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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"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."
Harris Associates' International Strategy delivered 7.86% net returns in Q1 2025, outperforming the MSCI World ex USA Index's 6.20% return. The portfolio benefited from strong contributions from BNP Paribas, which posted strong fiscal results driven by Corporate and Institutional Banking strength, and Alibaba Group, which delivered accelerating e-commerce growth and cloud revenue expansion fueled by AI demand. Thyssenkrupp gained on solid results and increased German defense spending benefiting its Marine Systems segment. Key detractors included WPP due to weaker results and client losses, Glencore from declining commodity prices, and Kering despite in-line results. The manager initiated five new positions including Asahi Group Holdings, Flutter Entertainment, Rentokil Initial, LVMH, and Mitsubishi Estate, while eliminating four holdings. The investment approach remains focused on bottom-up fundamental analysis, with the manager maintaining conviction that significant valuation imbalances between value and growth equities will drive superior long-term performance for value-oriented strategies despite recent outperformance.
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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 by maintaining positions in underperforming holdings like WPP and Glencore due to strong intrinsic value, while adding multiple new high-conviction positions during pullbacks.
Growth Outlook
The manager expresses optimism for international value equities, highlighting a persistent valuation imbalance that should fuel outperformance.
Risk Appetite
The fund actively took advantage of market sell-offs and macro concerns to buy high-quality names like LVMH, Flutter, and Rentokil at discounted valuations.
Capital Deployment
The manager actively deployed capital into five new high-conviction holdings while exiting four existing positions to optimize portfolio alignment.
Forward Guidance
Forward guidance across portfolio holdings and value equities is positive, with expectations of operational recovery, margin expansion, and market re-rating.
Language Signal
The commentary uses confident, assertive language focusing on fundamental intrinsic value, competitive advantages, and well-positioned management teams.
Perceived Risk
While acknowledging macroeconomic uncertainties and commodity price volatility, the manager views market risk as creating attractive entry points rather than fundamental threats.
Opportunity Density
The team identified numerous compelling buy opportunities across varied sectors and regions, initiating five new positions during the quarter.
Time Horizon
The strategy clearly focuses on a multi-year horizon, prioritizing long-term capital generation and intrinsic value over short-term earnings noise.
