BALTIMORE — Brown Advisory, an independent and privately held global investment management firm which oversees more than $78 billion in client assets as of April 30, celebrates five years since the launch of its Global Leaders Strategy ("the Strategy") on May 1, 2015.
The $1.3 billion global equity strategy, led by co-portfolio managers, Mick Dillon, CFA, and Bertie Thomson, CFA, has meaningfully outperformed its benchmark, the FTSE All World Index over the five-, three-, one-year and year-to-date periods based on preliminary results. The Strategy has also outperformed its benchmark based on preliminary results by more than 4.5% annualized since inception. Over the three-year period, the Strategy is ranked in the top percentile of global equity managers according to data provided by eVestment.
Tim Hathaway, Head of U.S. Institutional Business at Brown Advisory said, "We are proud to consistently offer a set of investment products of the highest caliber, and honored that our clients have put their trust in our managers. Mick and Bertie have developed a disciplined process that has produced compelling performance for our clients in up and down markets."
The management duo's approach to investing seeks to accentuate the two key sources of their investment edge—their long-term vision coupled with a deep understanding of human behavior. Their perspectives are driven by a fervent belief that equity markets are inefficient over short time periods and that the compounding nature of the cash flow of companies with high returns on capital may generate long-term outperformance for investors. The pair have also spent a considerable amount of time thinking about how to protect their clients' capital from potentially damaging human behavior. This has led to improvements to their process, confidence in their investment discipline, and a set of rules designed to short circuit potentially harmful investor biases, which overall have been particularly helpful in times of crisis and market volatility.
Their philosophy has created several recent opportunities to take advantage of share price weakness. Booking Holdings is a stock they have held since they launched the Strategy five years ago and they have seen micro-versions of demand shocks before. As long-term investors, they believe these can create compelling opportunities in the best companies globally. Booking Holdings is actually seeing its competitive position improve as weaker participants become marginalized and the managers believe its own financial health remains strong enough to withstand a prolonged downturn in travel.
They have also made two new investments in the last two months—Autodesk and Intuit—which marks a sharp increase in portfolio activity compared to only two new investments made between August 2018 and March 2020. These vertical software companies have been featured on the managers' watch list for several years, yet the recent market dislocation provided an opportunity to invest at prices that were at a discount to the managers' estimation of intrinsic value. The managers believe that both companies have high market share in their respective verticals, multiple economic moats, high returns on capital, strong balance sheets and recurring revenue. These are all typical characteristics of the types of companies they own.
Mick Dillon, Co-Portfolio Manager at Brown Advisory, said: "We maintain a dynamic 'subs-bench', and have been actively monitoring this ready-to-buy list of around thirty companies we would like to buy at the right price. Right now we are seeing some of the best internal rate of returns (IRRs) of the past five years and are pleased to have had the opportunity to initiate new compelling investments at very attractive prices."
Bertie Thomson, Co-Portfolio Manager at Brown Advisory, said: "Our long-term approach, which focuses on business fundamentals and a healthy appreciation for valuation, has led us to find compelling investments in various sectors of the economy like technology, financials and industrials, and we also expand our global reach to include emerging markets. We are not afraid of looking different to our benchmark and with Brown Advisory's strong history and success investing in U.S. equities, we believe we are well positioned to uncover the best opportunities in the vast global market."
About the Global Leaders Strategy
Bertie Thomson and Mick Dillon manage the $1.3 billion Brown Advisory Global Leaders Strategy, which invests in 30-40 equity securities of companies that they believe are leaders within their industry or country, as demonstrated by an ability to deliver high relative return on invested capital over time. The managers believe that high returns on capital can typically be attributable to, among other things, a strong competitive position and defensible barriers to entry. They seek to build a concentrated portfolio of fundamentally sound companies characterized by low turnover, high active share and the potential to deliver attractive outperformance over time.
About Brown Advisory
Brown Advisory is an independent investment management and strategic advisory firm committed to providing its clients with a combination of first-class investment performance, strategic advice and the highest level of service. The firm has offices in Austin, Baltimore, Boston, the Carolinas, Delaware, London, New York, Singapore, Virginia and Washington, D.C.
The firm serves individuals, families, endowments, foundations and other institutions, and is responsible for over $77 billion in client assets as of October 31, 2019. The firm’s colleague equity ownership, experienced investment professionals and client-first culture help to make a material difference in the lives of its clients. For more information, please visit: https://www.brownadvisory.com/us/home.
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