International Equity

Philosophy

Our philosophy in managing international equity portfolios is that we believe long-term share price performance reflects “value creation” in the underlying business. By investing in “value-creating” businesses that are undervalued (i.e., those companies whose share price is trading below that of the intrinsic value of the business), we believe we can deliver superior long-term performance.

Discipline

Our investment process is one that chooses stocks, not styles. We allocate money to businesses, not regions and our metric for judging value is cash flows, not earnings. While we are benchmark and macro- aware, we are not benchmark- or macro-driven. We seek to buy franchise-quality companies at the rightprice. Our models are designed to identify companies with high or increasing returns on capital employed relative to their cost of capital, peer group and the benchmark. If the value spread and risk/reward assessment of the new idea is attractive, generally it is bought in the portfolio. If not, it may be kept in reserve until the stock price corrects to improve the value spread and risk/reward of ownership.

There are three primary reasons why our Investment Team would consider selling a stock which include when a stock price approaches its intrinsic value, developments occur that invalidate or undermine the original thesis, and superior opportunities to re-deploy cash.