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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Hardman Johnston's international equity strategy significantly outperformed benchmarks in Q4 2024 through superior stock selection, particularly in Technology and Financials. TSMC and Atlassian drove tech gains while Standard Chartered led financials."
Hardman Johnston's International Equity strategy delivered strong relative performance in Q4 2024, returning -3.26% net versus -8.11% for MSCI EAFE, driven by superior stock selection. Information Technology and Financials were top sector contributors, with TSMC benefiting from AI processor demand and Atlassian recovering on strong cloud growth. Standard Chartered and Dai-ichi Life led Financials performance through earnings beats and favorable interest rate environments. Consumer Discretionary detracted as MercadoLibre faced Brazil macro headwinds and LVMH struggled with luxury sector slowdown from Chinese demand weakness. The portfolio initiated Sandoz Group, a biosimilars specialist positioned for patent cliff opportunities, while liquidating Nordic Semiconductor due to IoT market volatility. Looking ahead, the manager expects 2025 unpredictability from Trump policies but believes their bottom-up approach and portfolio resilience will navigate various scenarios. Full valuations and higher rates require getting fundamentals right, though heightened volatility should create attractive entry points for quality holdings.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
The portfolio holds 25 concentrated positions with detailed thesis explanations for each major holding. The manager provides specific reasoning for position additions (Sandoz) and liquidations (Nordic Semi), demonstrates clear sector allocation decisions, and expresses confidence in their bottom-up stock selection approach despite market uncertainties.
Growth Outlook
The manager acknowledges both positive and negative scenarios for 2025, with deregulation and tax cuts as tailwinds but tariffs and immigration policies as headwinds. They expect unpredictability and most scenarios point to decelerating GDP growth, showing cautious optimism tempered by significant uncertainty.
Risk Appetite
The portfolio maintains concentrated positions but acknowledges full valuations and higher rates require careful fundamental analysis. The manager emphasizes the need to 'get the fundamentals right' and notes that stock prices can be punished for bad news, indicating a measured risk approach.
Capital Deployment
The manager initiated one new position (Sandoz) and liquidated one (Nordic Semi), representing rotation rather than net deployment. Cash remains low at 1.6% with no indication of significant cash level changes. This represents minimal net capital deployment activity.
Forward Guidance
The manager expects heightened volatility to present new opportunities and potential to add to existing holdings at attractive entry points. They maintain confidence in their portfolio's resilience across scenarios while being prepared for various outcomes, showing selective deployment bias.
Language Signal
Language is balanced between opportunities (attractive entry points, portfolio resilience, quality holdings) and risks (full valuations, unpredictability, higher rates). The manager uses cautious but constructive framing with more risk acknowledgment than pure bullish language.
Perceived Risk
The manager identifies multiple specific risks including tariff impacts on growth and inflation, geopolitical uncertainty affecting semiconductors, full valuations with less forgiveness, higher interest rates, and political uncertainty in Europe. These risks are discussed with meaningful detail and concern.
Opportunity Density
The manager sees selective opportunities, particularly expecting heightened volatility to create attractive entry points for existing holdings. They identify specific opportunities in biosimilars (Sandoz), AI value chain, and energy transition themes, but emphasize the need for selectivity given full valuations.
Time Horizon
The manager emphasizes medium to long-term growth for holdings like MercadoLibre and discusses structural trends in AI, energy transition, and defense spending. They view current investments as positioning for multi-year themes while acknowledging some near-term catalysts, indicating a 2-4 year investment horizon.
