv, growth, Lithography, Monopoly, semiconductors | Login |
| Jul 22, 2025 | Fund Letters | David Herro | 6273 JP | SMC Corp. | Industrials | Industrial Machinery | Bull | New York Stock Exchange | Automation, CapEx, Cyclicality, Freecashflow, Industrials, Pneumatics | Login |
| Mar 31, 2025 | Fund Letters | Harris Associates International Equity Strategy | BNP.PA | BNP Paribas | Financials | Banks | Bull | Euronext Paris | Banks, Corporate Banking, Diversified, Europe, financials, france, Institutional Banking, Personal Finance | Login |
| Mar 31, 2025 | Fund Letters | Harris Associates International Equity Strategy | BABA | Alibaba Group | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | NYSE | AI, China, Cloud computing, Consumer Discretionary, e-commerce, large language models, monetization, technology | Login |
| Mar 31, 2025 | Fund Letters | Harris Associates International Equity Strategy | TKA.DE | thyssenkrupp | Industrials | Industrial Conglomerates | Bull | XETRA | Defense, Germany, Government Spending, industrial conglomerate, Marine Systems, spin-off, value unlock | Login |
| Mar 31, 2025 | Fund Letters | Harris Associates International Equity Strategy | 2502.T | Asahi Group Holdings | Consumer Staples | Brewers | Bull | Tokyo Stock Exchange | Australia, Beer, Brewers, Central Europe, consumer staples, deleveraging, Japan, shareholder returns, Tax Reform | Login |
| Mar 31, 2025 | Fund Letters | Harris Associates International Equity Strategy | FLTR.L | Flutter Entertainment | Consumer Discretionary | Hotels, Restaurants & Leisure | Bull | London Stock Exchange | FanDuel, Gaming, market leader, online gambling, PokerStars, Scale Advantages, secular growth, Sports betting | Login |
| Mar 31, 2025 | Fund Letters | Harris Associates International Equity Strategy | RTO.L | Rentokil Initial PLC | Industrials | Commercial Services & Supplies | Bull | London Stock Exchange | Acquisitions, cash flow generation, Defensive growth, market leader, pest control, Scale Advantages, Terminix integration | Login |
| Mar 31, 2025 | Fund Letters | Harris Associates International Equity Strategy | 8802.T | Mitsubishi Estate | Real Estate | Real Estate Management & Development | Bull | Tokyo Stock Exchange | asset monetization, capital returns, inflation, Japan, Marunouchi, NAV discount, Prime Office, Real Estate, Tokyo | Login |
| Mar 31, 2025 | Fund Letters | Harris Associates International Equity Strategy | MC.PA | Louis Vuitton Moët Hennessy | Consumer Discretionary | Textiles, Apparel & Luxury Goods | Bull | Euronext Paris | Bernard Arnault, brand portfolio, China, fashion, Leather Goods, Luxury goods, LVMH, premium brands, tariffs | Login |
| TICKER | COMMENTARY |
|---|---|
| 005930.KS | Samsung Electronics was a contributor during the quarter. Shares of the South Korea-headquartered technology company rallied on the back of record first-quarter operating profit, driven by strong AI-related demand across its semiconductor business. Management noted that memory chip supply continues to trail robust customer demand, supporting a favorable pricing environment. The current memory up-cycle has been exceptionally strong as AI workloads have driven incremental demand for high-bandwidth memory. Samsung remains one of the leading memory companies in the world and is well positioned to benefit from increasing demand over the long term. |
| ADS.DE | adidas was a contributor during the quarter. Shares of the Germany-headquartered sportswear brand appreciated after it posted results that exceeded consensus expectations and are tracking ahead of our top-line forecast. The performance division was exceptionally strong, driven by strength in running, training and soccer, and every geography grew double digits except Europe (+6%). We value management's product-first focus and its continued progress in key markets, which we believe can help unlock further value over the long term. |
| BNP.PA | BNP Paribas was a contributor during the quarter. Results for the first quarter were better than expected. In the quarter, BNP demonstrated positive expense leverage, a continued low-risk profile, and top line growth in the retail franchises due primarily to reinvestment of non-remunerated deposits into a steeper yield curve. Capital build was the highlight, with CET1 up 20 basis points vs. the prior quarter, bringing them to 12.8%. We believe this leaves BNP well positioned to reach the targeted 13% a year ahead of plan, at which point shareholder returns have the potential to accelerate. With shares at a compelling valuation, fundamentals developing in line with our thesis, <10% of earnings exposed to a more challenged French economy, and a clear path to higher shareholder returns, we believe BNP's shares remain rather attractive. |
| BMW.DE | BMW was a detractor during the quarter. Shares of the Germany-headquartered automaker fell after management cut full-year guidance in June, lowering the Automotive EBIT margin on weaker Chinese demand, Middle East conflict fallout, and accelerated restructuring charges set to weigh on the second half results. The revision overshadowed an otherwise resilient first-quarter print, which showed solid execution, with automotive margins and free cash flow ahead of expectations and encouraging early indications from the Neue Klasse launch. We continue to view BMW as well positioned long term as the Neue Klasse vehicles are beginning to hit the market and management continues to take additional steps to support profitability and free cash generation. |
| BABA | Alibaba Group was a detractor during the quarter. E-commerce results were soft, with subdued like-for-like growth and profits still pressured by heavy quick-commerce subsidies. The AI engine, by contrast, is performing well — Cloud growth remained strong, management was bullish on accelerating momentum, and newly disclosed AI product revenue is scaling rapidly, though the associated costs and capex are set to rise materially. We continue to believe Alibaba is an attractive holding given its leadership in e-commerce and cloud, its rare full-stack AI capability, and management's ongoing capital return. |
| SAP.DE | SAP was a detractor during the quarter, with the stock declining despite strong results ahead of expectations. The Germany-headquartered enterprise software company delivered better-than-anticipated growth and margin and a clean underlying beat. Cloud current backlog grew, ahead of consensus and allaying fears that geopolitical disruption would drive a sharper deceleration. Cloud growth is tracking ahead of guidance, margins expanded, and management maintained its '26 and '27 targets. The CEO also reassured investors that the AI transition will be incremental rather than a disruptive reset. A slight trim to the total revenue guide, tied to professional services, is not material to the investment case. We continue to believe SAP offers further upside. |
| BVI.PA | Bureau Veritas is a France-headquartered testing, inspection, and certification (TIC) company operating in ~140 countries, providing independent verification that products and systems meet regulatory and contractual standards. The TIC industry's oligopolistic structure, accreditation-based barriers to entry, and mission-critical-but-low-cost services support durable organic growth and resilient through-cycle margins. We view Bureau Veritas as better positioned than perceived, with a portfolio reshaping toward higher-growth end markets — data center commissioning, fleet decarbonization, and infrastructure — and management executing an operational improvement program that has already delivered margin gains ahead of plan. A Q1 miss driven by transitory Government Services and Middle East headwinds has pushed the stock to near decade-low multiples, creating an opportunity to invest at a meaningful discount to our estimate of intrinsic value. |
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