HIGH RISK MARKET: INTERNATIONAL VALUE ADVISERS’ CHARLES DE VAULX SAYS THE MARKETS ARE EXPENSIVE AND OPPORTUNITIES FEW

January 20, 2017

Veteran value fund manager, IVA Advisers’ Charles de Vaulx explains why he has nearly 40% of his portfolios in cash.

WEALTHTRACK Episode #1331; Originally Broadcast on January 20, 2017
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CHARLES DE VAULX

  • Chief Investment Officer,
  • International Value Advisers, LLC

Consuelo Mack

Ask investors how they define value and you will probably get a variety of answers, an “eclectic” assortment, as this week’s guest, long-time value investor Charles de Vaulx put it.

Investment styles go in and out of favor. An extreme example was during the tech boom when growth was hot. Investors were willing to pay up if a company had a dot com in its name, and revenues were increasing. Traditional value metrics such as price and earnings didn’t seem to matter, until of course they did. Growth crashed and value took the lead in the 2000s.

In the slow growth years after the financial crisis, growth made a strong comeback and value lagged badly. Last year it flipped again. For the first time in four years, value outperformed growth.

Until then, self-described value managers have had a tough time beating the overall market and even their benchmark indexes like the Russell 2000 value index, which are chock full of many lower quality companies that are cheap for good reasons: in many cases they are highly leveraged, have no earnings or have problems.

This week’s guest is a self-described value manager with a precise definition of what value means to him and his firm. He is Charles de Vaulx, the chief investment officer and co-portfolio manager of International Value Advisers, a long only, global money management firm he co-founded with Charles de Lardemelle in 2008, at the beginning of the financial crisis.

Before founding IVA, both spent many years working with legendary value investor and frequent WEALTHTRACK guest, Jean-Marie Eveillard. They manage several portfolios but their major holdings are in two mutual funds, their flagship IVA Worldwide Fund and the IVA International Fund. Both were closed to new investors in 2011 because they didn’t want them to get too big, and felt there were too few opportunities in the market, a view they hold today.

IVA Worldwide has outperformed its Morningstar peer group and market benchmark, with less than market risk since inception. It has trailed the market in recent years however, a fact that does not bother this investor whose goal is absolute returns overall with capital preservation in the short term and market outperformance over a full economic cycle. According to de Vaulx, we are not there yet. In the meantime he is holding nearly 40% of his portfolios in cash!

In this week’s EXTRA feature on our website de Vaulx discusses the severe disruption he is seeing in many industries and how they are handling it at IVA.

If you miss the show on air this week, you can always catch it later on our website. Feel free to also view last week’s exclusive episode there as well. You can also view all of our episodes and clips on our YouTube channel.

As always, we welcome your feedback on Facebook, Twitter or via the Contact Us link on our website.  We read all of your comments!

Have a great weekend and make the week ahead a profitable and productive one!

Best Regards,

Consuelo Mathews Asia

CONSIDER THE VALUABLE ROLE CASH CAN PLAY IN YOUR PORTFOLIO

No Bookshelf titles this week.

DE VAULX

Valuable Japanese Pharmaceutical

  • Astellas Pharma Inc ADR (ALPMY)
  • Stock price: $13.53
  • 52-week range: $12.50-19.40 (as of 1/18/17)
Astellas Pharma Inc ADR (ALPMY) ALPMY Chart

ALPMY data by YCharts

Bolloré SA (BOIVF) BOIVF Chart

BOIVF data by YCharts

Sodexo SA ADR (SDXAY) SDXAY Chart

SDXAY data by YCharts

Nestlé SA ADR (NSRGY) NSRGY Chart

NSRGY data by YCharts

Expediters International of Washington, Inc. (EXPD) EXPD Chart

EXPD data by YCharts

WEALTHTRACK PREMIUM subscribers can access your copy here, otherwise this transcript is available here for purchase.

More information regarding WEALTHTRACK transcripts can be found here

This is Charles de Vaulx first appearance on WEALTHTRACK.

EXTREME DISRUPTION

International Value Advisers’ is holding nearly 40% of its portfolios in cash. Why are they taking such an extreme position in both their IVA Worldwide and IVA International Funds? Portfolio manager Charles de Vaulx says in his more than 30 year investment career he has never seen so much disruption in so many industries.


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