Causeway Capital Management LLC is a $28 billion firm run by Sarah Ketterer (Trades, Portfolio) and a team of analysts, using a “fusion of fundamental and quantitative research” to identify undervalued opportunities. Ketterer has significant experience in international investing, having founded the international equity strategy for Hotchkis & Wiley prior to the start of Causeway.
Causeway’s international value portfolio focuses on companies within developed market having market capitalizations greater than $750 million. As of Dec. 31, 2013, the top countries represented in the portfolio included the United Kingdom, France and Switzerland, and among the 64 holdings, the average FY2 P/E ratio was 12.7.
The fund’s managers commented on the fourth quarter:
Due primarily to favorable currency exposure (a byproduct of our bottom-up stock selection process), Causeway’s International Value Equity Composite outperformed the MSCI EAFE Index this quarter. Relative outperformance resulted from underweights to the Japanese yen and Australian dollar and overweights to the euro, Swiss franc, pound sterling, and Korean won. Portfolio holdings in the materials, banks, transportation, insurance, and telecommunication services industry groups contributed the most to relative performance. Relative performance was negatively impacted by holdings in the energy, diversified financials, automobiles & components, food & staples retailing, and media industry groups.
In the fourth quarter, Causeway purchased seven new stocks for the fund: Korea Electric Power Corp. (XKRX:015760, Financial), ABB Ltd. (XSWX:ABBN, Financial), Unilever NV (XAMS:UNIA, Financial), Nikon (TSE:7731) Peugot (XPAR:UG, Financial), Link Real Estate Investment Trust (HKSE:00823) and Crédit Agricole (XPAR:ACA, Financial).
Crédit Agricole (XPAR:ACA, Financial)
For its smallest new holding Causeway purchased 213,340 shares of Credit Agricole, representing 0.06% of the portfolio. Shares cost €9 on average during the quarter.
Crédit Agricole acts as the central bank of the Group, coordinates its sales and marketing strategy and ensures the liquidity and solvency of each of the Caisses Regionales. Crédit Agricole has a market cap of €27.41 billion; its shares were traded at around €11.47 with and P/S ratio of 0.46. Crédit Agricole had an annual average earnings growth of 4.10% over the past 10 years.
Link Real Estate Investment Trust (HKSE:00823)
Causeway purchased 4,850,556 shares of Link Real Estate Investment Trust, representing 0.52% of the portfolio. Shares cost HK38 on average for the quarter.
Link Real Estate Investment Trust is a real estate investment trust in Hong Kong. Link Real Estate Investment Trust has a market cap of HK83.31 billion; its shares were traded at around HK36.20 with a P/E ratio of 3.90 and P/S ratio of 12.65. The dividend yield of Link Real Estate Investment Trust stocks is 4.32%. Link Real Estate Investment Trust had an annual average earnings growth of 23.50% over the past five years.
Causeway purchased 1,862,351 shares of Peugot, representing 0.53% of the portfolio. Shares cost €11 on average in the fourth quarter.
Peugeot is incorporated in France. The company's operations are organized around three main segments: The Automotive Division, covering the design, manufacture and sale of passenger cars and light commercial vehicles under the Peugeot and Citron brands; The Automotive Equipment Division, corresponding to the Faurecia group and comprising Interiors Systems, Automotive Seating, Automotive Exteriors and Emissions Control Technologies; and Other Businesses, which include the activities of the holding company, Peugeot S. Peugeot has a market cap of €4.56 billion; its shares were traded at around €12.90 with and P/S ratio of 0.07.
Nikon (TSE:7731)
Causeway purchased 1,357,000 shares of Nikon, representing 0.57% of the portfolio. Shares cost ¥1844 in the fourth quarter on average.
Nikon was established on July 25, 1917. It is engaged in the manufacture and sale of image and video equipment. Nikon has a market cap of ¥738.86 billion; its shares were traded at around ¥1832.00 with a P/E ratio of 30.70 and P/S ratio of 0.75. The dividend yield of Nikon stocks is 1.06%. Nikon had an annual average earnings growth of 6.10% over the past 10 years.
Unilever NV (XAMS:UNIA, Financial)
Causeway purchased 1,223,986 shares of Unilever NV, representing 1.1% of the portfolio. Shares of the company cost €29 on average during the quarter.
Unilever NV is incorporated in Netherlands on Nov. 9, 1927. Unilever NV has a market cap of €86.6 billion; its shares were traded at around €28.47 with a P/E ratio of 18.50 and P/S ratio of 1.62. The dividend yield of Unilever NV stocks is 3.19%.
ABB Ltd. (XSWX:ABBN, Financial)
Causeway purchased 1,949,323 shares of ABB Ltd., representing 1.1% of the portfolio. Shares cost CHF22 on average in the fourth quarter.
ABB Ltd. was incorporated in the State of Switzerland. ABB Ltd. has a market cap of CHF52.06 billion; its shares were traded at around CHF22.47 with a P/E ratio of 20.50 and P/S ratio of 1.41. The dividend yield of ABB Ltd. stocks is 3.02%. ABB Ltd. had an annual average earnings growth of 12.10% over the past 10 years.
Korea Electric Power Corp (XKRX:015760, Financial)
Causeway purchased 1,634,130 shares of Korea Electric Power Corp, representing 1.2% of the portfolio. Shares cost â‚©30562 in the fourth quarter on average.
Korea Electric Power Corp was incorporated on Jan. 1, 1982. Korea Electric Power Corp has a market cap of â‚©23052.26 billion; its shares were traded at around â‚©37550.00 with and P/S ratio of 0.44. The dividend yield of Korea Electric Power Corp stocks is 0.23%. Korea Electric Power Corp had an annual average earnings growth of 10.60% over the past five years.
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