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Causeway Capital's Sarah Ketterer Joins GuruFocus for Q&A - Ask Your Investing Question

Holly LaFon

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Sarah Ketterer (Trades, Portfolio) is CEO of Causeway Capital Management LLC, an investment firm with $28 billion in assets. She joins two members of her team, Causeway portfolio managers Jamie Doyle and Conor Muldoon, for a Question & Answer session with GuruFocus readers. To submit a question to them about anything related to investing, simply post it in the comments section below.

About Sarah and Causeway

Sarah and the team at Causeway focus primarily on companies in international and emerging markets, employing a time-tested bottom-up value approach. The firm’s flagship fund has returned an annualized 8.4% since its October 2001 inception, and the global value equity strategy has returned an annualized 12%, both beating their benchmark index.

Causeway combines rigorous fundamental research with quantitative analysis when evaluating stocks. Their researchers find investment ideas by poring over global stocks markets, and value stocks based on the companies’ yield and ability to profitably reinvest back into the company. As contrarian investors, they seek out-of-favor sectors and companies that face temporary setbacks.

Global Approach and Current Investing

Causeway invests across several geographic strategies, including global (developed markets including the U.S.), international (non-U.S. developed market equities) and emerging markets. Their team explained why they are enthusiastic about investing without borders in their January newsletter, “Beyond Boundaries: The Case for Global Equity:”

“We recognized the benefits of screening globally for undervaluation among the world's best-run companies. The developed global investable universe is comprised of over twice the number of companies in the developed international universe. As a result, global has the potential to deliver significant performance advantages versus international.”

Causeway is also heavily invested in financial stocks, increasing exposure significantly in 2013. They chose bank stocks they identified as being undervalued and undergoing restructuring or deleveraging. Some of their biggest bank positions include JPMorgan Chase & Co (JPM) – a new fourth quarter holding – Citigroup Inc. (C) and Wells Fargo (WFC).

As of the fourth quarter, some of Causeway’s largest positions are Ryanair Holdings PLC (RYAAY), UnitedHealth Group Inc. (UNH) and Boeing Co. (BA). Within their International Value portfolio, which GuruFocus follows separately, the largest positions are Akzo Nobel NV (XAMS:AKZA), Reed Elsevier NV (XAMS:REN) and Siemens AG (FRA:SIE).

Asking a Question

To ask Sarah, Jamie and Conor a question about investing, post it as a comment in the box below. We’ll gather questions and get the answers back to you shortly.

See Causeway’s portfolio here, and see the Causeway International Value portfolio here.


Rating: 5.0/5 (4 votes)

Voters:

Comments

fekafiemd
Fekafiemd premium member - 5 months ago

What do you think about the Brazilian and Chinese market. Is this an opportunity to pick up stocks like BSBR, CHL, PBR? Thank you.

Grahamites
Grahamites premium member - 5 months ago

Thank you for taking our questions. I have a two-part question: (1) How did your global portfolio position strategy change each time the Fed has announced a new round of QE and (2) How would you position your global portfolio in anticipation of the eventual wind-down of QE?

iviskalin
Iviskalin - 5 months ago

I'm going to start my own investing company. I would like your kind advice: what is the most important things for the start?
Thank you and best regards!

hola50
Hola50 premium member - 5 months ago

Dear Sarah,
what do you think about Medusa Mining Ltd? Due to my analysis its undervalued and markets are significantly overvalued. Is it the right time to invest into gold, especially Medusa Mining Ltd in your opinion?

dontfretit
Dontfretit premium member - 5 months ago

I have a very simple (yet not simple) question. As a 24 year old, I have a lot of time to allow for compounding. If you had to pick one or two smaller companies to buy and hold for the next 5-10 (or longer) years. What would they be?

chuckpetersen
Chuckpetersen premium member - 5 months ago

Hi Sarah; Could you please give me a company that is global in nature that you really feel has "disruptive" technology for the next decade that could be a real "game changer" and a great investment?? Thank You very much. Chuck Petersen

chneeley
Chneeley premium member - 5 months ago

How do international stock profitability (after taxes, the international peers of US S&P 500 companies) compare to S&P 500 profitability over time, say 10 year average?

bdionicio
Bdionicio premium member - 5 months ago

As a contrarian investor, what are the key indicators your company look for on stocks that have been discarded by other so called experts and picked by you? I typically don't follow numbers or parameters and decide to invest on stocks at or near 52 weeks low. So far I've been blessed with stocks such as ARIA, OXGN, and I have hope in Groupon only because I think their business model is improving and have plenty of upside potential. In other words, I trade by gut feeling and I'd like to learn more about real signs. Thanks in advance for taking our questions.

CoalreadGuru
CoalreadGuru premium member - 5 months ago

Tow questions:

1. In your case, what are the important factors to consider for building the portfolio, and

2. How you built them to current portfolio?

issachar
Issachar - 5 months ago
Hi Sarah and team, thanks for offering to take questions - i have 3:

1. Which aspect of value investing do you place a greater emphasis on - projecting future earnings or calculating the respective company's present value if liquidated (since some of the companies are in ' out-of-favor sectors' and those which face 'temporary setbacks').

2. Do you think that US Equities are reaching a saturation point/significantly overvalued as Seth Klarman (Trades, Portfolio) believes it to be so? If not, why?

3. Could you give a broad overview of your investment process/checklist which you use when first looking at a company?

thanks so much for your time!

TannorP
TannorP premium member - 5 months ago

Hi Sarah thanks for taking our questions,



I have a two questions. 

The first being how do you allocate your global portfolio regarding position sizes . . . Do you allocate strictly from a bottoms up perspective or do you have a certain threshold for each geographic area that must be met (or limited) in terms of percentage of the portfolio? 



The second question is what do you think of the prospects for Africa and the Middle East in the next 20+ years? How to you evaluate the financial statements and verify the companies are legitimate in the "questionable" geographic regions? It seems most western investors neglect these geographic areas but I could see tremendous value being created over the coming decades, especially in the agriculture and energy industries. I would love to hear what you have to say!

Cheer and thanks again for your time.

rsheeley
Rsheeley premium member - 5 months ago

Does China have any up and coming John Deere type companies or a smaller version of Archer-Daniel-Midland?

Thank you.

chiavacci
Chiavacci premium member - 5 months ago

Sarah,

Thank you for taking time to answer questions.

If you had to invest 10% of your liquid net worth in one publically traded company and could not sell that position for at least 10 years, what characteristics would you look for?

Or, if you prefer to think of this in terms of 3 or 4 positions representing 30-40% of your net worth, what characteristics would you take into account most?

Furthermore, can you think of any names out today that meet this criteria and would be worth buying?

Thanks again.

cjanders
Cjanders premium member - 5 months ago

The banking system in the US seems to be improving. As far as foreighn banking investments which would you favor an european bank (CRZYB) or an emerging market bank (ITUB)? Thank you.

batbeer2
Batbeer2 premium member - 5 months ago

Thank you for taking the time to answer our questions!

PostNL has been discussed on gurufous.com after your fund disclosed its stake. I have two questions regarding this company.

1) It seems the Dutch postal service (net of the TNT stake and the international operations) is not performng as well as the Austrian postal service and the Belgian postal service. Do you see any reasons why the Dutch postal service should be inherently less profitable than some of their publicly traded European peers?

2) A number of European postal services have been IPOed recently. Do you see any drivers for consolidation in the space?

And finally a question about Rolls-Royce plc.

3) What (if any) competitive advantages does Rolls-Royce have over GE and Pratt & Whitney?

vgm
Vgm - 5 months ago

Hi Sarah and colleagues. Thanks for taking our questions.

1. Do you still own Tesco? If so, what are your current thoughts on valuation? It seems to be going thru a challenging patch.

2. Have you condidered Tesco competitor Morrison's (which is also having a tough time of late)?

3. Which other UK stocks do you own?

4. Who is your all-time favorite investor and why?

bunahan
Bunahan premium member - 5 months ago

Japan - (A) a new secular bull market has begun

or

(B) yet another cyclical rally that should be sold into like every other one of the last 20 yrs?

If (A), do you have any interesting ideas in Japan?

Thanks!

billups7383
Billups7383 premium member - 5 months ago

Hello Sarah,

Thank you for taking time to respond to these questions. Regarding China and Brazil: the energy sector, in particular oil/gas, has been under a lot of pressure. Stocks like CEO, PBR and PTR seem to be in oversold territory. Do you see more pain ahead with growth concerns and government intervention like with CEO or do you this as a good entry point for a long-term investor like myself?

Thanks so much.

Carol Nadon
Carol Nadon premium member - 5 months ago

Miss Ketterer, I've noticed you bought gambling business online in China. Why GAME and GA, not CACQ and why in China ?

Thank you from Montreal

yvens.trading
Yvens.trading - 5 months ago

Hello Ms Ketterer,

I'm a Montreal CPA title holder currently preparing for the CFA exams.

As you are an experienced manager, my question would be what are the qualities you are looking for in a new candidate. And how do you suggest a new analyst can "break in" the industry?

Thank you for your time,

Evans Banatte

mquanbeck
Mquanbeck premium member - 5 months ago

What critiera .....or how and when do you decide you are wrong on a position? What, where, when, and How do you decide you are wrong and take the loss?

Please leave your comment:


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