Charles de Vaulx

Charles de Vaulx Premium Guru

Last Update: 12-06-2016
Related: IVA International Fund

Number of Stocks: 84
Number of New Stocks: 6

Total Value: $4,310 Mil
Q/Q Turnover: 3%

Details: Top Buys | Top Sales | Top Holdings  Embed:

Charles de Vaulx Watch

  • IVA Worldwide Fund 3rd Quarter Commentary

    The IVA Worldwide Fund Class A (NAV) (“the Fund”) ended the quarter on September 30, 2016 with a return of 3.73% versus the MSCI All Country World Index (Net) (“Index”) return of 5.30% bringing YTD performance to 5.70% versus the Index return of 6.60% for the same period.

    Despite bouts of volatility throughout the quarter, primarily related to anxieties over Central Bank actions and inactions, the markets were relatively quiet. The last few weeks were an exception, when Deutsche Bank concerns hit a crescendo, dragging down European bank shares and igniting fears about their overall health. We have expressed these same concerns for some time now and have therefore largely avoided European banks in our portfolio. Our cautious positioning continues to reflect our other concerns, including large credit excesses in China and prolonged Central Bank manipulations. We will expand upon this later on in our update.


  • IVA Funds Comments on Emerson

    Well, Deere (NYSE:DE) is a much finer business. They are world-class. It's much more oligopolistic. The returns of capital over a full cycle dwarf I believe what they are with other fertilizer companies. Yes, the answer is that we've looked at both. There's a clear price at which we would love to own Deere. But, in the fertilizer space, and understand there's a proposed merger going on, we have found it difficult to find one company that truly has much lower costs than the other. In a commodity business, if you can find a company that structurally has much lower cost than another, it helps assure you that they will be a survivor if and when commodity prices are low, and then the company may in fact capitalize during times of low prices to maybe increase its market share position.

    So, we have not been able to identify, at least yet, a fertilizer company that really stands out in terms of quality and being lower cost than others.

    From Charles de Vaulx (Trades, Portfolio)'s semi-annual 2016 IVA Funds call.   

  • IVA Funds Comments on Emerson

    Question: You hold Emerson Electric. It's always acquired a lot of companies over the years. Do you think it could be anything like a Valeant, who acquired a lot of companies over the years, or have some characteristics like that?

    Chuck de Lardemelle: No, not at all. Emerson (NYSE:EMR) has a very strong track record of making smart acquisitions, spending some Research and Development. Now, over the last few years, they've diversified into a business that they are now trying to spin off and making a number of acquisitions in uninterruptible power supplies/electronics. That vertical, if you will, has not worked out at all for Emerson, and they are going back to basics and spinning off or selling that division. The balance sheet is extremely strong, which is absolutely not the case of a Valeant.

    Emerson is in no position to hike prices and gouge clients. It's a very strong industrial company that is extremely well managed from an operational point of view, that has a strong balance sheet, and has not been able to hike prices substantially. However, again, over the last few years, they've gathered a collection of companies in one segment and those acquisitions turned out to be a mistake. And that's what provided us with an opportunity to get into Emerson. And they recognized their mistake and are now trying to correct it. So, in no way, shape, or form is it similar to a Valeant, in our opinion.

    From Charles de Vaulx (Trades, Portfolio)'s semi-annual 2016 IVA Funds call.   

  • IVA Funds Comments on Samsung Electronics

    Moving on to another large position, Samsung Electronics (XKRX:000830) is up substantially from its lows this year, and therefore not as attractive as it used to be. However, the balance sheet is pristine, the company sells not too far from tangible book value, and we believe the semiconductor franchise is highly profitable and solid. As for the telecom handset franchise, well, I'm sure you'll remember Motorola, Nokia, Siemens, SAGEM, or Sony Ericsson handset businesses? Yes, they all went out of business.

    So, what do we see there? Why should it be different for Samsung Electronics? Well, SmartPhones today are computers; capital employed in the business is very low. Basically, Samsung simply assembles the mini-computers. It's a business model akin to the Dell business model, not to a Nokia. The industry has consolidated; through its scale, Samsung is able to achieve buying power and a low-cost position; and through the advanced manufacturing of display components and semiconductors, Samsung has an edge in innovation. We anticipate this business may remain profitable in the future, with single-digit operating margin being sustainable despite heavy Chinese competition. Capital allocation and governance have been issues in the past for the Samsung Group. There are encouraging signs on both fronts. Time will tell.

    From Charles de Vaulx (Trades, Portfolio)'s semi-annual 2016 IVA Funds call.   

  • IVA Funds Comments on Berkshire Hathaway

    Next, Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) still sells at a discount to our estimate of its intrinsic value. We believe Buffett and his successors are likely to be able to compound at a reasonable pace, particularly due to the ability to buy listed or unlisted companies in their entirety. A few looming technological innovations, though may be tough for some of Berkshire's businesses: driverless cars would negatively impact insurance subsidiary Geico, while driverless trucks would be a large negative for the railroad business, Burlington Northern. If battery technology continues to improve, at some point the storage of electricity will make renewable energy a lot more competitive against traditional utilities, a risk for Berkshire Hathaway Energy.

    This conglomerate, however, is well equipped to deal with obsolescence: after all, Berkshire is quite unique in its ability to take cash flow from mature or declining business A to invest successfully in a totally unrelated business B. Hopefully the lack of red tape, the investment culture, the candor, and the ethics on display at Berkshire will survive both Warren and Charlie.

    From Charles de Vaulx (Trades, Portfolio)'s semi-annual 2016 IVA Funds call.   

  • Charles de Vaulx's IVA Funds Semi-Annual Update Call Transcript

    Tara Hannigan: Thank you. Good afternoon, and welcome to the Semi-Annual IVA Funds Update Call. We thank you for joining us this afternoon. I'm Tara Hannigan, the Director of Mutual Fund Distribution. Our goals on this call are to update you on the funds and share our current investment thinking. Our portfolio managers, Charles De Vaulx and Chuck de Lardemelle, will give you prepared remarks explaining what they're seeing around the world today, and then we will open the call up to questions.

    To update you on IVA as a firm as of August 31, 2016, we had approximately $18.5 billion in total assets under management with our two mutual funds comprising just over $12.3 billion of that total. Both funds do remain closed to new investors.


  • IVA International Gains 4 in 2nd Quarter

    IVA International Fund (Trades, Portfolio) acquired four new holdings in the second quarter. They are Fanuc Corp. (TSE:6954), Euler Hermes Group SA (XPAR:ELE), Yokogawa Electric Corp. (TSE:6841) and Jardine Lloyd Thompson Group PLC (LSE:JLT).

    IVA International was established in 2008 by International Value Advisers and is managed by Charles de Lardemelle and Charles de Vaulx (Trades, Portfolio). The fund seeks long-term growth of capital and invests in a variety of securities and asset classes from markets around the world. The fund utilizes in-house, fundamental research conducted by analysts to aid in their decision-making process.


  • Charles de Vaulx Hikes Stake in Hyundai Motors

    Morocco native Charles de Vaulx (Trades, Portfolio) more than tripled his stake in Hyundai Motor Co. (XKRX:005380) during the second quarter.

    De Vaulx is the portfolio manager of the IVA Worldwide Fund, which focuses on long-term growth of capital through investing in a range of securities and asset classes from markets around the world. In the second quarter de Vaulx added 283,248 shares of Hyundai at an average price of 141,280 South Korean won ($126.16) per share.


  • Charles de Vaulx Invests in 5 New Holdings in 2nd Quarter

    Charles de Vaulx (Trades, Portfolio), chief investment officer and portfolio manager at International Value Advisers, added five new holdings to the portfolio in the second quarter.

    The guru acquired an 844,953-share holding in American Express (NYSE:AXP), a financial services company based in New York City, for an average price of $63.32 per share. The deal had a 1.16% impact on the portfolio.


  • Value Screeners Identify Opportunities

    Several companies made multiple GuruFocus value screeners as of Aug. 2.

    In addition to identifying the best stocks in which to invest, the value screeners provide insight in which sectors have high value potential in the short term. Based on the stocks that made the screeners, retail and industrial companies offer good investing opportunities.


  • IVA Worldwide Fund 2nd Quarter Commentary

    The IVA Worldwide Fund Class A (NAV) (“the Fund”) ended the quarter on June 30, 2016 with a return of 0.91% versus the MSCI All Country World Index (“Index”) return of 0.99% bringing YTD performance to 1.90% versus the Index return of 1.23% for the same period.

    The majority of the second quarter was uneventful. And then Brexit happened. Although the possibility of the UK voting to Leave the EU had been on investors’ minds for months, most everyone was surprised by the final result on June 24th. Markets recoiled, the Pound plummeted, and the currency safe havens of the USD and JPY leapt. It became clear that markets never truly believed the UK would Leave and that the possibility wasn’t adequately priced in. Brexit brings along with it a multitude of financial and political uncertainties and it is unclear at this time what the ultimate global consequences will be. What is clear, yet again, is that attempting to forecast market events can be both futile and dangerous. At IVA we continue to focus on valuations, worst case scenarios, and their impact on our portfolio. This has helped us minimize drawdowns through many storms, most recently the market’s reaction to Brexit. We believe our portfolio is well positioned as we grapple with post-Brexit unknowns on top of other risks we see, including large credit excesses in China and prolonged Central Bank manipulations. We remain cautious, requiring risk premiums that accurately reflect the current treacherous investment environment.


  • Charles De Vaulx Comments on DeVry

    As for DeVry (NYSE:DV) (which only the Worldwide Fund owns), our intrinsic value estimate was impaired as we underestimated the extent of the decline of the BTM (Business, Technology, Management) segment. We note, however, that the overwhelming majority of DeVry’s profits come from its healthcare schools (Nursing, Veterinary, and Physicians) where student loan defaults have been negligible.


  • Charles De Vaulx Comments on News Corp

    News Corp. (NASDAQ:NWSA)’s value has been impaired by a continued difficult environment for their newspapers, a weaker Australian dollar and the expensive acquisitions of Move Inc. and iProperty Group Ltd. A substantial part of News Corp.’s value though resides in their ownership of a stake in REA Group Ltd, a dominant and highly profitable real estate portal in Australia.


  • Charles De Vaulx Comments on Astellas Pharma Inc.

    Finally, a word on Astellas Pharma Inc. (TSE:4503), owned by both Funds. Astellas is the perfect antithesis of Valeant: Astellas spends substantial amounts on R&D (around 17% of revenues) and develops life-saving drugs, recently in oncology with Xtandi (treatment of prostate cancer); has no financial leverage; does not engage in price gouging; has a strong pipeline and conservative accounting; allocates capital well; pays dividends; buys back shares at reasonable prices whilst maintaining a substantial net cash position: exercises restraint in compensation of senior executives; is not promotional; and trades at a single digit multiple of earnings before interest, amortization and taxes. One risk, however, is that high healthcare costs in the U.S. lead to greater regulation of drug prices in the U.S. Such a development would be a negative for Astellas. We believe that risk is more than priced in at the current stock price.


  • Charles de Vaulx's Annual IVA Funds Letter from the Portfolio Managers

    May 4, 2016


  • Charles de Vaulx Buys 2 Discount Stocks

    Charles de Vaulx (Trades, Portfolio) (Trades, Portfolio), portfolio manager of the International Valuations Advisors (IVA) Fund, invested in two major stocks May 31: Bank of America Corp. (NYSE:BAC) and Hyundai Motor Co. (XKRX: 005380).

    The manager of Sofire Fund Ltd., which won “Fund of the Year” in the global equity category in 2005 and in 2006, Charles de Vaulx (Trades, Portfolio), joined the IVA Fund in May 2008 as portfolio manager and chief information officer. According to his May 27, semiannual report, de Vaulx chooses stocks to buy using a “preservation of capital” approach: the manager targets company stocks that trade at “reasonable discounts” to the company’s intrinsic value at the time of investment. Additionally, de Vaulx prefers companies that have good balance sheets so the fund does not suffer in case the valuations are inaccurate.


  • Charles de Vaulx Answers the Question - Is Value Investing Still Relevant?

    Charles De Vaulx answered the question during the IVA Funds conference call on March 16. 

    Is value investing still relevant?


  • Charles de Vaulx Trims Stake in Japanese Energy Company

    Charles de Vaulx (Trades, Portfolio) of IVA Worldwide Fund made no new buys in the fourth quarter, but he made some noteworthy transactions in a variety of sectors.

    De Vaulx reduced his stake in Miura Co. Ltd. (TSE:6005), a Japanese energy company, by more than 66% with the sale of 3,795,800 shares for an average price of ¥1,560.12 ($13.70 in American currency) per share. The transaction had a -0.94% impact on de Vaulx’s portfolio.


  • IVA Worldwide Fund Quarterly Review - Fourth Quarter 2015

    The IVA Worldwide Fund Class A (NAV) (“the Fund”) ended the quarter on December 31, 2015 with a return of 1.00% versus the MSCI All Country World Index (“Index”) return of 5.03% bringing YTD performance to -2.47% versus the Index return of -2.36% for the same period.

    Despite bouts of volatility, global equity markets showed resilience in the fourth quarter, recovering from the very difficult previous two months. Concerns over China’s growth, which triggered the third quarter’s sell-off, were somewhat alleviated and there was a positive reaction to further monetary stimulus by China’s Central Bank at the end of October. The European Central Bank also continued to loosen monetary policy at the beginning of December, although the stimulus measures fell short of market expectations. Diverging from other global central banks, the U.S. Federal Reserve raised the benchmark interest rate by 0.25 percentage points in December. This move was largely anticipated and was well received. The price of Brent crude oil continued to drop over the quarter, hitting lows not seen in over a decade, and the broader commodities market also remained weak. Cracks in high yield deepened, as spreads widened across the market. We believe that the distress seen in this market is indicative of broader global economic problems that are not being fully incorporated by equity markets. While we are concerned by this deviation, we are also intrigued by the opportunities this environment is beginning to present in the high yield space.


  • IVA Funds: Do Low Rates Truly Justify Higher Valuations?

    Since the financial crisis, Central Banks around the world have launched various forms of “Quantitative Easing,” driving interest rates in developed countries to ultra-low levels, manipulating currencies worldwide and injecting massive amounts of liquidity. The growth in popularity of the “Fed Model” (a valuation model which compares the yield on 10 year Treasury bonds to the stock market’s earnings yield) over the past 30 years has led some investors to justify using higher market multiples to price securities, bidding up the price of many stocks. Some believe that even if stocks do manage to deliver returns of 3% to 5%, that would be better than holding cash which offers a negative yield after inflation. The argument that higher valuations are justifiable and that equity markets will be OK as long as rates stay low is at best a relative argument and at worst a dangerous one. We think better questions to consider are: Why are interest rates so low? Why do so many Central Banks around the world practice “Quantitative Easing” and “Financial Repression”? We believe that low rates today are symptomatic of a world where economic and financial imbalances may be bigger than ever.


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