“We are global value investors. We use a value-based research process to identify quality businesses at attractive prices around the world. We then seek to capture the advantages of global diversification within a focused portfolio of compelling ideas. We believe that the structure of the Thornburg Global Opportunities Fund — built on our core investment principles of flexibility, focus, and value — gives us a durable framework for value-added investing.”
– Brian McMahon
Our goals are to use:
- Flexibility – to diversify and to enhance risk-adjusted returns
- Focus – to manage risk and improve returns
- A value-based framework – to identify opportunities at a significant discount to intrinsic value
We seek value and are careful to diversify by sector, but we do not hew to benchmark weights.
Thornburg believes that diversification beyond a certain number of holdings may yield only marginal performance benefits. In a focused portfolio, the task of analyzing, understanding, and tracking holdings is more manageable than with a portfolio of 100 to 200 securities.
Global Opportunities holds 30 to 40 positions, where the typical global fund (as represented by the Morningstar World Stock category) holds more than three times as many. We know what we own, and why we own it.
Finally, we determine whether there is a path to success. As a sort of reality check, we ask ourselves: what must happen in order for the stock to reach its price target?
We May Consider Selling a Holding When:
- A better investment opportunity emerges, with greater risk-adjusted expected return or a potential improvement in diversification benefit
- Its target price has been achieved or when the initial discount is diminished
- The investment thesis is no longer intact, via a change in company fundamentals or a decrease in the company’s promise