BHANSALI & HARTCH: IDENTIFYING INVESTMENT VALUE

November 13, 2015

Two top-ranked global value investors, both admirers of Warren Buffett, will join us this week on WEALTHTRACK. Both invest in quality companies selling below their intrinsic value and in doing so   frequently buy companies that are out of favor. Ariel International Fund’s Rupal Bhansali and BBH Core Select fund’s Timothy Hartch share their contrarian strategies and ideas.

WEALTHTRACK Episode #1221; Originally Broadcast on November 13, 2015

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RUPAL BHANSALI

TIMOTHY HARTCH

Consuelo Mack

Earlier this week I attended a symposium at the Museum of American Finance  celebrating the fiftieth anniversary of Warren Buffett’s leadership at Berkshire Hathaway. As a recent cover story in Barron’spointed out he is still going strong at 85 – and so is the company, an opinion shared by Buffett himself. In his most recent annual meeting he told shareholders: “First and definitely foremost, I believe that the chance of permanent capital loss for patient Berkshire shareholders is as low as can be found among single-company investments. That’s because per-share intrinsic business value is almost certain to advance over time.”

Try telling that to Wall Street!  Berkshire Class A shares have been underperforming the S&P 500 recently as they have in occasional periods over the last 50 years. As Barron’s pointed out, Berkshire can’t possibly replicate its 20% plus annualized performance of the past 50 years, but it’s doing just fine.

That is also the view of the Buffett acolytes and investors who spoke at the symposium.  Outstanding investors in their own right including Seth Klarman, CEO of The Baupost Group, Thomas Gayner, President and Chief Investment Officer of Markel Corporation and WEALTHTRACK regular, Tom Russo, Managing Member of Gardner Russo & Gardner describe Buffett as possibly the greatest investor of all time because of his unusual “trifecta”  combination of investment, business management and communication skills.

This week’s WEALTHTRACK guests are both admirers of Warren Buffett, and own Berkshire Hathaway in their portfolios. They both invest in quality companies selling below their intrinsic value, and in doing so, they each buy businesses that are out of favor.

We’ll hear from Rupal Bhansali, Chief Investment Officer of International and Global Equities for Ariel Investments. Bhansali is also Portfolio Manager for two mutual funds she launched at Ariel at the end of 2011. The 5-star rated Ariel International Fund, which is in the top percentile of its Morningstar Foreign Large Value Category with 12% annualized returns over the last 3 years, and the 4-star rated Ariel Global Fundwhose double digit 3 year returns place it near the top decile of its World Stock fund category.

Timothy Hartch will also give us his views on what it means to be a value investor.  Hartch is the Co-Manager of Brown Brothers Harriman’s Large Cap Core Select Equity Portfolios, including the 4-star rated BBH Core Select mutual fund which he has managed since 2005. Core Select is in the top 3% of its Large Blend category over the last 10 years with 10% annualized returns, although it’s impressive 3 and 5 year returns put it in the middle of its category peers.

Hartch was nominated for Morningstar’s Domestic Stock Fund Manager of the year in 2012. He also launched a BBH Global Core Select Fund in 2013 which is still too new to be ranked by Morningstar.

As always, if you can’t join us at the appointed hour on your local public television station, you can watch the show on our website as a podcast or streaming video. You can also find the One Investment picks of our guests and my Action Points there. For those of you who would like to see our  in advance of the broadcast, you can subscribe to ourPREMIUM subscription service on the website.

Thank you for watching. Have a great weekend and make the week ahead a profitable and a productive one.

Best Regards,

Consuelo Mathews Asia

CONSIDER SELLING A MUTUAL FUND WHEN THE FOLLOWING HAPPENS:

  • The manager you know and trust leaves the fund
  • A change in strategy at a fund
  • Two years or more of significant losses
  • The flip side: consider selling if a fund has phenomenal outperformance.
  • A fund’s expenses go up
  • If you are uncomfortable with the fund, it’s redundant or it no longer fits your needs
No Bookshelf titles this week.

BHANSALI: BIOTECH HOLY GRAIL

  • Gilead Sciences Inc (GILD)
  • Price: $109.05 on 11/10/15
  • 52-week range: $85.95 – $123.37

GILD Chart

GILD data by YCharts

 

HARTCH: RESILIENT COMPETITIVE ADVANTAGE

  • Oracle Corporation (ORCL)
  • Price: $40.01 on 11/10/15
  • 52-week range: $35.14 – $46.70

ORCL Chart

ORCL data by YCharts

GlaxoSmithKline PLC ADR (GSK) GSK Chart

GSK data by YCharts

Berkshire Hathaway Inc (BRK.B) BRK.B Chart

BRK.B data by YCharts

Toyota Motor Corp ADR (TM) TM Chart

TM data by YCharts

Procter & Gamble Co (PG) PG Chart

PG data by YCharts

Discovery Communications Inc (DISCK) DISCK Chart

DISCK data by YCharts

Baidu Inc ADR (BIDU) BIDU Chart

BIDU data by YCharts

Wells Fargo & Co (WFC) WFC Chart

WFC data by YCharts

U.S. Bancorp (USB) USB Chart

USB data by YCharts

Nestle SA ADR (NSRGY) NSRGY Chart

NSRGY data by YCharts

Diageo PLC ADR (DEO) DEO Chart

DEO data by YCharts

This transcript is available here. More information regarding WEALTHTRACK transcripts can be found here

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BHANSALI: CONTRARIAN CHOICE

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Nearly two hundred year old Brown Brothers Harriman is one of the oldest firms on Wall Street and one of the few remaining partnerships, having opted to stay private when most of its competitors went public. We asked partner and portfolio manager Tim Hartch what difference that structure makes to his role as a money manager.


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