Price Matters: International Value Opportunities Today
Big price gap between US and foreign stocks is creating opportunity for value investor David Herro
Adhere to a sound investment philosophy
Herro breaks down Harris Associates’ investment philosophy into three components. “First, we buy businesses at a significant discount to our estimate of intrinsic value. Second, we invest in companies expected to grow per share value over time. And lastly, we invest in quality companies with management teams that think and act as owners.” He maintains that when the price of a business and its estimated value converge, it becomes less attractive as an investment and it is time to trim or sell.
Price is what you pay, value is what you get
“Price mattered when you were looking for a new car, when you’re buying a refrigerator, a laptop, or an iPhone. Well, price matters when you’re buying businesses, too,” said Herro. Today, he sees a big value gap, especially when you compare the price of US to European stocks. This, he believes, spells opportunity to buy quality companies at low prices.
Why international equities are attractive today:
- Price differential appears to be too high between US and international stocks
- An overvalued US dollar is a tailwind for international equities
- International and US equity leadership tends to be cyclical
- Good value opportunities on quality companies in Europe and UK
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This material is provided for informational purposes only and should not be construed as investment advice. There can be no assurance that developments will transpire as forecasted. Actual results may vary.
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