David Herro and Michael Manelli discuss potential catalysts for international stocks in the coming months and opportunities in the small cap value space. Highlights include:
Three conditions for stronger performance in international value stocks are in place.
- Short-term themes are creating long-term opportunity in the global automobile sector for value investors.
- A strong US dollar has led to quality international small-cap companies trading at huge discounts relative to historic levels.
- International small-caps have been overlooked for more than two years, as investors focused their attention on the US large-cap space. This has created attractive opportunities for bottom-up stock pickers.
The securities mentioned are not held in the Oakmark International Fund or in the Oakmark International Small Cap Fund.
The information, data, analyses, and opinions presented herein (including current investment themes, the portfolio managers’ research and investment process, and portfolio characteristics) are for informational purposes only and represent the investments and views of the portfolio managers and Harris Associates L.P. as of the date written and are subject to change and may change based on market and other conditions and without notice. This content is not a recommendation of or an offer to buy or sell a security and is not warranted to be correct, complete or accurate.
Certain comments herein are based on current expectations and are considered “forward-looking statements”. These forward looking statements reflect assumptions and analyses made by the portfolio managers and Harris Associates L.P. based on their experience and perception of historical trends, current conditions, expected future developments, and other factors they believe are relevant. Actual future results are subject to a number of investment and other risks and may prove to be different from expectations. Readers are cautioned not to place undue reliance on the forward-looking statements.
The price to earnings ratio (“P/E”) compares a company’s current share price to its per-share earnings. It may also be known as the “price multiple” or “earnings multiple” and gives a general indication of how expensive or cheap a stock is. Investors should not base investment decisions on any single attribute or characteristic data point.
Investing in value stocks presents the risk that value stocks may fall out of favor with investors and underperform growth stocks during given periods.
