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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Lyrical Asset Management 2024 Q4 Investor Letter | Buyside Digest

Back to Fund Profile (Lyrical Asset Management)

Primary Source Intelligence • Q4 2024 Letter Analysis

Lyrical Asset Management Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Lyrical Asset Management. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

YTD-0.02%

Annualized+6.4%

Positioning StanceConstructive

Market CapMid Cap

GeographyEurope, Asia, Global

Digest Analysis

Quick Take

"Lyrical's international value strategy underperformed in 2024 due to mega-cap concentration and AI fears affecting Samsung and Teleperformance. The portfolio trades at 10.4x earnings with superior growth versus EAFE at 13.8x."

Executive Summary

Lyrical's International Value strategy returned -2.1% in 2024, underperforming the EAFE (+3.8%) and EAFE Value (+5.7%) due to three key headwinds. First, mega-cap concentration drove cap-weighted indices to outperform equal-weighted by 210 bps, creating challenges for their mid-cap focused approach. Second, Samsung Electronics and Teleperformance suffered severe multiple compression despite positive earnings growth, as AI concerns weighed on valuations. Third, avoiding banks cost performance as financials gained 25% in 2024. The managers maintain conviction in their quality value approach, noting the portfolio trades at 10.4x forward earnings versus 13.8x for EAFE while generating superior earnings growth. Samsung is expected to close its AI memory technology gap by 2025, while Teleperformance's market-leading position and complexity should enable adaptation to AI disruption. With 75% upside to intrinsic value and historical precedent suggesting large-cap outperformance will reverse, they expect significant future outperformance from their benchmark-agnostic, analyzable business focus.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

72%

CautiousHigh

High Conviction (72%)

High conviction evidenced by maintaining concentrated positions in Samsung and Teleperformance despite 38% average declines and 3.1% portfolio detraction. The managers provide detailed fundamental analysis, specific timelines (Samsung technology parity by end 2025), and explicit valuation targets (75% upside to intrinsic value). The 99% active share and willingness to accept significant tracking error further demonstrates conviction in their approach.

Growth Outlook

25%

BearishBullish

Bearish (25%)

The manager expresses cautious optimism about future opportunities while acknowledging current challenging market dynamics. They note the unusual seven-year period of large-cap outperformance and expect this to normalize, but don't express strong bullish conviction about near-term market conditions.

Risk Appetite

40%

DefensiveAggressive

Defensive (40%)

The portfolio maintains concentrated positions in Samsung and Teleperformance despite significant underperformance, indicating willingness to hold through volatility. However, the defensive stance of avoiding banks and focus on analyzable businesses suggests measured risk appetite rather than aggressive positioning.

Capital Deployment

0%

De-riskingDeploying

De-risking (0%)

No specific information provided about cash level changes or net deployment activity during 2024. The letter focuses on performance attribution and fundamental analysis of existing holdings rather than discussing capital allocation decisions or changes in exposure levels.

Forward Guidance

50%

CautiousExpansionary

Neutral (50%)

The manager expresses high expectations for portfolio returns and confidence in their approach, with specific catalysts identified like Samsung's technology convergence by 2025. They maintain conviction in current holdings while expecting significant outperformance, indicating a moderately positive deployment bias.

Language Signal

30%

BearishBullish

Bearish (30%)

Language is balanced between acknowledging current challenges and expressing confidence in future prospects. Terms like 'high expectations,' 'significant outperformance,' and 'buying opportunities' are offset by discussions of headwinds, uncertainty, and disappointing performance.

Perceived Risk

45%

Low RiskElevated

Moderate Risk (45%)

Moderate risk acknowledgment focused on AI disruption uncertainty for portfolio companies and unusual market dynamics favoring mega-caps. The manager discusses specific risks to Samsung and Teleperformance from AI but frames these as manageable challenges rather than systemic threats.

Opportunity Density

65%

ScarceAbundant

Abundant (65%)

The manager sees selective opportunities in their quality value approach, noting attractive valuations in current holdings and the potential for normalization of market dynamics. While acknowledging current headwinds, they express confidence in finding analyzable businesses outside mega-caps with 75% upside potential.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

Multi-year investment horizon evidenced by willingness to hold through significant volatility and focus on long-term fundamental drivers. Specific mention of Samsung's technology convergence by end 2025 and historical analysis of market cycles spanning decades indicates patient capital approach with 2-5 year thesis timeframes.