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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Pzena International Value delivered strong Q3 performance driven by value outperformance and AI-related gains in Alibaba and TDK. The manager continues finding opportunities in undervalued companies with strong fundamentals, particularly those in profit recovery mode, while managing around tariff concerns and sector-specific headwinds in chemicals and trucking."
Pzena International Value ADR delivered strong performance in Q3 2025 with a 6.6% net return, outperforming benchmarks as value stocks outpaced growth. The portfolio benefited from strong performance in financials and consumer discretionary, partially offset by weakness in industrials and materials. Top contributors included Alibaba, which saw optimism around its cloud and AI businesses, ING Groep with solid banking results, and TDK Corp benefiting from AI-related storage demand. Key detractors were Teleperformance due to temporary contract losses, Daimler Truck facing tariff headwinds, and Arkema amid soft chemical demand. The manager added to positions in Michelin, Teleperformance, and Daikin while exiting T&D Holdings and NatWest, trimming Alibaba, Rexel, and Continental on valuation. The portfolio remains positioned in businesses in profit recovery mode, overweight consumer discretionary and healthcare while avoiding communication services. Recent uncertainty continues to create attractive opportunities for long-term value investors given cheap valuations relative to fundamentals.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
The manager demonstrates high conviction through active portfolio management, clear positioning statements, and strong language about being 'very excited' by opportunities. Specific sector allocations and explicit avoidance of communication services shows decisive positioning.
Growth Outlook
The manager expresses optimism about continued market upward trends, stable macro environment, and abating tariff concerns. They note that non-U.S. equity markets continued their upward trend and describe increased investor risk appetite, indicating a positive market outlook.
Risk Appetite
The portfolio shows selective risk-taking with active position management - adding to some positions while exiting others and trimming on valuation. The overweight to consumer discretionary and healthcare with no communication services exposure suggests moderate risk appetite rather than aggressive positioning.
Capital Deployment
The manager shows modest net deployment by adding to three existing positions while exiting two positions and trimming three others. This represents selective capital deployment rather than aggressive or defensive positioning, indicating slight net positive deployment.
Forward Guidance
The manager expresses strong excitement about opportunities for long-term value investors and cheap company valuations. They explicitly state being 'very excited' about current valuations and see uncertainty as creating opportunities, indicating bullish forward guidance.
Language Signal
Language includes positive terms like 'opportunities,' 'excited,' 'attractive,' and 'strong performance' balanced against mentions of 'weakness,' 'concerns,' and 'headwinds.' The net balance leans slightly positive with emphasis on opportunity and value discovery.
Perceived Risk
The manager acknowledges specific risks including tariff concerns, soft chemical demand, and sector-specific headwinds, but frames these as creating opportunities rather than systemic threats. Risk perception is moderate with focus on company-specific rather than market-wide risks.
Opportunity Density
The manager explicitly states being 'very excited' about cheap company valuations and describes recent uncertainty as creating opportunities for long-term value investors. This indicates a rich opportunity set across their international value universe.
Time Horizon
The manager emphasizes 'long-term value investors' and focuses on businesses in 'profit recovery mode,' suggesting a patient, multi-year investment approach. The value investing philosophy inherently requires longer time horizons for thesis realization.
