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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Hotchkis & Wiley Global Value Fund 2024 Q3 Investor Letter | Buyside Digest

Back to Fund Profile (Hotchkis & Wiley Global Value Fund)

Primary Source Intelligence • Q3 2024 Letter Analysis

Hotchkis & Wiley Global Value Fund Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Hotchkis & Wiley Global Value Fund. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

Annualized+10.5%

Digest Analysis

Quick Take

"Hotchkis & Wiley Global Value Fund underperformed in Q3 2024 due to underweight positions in rate-sensitive sectors that benefited from declining rates and overweight energy exposure amid sector weakness."

Executive Summary

The Hotchkis & Wiley Global Value Fund underperformed the MSCI World Value Index in Q3 2024, returning 5.58% versus the benchmark's 9.57%. The underperformance was primarily driven by sector allocation decisions and stock selection challenges. The portfolio's underweight in rate-sensitive sectors like utilities and real estate, which benefited from declining interest rates, weighed on relative performance. Additionally, the fund's slight overweight in energy detracted as the sector experienced its second consecutive quarterly decline amid historically bearish sentiment. Stock selection in financials, communication services, consumer discretionary, and industrials also detracted from performance. However, technology stock selection contributed positively, with holdings like F5 and Ericsson performing well. The managers maintain their disciplined value approach, focusing on businesses with durable balance sheets, sustainable returns on equity, and attractive valuations. They remain committed to long-term value creation while managing risk through selective positioning, including underweighting high-leverage companies. The team anticipates improved energy sector performance as economic conditions evolve.

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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

68%

CautiousHigh

Moderate (68%)

The fund demonstrates moderate-high conviction through named positions with specific thesis explanations for holdings like F5, Ericsson, Samsung, and Alphabet. Top 10 holdings represent meaningful portfolio weights (2.4-4.7%), and managers provide detailed rationale for sector positioning decisions. However, the diversified nature of the portfolio and hedged language around market conditions prevents a higher score.

Growth Outlook

25%

BearishBullish

Bearish (25%)

The managers express cautious optimism about lower interest rates being favorable for markets but emphasize focusing on long-term trends rather than short-term fluctuations. They acknowledge potential economic slowdown concerns in technology but maintain commitment to their strategy.

Risk Appetite

10%

DefensiveAggressive

Defensive (10%)

The portfolio maintains defensive characteristics with underweight positions in high-leverage companies and rate-sensitive sectors. The managers explicitly state their focus on seeking better risk-adjusted returns and effective risk management, indicating a cautious risk appetite.

Capital Deployment

0%

De-riskingDeploying

De-risking (0%)

No specific cash level changes or deployment activity is mentioned in the letter. The managers discuss maintaining their current positioning and strategy without indicating net deployment or de-risking activity during the quarter.

Forward Guidance

15%

CautiousExpansionary

Cautious (15%)

The managers indicate they will continue their disciplined approach without suggesting aggressive deployment. They anticipate improved energy performance but do not signal major portfolio changes or increased activity levels.

Language Signal

20%

BearishBullish

Bearish (20%)

Language is balanced with some positive terms like 'attractive valuations,' 'favorable,' and 'improved performance' but also includes risk-aware language about economic slowdown, challenges, and the need for selectivity.

Perceived Risk

45%

Low RiskElevated

Moderate Risk (45%)

The managers acknowledge moderate risks including potential economic slowdown in technology, regulatory scrutiny for some holdings, and sector-specific challenges. However, risk discussion is not central to the letter and is balanced with opportunity identification.

Opportunity Density

60%

ScarceAbundant

Selective (60%)

The managers identify selective opportunities in specific names and sectors, discussing attractive valuations in several holdings. They express confidence in finding undervalued assets but emphasize the need for selectivity and risk management, suggesting a moderately rich opportunity set.

Time Horizon

70%

Short-TermLong-Term

Decade+ (70%)

The managers emphasize focusing on long-term trends rather than short-term fluctuations and describe their strategy as aimed at generating consistent long-term returns. They discuss multi-year themes like DRAM demand growth and energy sector recovery, indicating a multi-year investment horizon.