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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Lyrical Asset Management 2023 Q4 Investor Letter | Buyside Digest

Back to Fund Profile (Lyrical Asset Management)

Primary Source Intelligence • Q4 2023 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

Annualized+9.3%

Positioning StanceConstructive

Market CapLarge Cap

GeographyGlobal, US, Europe

Digest Analysis

Quick Take

"Lyrical's Global Value strategy outperformed its style benchmark despite missing the Magnificent Seven rally, delivering superior earnings growth of 6.2% versus 4.0% for MSCI World."

Executive Summary

Lyrical Asset Management's Global Value strategy returned 21.2% in 2023, outperforming the MSCI World Value Index by 970 bps while underperforming the MSCI World by 260 bps due to not owning the Magnificent Seven mega-cap growth stocks. The portfolio delivered superior fundamentals with 6.2% earnings growth versus 4.0% for the MSCI World, demonstrating that underperformance was driven by multiple expansion rather than weaker business performance. The managers emphasize the significant opportunity in both U.S. and non-U.S. value stocks, with their portfolio trading at a 43% discount to MSCI World valuations. Non-U.S. markets appear particularly attractive, trading near their cheapest valuation relative to the U.S. in 20 years despite delivering similar fundamental returns. The cheapest quintile of U.S. stocks trades at just 9.4x earnings compared to 19.2x for the median stock, creating a valuation spread similar to crisis periods. With better projected earnings growth and deep value characteristics, the managers see compelling opportunities for patient capital deployment across global markets.

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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

85%

CautiousHigh

High Conviction (85%)

The manager expresses very high confidence in their disciplined value approach, asserting that their portfolio's superior earnings growth and 43% valuation discount will drive significant long-term outperformance.

Growth Outlook

40%

BearishBullish

Neutral (40%)

While cautious about the inflated valuations of broad market indices driven by mega-cap tech, the manager is moderately bullish on international equities and US value stocks.

Risk Appetite

30%

DefensiveAggressive

Defensive (30%)

The portfolio focuses on deep value stocks with low P/E multiples (10x) and historically lower economic sensitivity, reflecting a disciplined, value-conscious risk profile.

Capital Deployment

65%

De-riskingDeploying

Net Neutral (65%)

The manager actively deploys capital into attractive bottom-up stock opportunities across both U.S. and foreign markets.

Forward Guidance

75%

CautiousExpansionary

Expansionary (75%)

The manager is highly optimistic about future returns, citing attractive projected earnings growth and potential excess returns from mean-reverting valuation spreads.

Language Signal

80%

BearishBullish

Bullish (80%)

The letter maintains a clear, data-driven, and highly confident tone regarding their strategy's fundamental strength relative to benchmark indices.

Perceived Risk

30%

Low RiskElevated

Low Risk (30%)

While noting valuation risks in cap-weighted indices, the manager views fundamental risks within their own high-growth, cheap portfolio as low and resilient across economic cycles.

Opportunity Density

80%

ScarceAbundant

Abundant (80%)

The team identifies abundant investment opportunities in both non-U.S. markets and the cheapest quintile of U.S. equities.

Time Horizon

85%

Short-TermLong-Term

Decade+ (85%)

The letter explicitly emphasizes long-term performance horizons, evaluating 5-year to 20-year trends and fundamental drivers over short-term market noise.