International equities quarterly update

DAVID HERRO: The question is somewhat misspecified because, though we have a big exposure in Europe, when you look at the revenues of the businesses which we own in Europe, you basically see a lot lower exposure. So when you look at these global businesses, the luxury good companies, the pharmaceutical companies, the chemical companies, what you see is exposure to the globe and almost on a GDP-weighted basis, a big exposure in the US, big exposure in Asia. 

What will get Europe growing again? We aren't macro investors. We don't invest because a certain global region is growing or not growing. What we focus on is the company's earnings streams and cash flow streams, are they growing, and what we are paying for those cash flow streams. 

And because of Europe phobia, we're able to buy quality at a low price, which in essence is value. So who knows what will cause it to reignite? Different parts of Europe, incidentally, are growing at different rates. 

You get to Southern Europe and Scandinavia, and you have healthy 2% to 3%, in some instances 4% growth. Same with Eastern Europe. But then you get places like France and Germany. You have much slower growth in the United Kingdom. 

So it's not as simple as to say Europe is slow growing. What are you going to do about it? It's, what is this slow growth? And what we see is the instability in Europe providing for us as long-term value investors, and actually it's providing quite a bit.