Seeking the Best Companies in the World, At the Right Price

“Analyzing companies against their competitors across the world is so important; it allows for what we believe to be the very best stocks to be picked, regardless of their location.”

By Sean Bogda,  CFA, Portfolio Manager

Global Currents Investment Management, LLC is an investment manager focused on global equity opportunities across both developed and emerging markets — investing prudently with a value approach — but not in the absence of growth. Decades ago, our founding partners were instrumental in developing and refining this timeless philosophy by leveraging their rigorous research findings, following a disciplined investment process and employing common sense. Today, our team of investment professionals maintains a passion for value investing as displayed by an unwavering belief that excess returns can be captured through investing in relatively lower valued securities. Notwithstanding our focus on ‘value’ when assessing specific companies — ‘growth’ prospects are also an important factor in our decision making.

Capturing Value and Growth

Our core philosophy at Global Currents is centered on a key investment approach: Value Investing. Through in-depth research studies and practical experience, our investment team has determined that value-style investing can provide excellent risk adjusted returns over full investment cycles, and it is a particularly important strategy in global markets. Today, we understand that in a global marketplace — the world is not a static place. Only by being creative and diligent can we continue to identify and capture Value across all industries, markets, and time periods, and deliver superior long-term performance to our clients.

Our investment team believes that a disciplined bottom-up approach allows a skilled investor to capture potential additional return premium. To manage company-specific risk, we look to buy only those stocks that are at the lower end of their historical valuation ranges and have significant catalysts to spur future growth. In short, we seek to invest in quality companies trading at low prices relative to their intrinsic value. The ultimate goal is to bypass the ‘deservedly cheap stocks’ in favor of those with sufficient catalysts to recover and prosper.

We balance our focus on value with an eye towards identifying the growth drivers of each business we analyze. Our stock picking approach seeks to gather an awareness of a company's earnings cycles. We ignore the attraction of peak earnings and profitability and instead focus on companies that have room to expand sales and/or profitability. We are seeking growth, however, we are not willing to pay for it.

A Rigorous Process

The investment process employs both quantitative modeling and fundamental analysis. We begin by screening over 17,000 publicly traded securities with capitalizations greater than $100 million. We assess overall liquidity and compare measures such as current price-to-earnings, price-to-book value, and price-to-cash flow within sectors and countries on a historical basis. The overall universe is comprehensive with stocks across a range of countries and industries.

Once the universe is established, our investment team embarks upon its research efforts to eliminate those companies with negative characteristics or barriers to success such as poor financial characteristics, deteriorating competitive position, weak or ineffective management and poor industry conditions. This produces our 'focus list,' a group of high quality businesses that have no obvious barriers to success and whose valuations are attractive.

Our focus list becomes the basis of our research agenda. We conduct a thorough analysis on the fundamentals of these companies and the industries in which they operate. This part of the process seeks to develop a deep understanding of these businesses and to develop a sense of what the business is worth. Our analysis emphasizes factors that create value over the long term, rather than short term price momentum or precise earnings forecasts. The focus is on investing with a margin of safety, coupled with an ability to recover in a reasonable time frame. Our approach and discipline allows us to build a portfolio that is dviersified by both region and economic sector.

While we analyze and value the businesses in which we seek to invest, we don't lose sight of the overall macroeconomic environment and its potential impact on our portfolios. We seek to understand how these broader issues will impact the prospects of current investments and the value proposition of potential future investments. Ultimately, we seek to take advantage of the mispricings that result from the fear or greed that macroeconomic disruptions often engender.

A Global Approach

The global equity investment team has broad-based experience with investing in global equities and has managed global equity strategies for over fifteen years. Today, we continue to verify our value measures and explore new ways to identify investment opportunities. We strive to assist our clients in attaining their goals through a disciplined value approach to global investing.