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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Tweedy, Browne International Value II 2026 Q3 Investor Letter | Buyside Digest

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Primary Source Intelligence • Q3 2026 Letter Analysis

Tweedy, Browne International Value II Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Tweedy, Browne International Value II. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD+2.75%

YTD+11.82%

Annualized+6.39%

Positioning StanceCONSTRUCTIVE

GeographyGlobal, Europe, Asia

Digest Analysis

Quick Take

"Elevated capital costs and extreme valuation concentration are reviving international value opportunities characterized by robust balance sheets, durable moats, and disciplined capital allocation."

Executive Summary

Tweedy, Browne International Value Fund II – Currency Unhedged returned 2.75% net of fees in the third quarter of 2026, outperforming its international benchmark, the MSCI EAFE Index (USD), which gained 0.81%. Year-to-date through September 30, 2026, the strategy generated an 11.82% net return compared to 10.33% for the index. Equity exposure stood at 94.75% of net assets at quarter-end, complemented by a 5.25% cash and money market reserve without currency hedges. Portfolio performance was propelled by strong attribution across industrial machinery, IT services, specialty retail, and selected financial institutions, led by top contributors including CNH Industrial, Computacenter, Alten, Azelis Group, and Rubis. Management's macroeconomic framework highlights an impending structural transition across global equity markets driven by elevated interest rates, persistent inflation, high sovereign deficits, and historically stretched US equity valuations. The commentary emphasizes that international markets offer a substantially more compelling opportunity set than the narrow group of mega-cap domestic technology names that have dominated index performance. Tweedy, Browne notes that aggressive capital expenditure cycles in artificial intelligence infrastructure, rising margin leverage, and elevated market optimism raise fundamental questions regarding future returns on invested capital and prospective downside risks. Portfolio activity reflected disciplined, price-sensitive capital deployment into established international businesses trading at conservative discounts to intrinsic value with resilient balance sheets. During the quarter, the strategy initiated new positions in automotive technology supplier Aptiv, luxury goods leader LVMH, automotive component specialist Minth Group, Philippine grocer Puregold Price Club, Japanese automaker Toyota Motor, and Mimaki Engineering. The strategy selectively trimmed Computacenter after substantial share price gains and completed full exits from Teleperformance, Alliance Global Group, and Transcosmos.

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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

55%

CautiousHigh

Moderate (55%)

Portfolio construction exhibits moderate concentration with 75 distinct holdings across varied international markets, where the top 20 equity positions account for 48.98% of net assets. Individual equity allocations top out at 4.39% in CNH Industrial, and position changes are conducted with prudent, incremental sizing rather than concentrated high-conviction bets.

Growth Outlook

40%

BearishBullish

Neutral (40%)

Commentary expresses meaningful concern regarding historically elevated US equity valuations, extreme corporate earnings optimism, aggressive AI infrastructure capital commitments, and heightened margin borrowing. Management maintains caution that market participants may be underestimating the potential for future earnings and returns to disappoint.

Risk Appetite

52%

DefensiveAggressive

Balanced (52%)

Net equity exposure remains fully invested at 94.75% across mature, free-cash-flow-generative international franchises, while holding a conservative 5.25% in cash and equivalents. Positioning eschews leveraged or speculative momentum names in favor of durable compounders trading at tangible discounts to intrinsic value.

Capital Deployment

58%

De-riskingDeploying

Net Neutral (58%)

Cash reserves stood at 5.25% alongside measured net redeployment into fresh portfolio holdings and selective additions, balanced by targeted trims and full divestments in names like Teleperformance and Transcosmos.

Forward Guidance

65%

CautiousExpansionary

Expansionary (65%)

Active capital allocation continues as management initiates multiple new holdings such as Aptiv, LVMH, Minth Group, and Toyota Motor while selectively trimming appreciated positions like Computacenter. The team plans to opportunistically exploit market volatility to scale into financially sound franchises.

Language Signal

48%

BearishBullish

Balanced (48%)

Narrative language is evenly balanced between highlighting attractive discounts and durable competitive advantages in international markets and warning of elevated systemic valuations, capital expenditure risks in artificial intelligence, and complacency regarding downside risk.

Perceived Risk

72%

Low RiskElevated

Elevated Risk (72%)

Management underscores multiple systemic headwinds including elevated sovereign debt deficits, sticky inflation, higher capital costs, speculative trading exuberance, and uncertain economic returns on massive artificial intelligence infrastructure investments.

Opportunity Density

68%

ScarceAbundant

Abundant (68%)

The investment team notes an expanding assortment of attractive investment opportunities across developed international markets outside the United States, allowing for several new position initiations across diverse sectors and geographies.

Time Horizon

85%

Short-TermLong-Term

Decade+ (85%)

Portfolio management explicitly articulates a multi-year compounding horizon aimed at accumulating enduring value over full market cycles while systematically avoiding permanent capital impairment.