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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Hotchkis & Wiley Global Value Fund 2026 Q3 Investor Letter | Buyside Digest

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

Primary Source Intelligence • Q3 2026 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

QTD+3.44%

YTD+10.12%

Annualized+10.5%

Positioning StanceCONSTRUCTIVE

Market CapAll Cap

GeographyGlobal

Digest Analysis

Quick Take

"Positioned defensively in high-quality, attractively valued compounders with strong balance sheets, focusing on mispriced enterprise software franchises like $WDAY and $SAP while maintaining underweights in rate-sensitive utilities and real estate."

Executive Summary

The Hotchkis & Wiley Global Value Fund (I Shares) generated a net return of +3.44% in the third quarter of 2026, bringing its year-to-date net performance to +10.12%. For the quarter, the strategy performed in line with the MSCI World Value Index's +3.84% return and outperformed the broader MSCI World Index's +1.88% advance. Relative performance was propelled by strong stock selection and an overweight position in Information Technology, specifically enterprise software holdings, while underweight exposures to interest-rate-sensitive real estate and utilities provided additional tailwinds. Conversely, benchmark performance was hindered by not owning index mega-caps Microsoft and Meta Platforms, alongside stock selection drag in healthcare, financials, and materials. The macroeconomic environment was shaped by resurging inflationary pressures and geopolitical escalation. Renewed Middle East hostilities and the breakdown of the US/Iran ceasefire pushed Brent crude up 45% to $104 per barrel, reigniting headline inflation and prompting 25-basis-point interest rate increases from both the Federal Reserve (to 4.00%) and the European Central Bank. Rising bond yields triggered an unwinding of high-beta and momentum trades, spurring a rotational shift back toward attractively priced, high-quality value equities while speculative enthusiasm around artificial intelligence hardware experienced a sharp pause. Portfolio activity was marked by disciplined rebalancing in enterprise software and capital allocation to durable compounders. Management trimmed top holding Workday following buyout rumors and exceptional strength, while maintaining high conviction in deeply discounted software franchises like SAP that continue to demonstrate robust organic revenue and mission-critical enterprise retention. The fund continues to lean into high-quality, financially sound businesses trading at substantial discounts to normalized earnings power across global value segments.

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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%)

Management displays focused conviction across select high-conviction ideas, maintaining Workday as its largest holding at 5.2% and explicitly sizing its top ten holdings to comprise nearly 30% of net assets. Clear valuation frameworks are applied to defend underperforming positions like Cummins, Ericsson, and Accor against short-term market reactions. However, the broader strategy remains a multi-asset global mutual fund with diversified holdings across geographies and sectors, which moderately dilutes portfolio-level concentration.

Growth Outlook

58%

BearishBullish

Neutral (58%)

The outlook is constructive on valuation-driven equities but cautious regarding the broader macro tape given 45% crude oil spikes, renewed central bank tightening, and elevated long-term bond yields. The manager highlights that the speculative cycle in high-beta momentum is giving way to fundamentals, creating a favorable relative backdrop for high-quality value. However, persistent inflation and geopolitical headwinds temper absolute market optimism.

Risk Appetite

62%

DefensiveAggressive

Balanced (62%)

Portfolio capital is tilted toward select attractively valued enterprise software, industrial, and global consumer franchises while maintaining underweight stances in rate-sensitive utilities and real estate. The fund actively trimmed strong performers like Workday on takeover reports and avoids capital deployment into speculative, highly valued AI beneficiaries. This disciplined risk posture reflects selective risk-taking balanced by strict margin-of-safety criteria.

Capital Deployment

52%

De-riskingDeploying

Net Neutral (52%)

Capital deployment remains net neutral, marked by routine portfolio rebalancing such as trimming Workday following substantial price gains. The letter does not describe any significant cash accumulation or wholesale liquidation of positions. Capital appears to be recycling steadily within established long holdings without major shifts in aggregate exposure.

Forward Guidance

60%

CautiousExpansionary

Neutral (60%)

The manager indicates a steady, selective deployment posture, opportunistically trimming names on strong appreciation while standing pat or leaning into temporarily impaired compounders like Cummins and Accor. There is no broad mandate to aggressively deploy dry powder or de-risk the portfolio en masse. Instead, actions remain centered on patient bottom-up rebalancing into undervalued, cash-generative equities.

Language Signal

64%

BearishBullish

Balanced (64%)

Directional language skews constructive when discussing bottom-up holdings, frequently emphasizing 'attractive valuation,' 'durable compounding,' 'manageable' input cost surges, and 'unfounded' AI disruption fears. This is balanced by macro observations of 'renewed conflict,' 'inflation fears,' 'force majeure notices,' and elevated rate pressures. On balance, bottom-up equity rhetoric leans moderately bullish.

Perceived Risk

68%

Low RiskElevated

Elevated Risk (68%)

The manager identifies significant macroeconomic and geopolitical threats, including the collapse of the US/Iran ceasefire, oil reaching $104 per barrel, and persistent inflation driving synchronized rate hikes. Systemic concerns surrounding the financing sustainability of massive AI data center buildouts are also highlighted via rising bond yields and corporate force majeure filings. These risks are treated as meaningful headwinds rather than negligible background noise.

Opportunity Density

66%

ScarceAbundant

Abundant (66%)

Compelling opportunities are identified within select enterprise software, international travel, and specialized industrials where market fears have depressed valuations below normalized earnings power. At the same time, the manager emphasizes that broad market breadth has remained exceptionally narrow, with the median stock lagging significantly. Thus, the investable opportunity set is perceived as attractive but highly concentrated in misunderstood value niches.

Time Horizon

72%

Short-TermLong-Term

Decade+ (72%)

Investment rationale is anchored in a multi-year horizon, judging portfolio companies on their normalized earnings power rather than quarterly noise. Shortfalls at Cummins, Accor, and Ericsson are explicitly evaluated against multi-year earnings trajectories through 2027 and beyond. The manager stresses that single-quarter performance does not mark the conclusion of cycles, prioritizing patient fundamental realization.