Perspective on International Equities
Senior Managing Director and International Equity Portfolio Manager Frederick Brimberg talks about his background, the philosophy and process that drive the firm’s International Equity strategy, and his views on global markets and their impact on the portfolio today in this Q&A.
What are the basic tenets of Euclid’s approach and what types of factors most attract your interest when you are looking at the global investment universe?
We are an opportunistic, high-conviction manager. Our style is core with a value and quality bias, however, we will hold both value and growth stocks in the portfolio based on where we see opportunity in the market. Our energy is primarily focused on bottom-up research, but our macroeconomic views always inform the process. Many successful investors I knew growing up in the business have been value investors, not least because value investing has a dual advantage – returns can be gained by relative valuations expanding, or due to positive changes that drive a stock higher independent of the market. Within this framework, we look closely at valuation, financial strength, franchise quality, and management alignment. Our valuation analysis is based off of cash and not earnings because there is a lot of strong academic research indicating that cash flow return on investments ("CFROI") is a much better predictor of future value than accounting-based earnings. We feel this cash-based valuation approach gives us a much stronger basis for figuring out what we are willing to pay for a company, and helps us avoid so called “value traps”.