A Global Perspective: Mondrian’s approach to identifying value in the US

investment risks

When building a portfolio of US Large Cap companies, it is critical to have a global perspective. Over 30% of the revenue for the Fortune 100 is derived from outside the US. Additionally, many US multinational companies’ largest direct competitors are based in a different country. For instance, Intel’s main competitor is TSMC (Taiwan), Micron’s is Samsung (South Korea) and L3Harris competes with Thales (France).

Having a deep understanding of global supply chains helps Mondrian identify world-leading companies with strong franchises at attractive prices. Our London-based Global Equity investment team manages over $5B in US and Global equities, analyzing markets and understanding what causes some companies to succeed more than others. The below case study illustrates our current assessment of the semiconductor industry.

Case Study: Semiconductors

The semiconductor industry originated in the US but has evolved to become globally integrated, as illustrated below. Geopolitical tensions and supply chain disruptions are currently threatening the status quo.

US Semiconductors have become globally integrated

 

In our analysis, we considered multiple factors including shifting government policy, international technology competition and market share dynamics. We have performed detailed work on many different companies in various parts of the value chain, including:

In our analysis, we considered multiple factors including shifting government policy, international technology competition and market share dynamics. We have performed detailed work on many different companies in various parts of the value chain.

Our global perspective led us to invest in Micron over Intel because of our assessment of its market position relative to global peers. Competition in the memory industry appears to have rationalized over time, unlike the logic market where competition appears to be increasing. We believe short-term concerns around memory prices have created a very attractive opportunity to buy Micron shares at a discounted price.

This is just one example of how the Mondrian global research team uses experience to look across industries with a global perspective. In doing this, we have been able to build a US Large Cap portfolio with strong absolute returns from stock selection, while also providing defensive characteristics in challenging markets.

Defensive Characteristics

5 years to December 31, 2022

Defensive Characteristics

 

 

 

 

 


Important Notes and Disclosures

Past performance is not indicative of future results. An investment involves the risk of loss. The investment return and value of investments will fluctuate.

Views expressed were current as of the date indicated, are subject to change, and may not reflect current views. All information is subject to change without notice.

Examples of securities will represent only a small part of the overall portfolio and are used to illustrate our investment style. Such examples are not intended to represent a recommendation to buy or sell, neither is it implied that they will prove profitable in the future. Holdings are subject to change and may not feature in any future portfolio.

This document may include forward-looking statements. All statements other than statements of historical facts are forward- looking statements (including words such as “believe,” “estimate,” “anticipate,” “may,” “will,” “should,” “expect”). Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Various factors could cause actual results to differ materially from those reflected in such forward-looking statements.

This material is for informational purposes only and is not an offer or solicitation with respect to any securities. Any offer of securities can only be made by written offering materials, which are available solely upon request, on an exclusively private basis and only to qualified financially sophisticated investors.

Mondrian Investment Partners Limited (“Mondrian”) claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. A GIPS Composite Report is available on request mondrian.website@mondrian.com.

Mondrian Investment Partners Limited is authorized and regulated by the Financial Conduct Authority.

Mondrian Investment Partners Limited is registered as an Investment Adviser with the Securities and Exchange Commission (registration does not imply any level of skills or training).

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