Intrinsic Emerging Markets Equity Team

Derrick Irwin: The Intrinsic Emerging Markets Equity team seeks to invest exclusively in high-quality companies that are trading below their intrinsic value—what we have identified as quality at a compelling price. We have a strong and sequential emphasis on quality and valuation in our efforts. We believe that emerging market inefficiencies provide an opportunity to acquire quality companies at a discount to their long-term intrinsic value. We also believe that those quality companies may preserve value in times of adversity. Three key elements of our strategy differentiate us. The first is a sequential focus on quality and then valuation. This allows us to focus on companies that can create value for shareholders and allows us to look at the companies we follow in a consistent manner. Now, this is reflected in our approach via our quality pool, a carefully curated group of about 300 companies that best meet our quality criteria. We get to know these companies very, very well. Because we're a low turnover strategy and because the quality pool focuses on long-term drivers of value, we have a deeper understanding of these companies than a manager who might only own them for 12 or 18 months might have. We see how a company's competitive advantages grow over time and become more robust. We observe how a company's balance sheet manages times of stress and how its competitive advantages are manifested in a healthier income statement and a stronger cash flow statement. And we learn how this translates into higher, more sustainable return on invested capital—the ultimate source of shareholder value. It also gives us a vested interest in working with management to assess environmental or social risks that could destroy value and also to consider ways that such factors can also be a source of value creation. Finally, our understanding of quality gives us conviction in our assessment of that company's long-term intrinsic value—a value anchor that we can hang our hat on in times of stress. This quality focus and valuation discipline allows us to pick our opportunities and buy companies when they're trading at compelling valuations. It results in a resilient, high-quality portfolio that we expect to perform across the cycle while providing a predictable pattern of returns along the way.