In their latest Q3 2022 Letter, Tweedy Browne explain why non-US stocks are priced for Armageddon. Here’s an excerpt from the letter:
Rising equity market volatility continues to churn up investment opportunities, particularly in non-US equity markets where many stocks, in our view, are currently priced for Armageddon.
As a result of this ongoing volatility, our fund portfolios over the last year have been in the process of becoming refreshed with a significant number of new stocks, including an increasing number of smaller and medium capitalization European and Asian-based companies. In many, if not most, of these new investments, knowledgeable insiders have been actively purchasing shares at or around the prices we are paying.
This alignment of interests between knowledgeable insiders, i.e. c-suite executives and key directors, and outside investors is particularly comforting in the highly uncertain investment environment we find ourselves in today.
“Coattailing” insiders who are purchasing shares believed to be undervalued has empirically been shown to often be a profitable investment strategy.
The opportunity set being presented to us today in non-US equities is one of the best we have seen in well over a decade. As a result, we continue to believe that our Funds are well positioned for what could be a period of relative prosperity for our style of investing.
As Jason Zweig recently pointed out in his “The Intelligent Investor” column in The Wall Street Journal, The obvious negatives are already priced in: a prolonged war in Ukraine, an acute energy crisis and raging inflation, a brutal recession, floundering currencies. With pessimism this pervasive, it wouldn’t take many positive surprises to overturn the obvious—and make global diversification lucrative again.
Where You Can Find Stock Market Bargains
The Wall Street Journal | September 16, 2022
You can read the entire letter here:
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