BBH Global Core Select Fund (“BBH Global Core Select”) employs a long-term business ownership approach within a discount to of Intrinsic Value framework. The investment objective of the fund is to provide investors with long-term growth of capital. We search for established, cash-generative businesses that are leading providers of essential products and services with strong management teams. We seek to purchase the publicly-traded equity securities of such companies at a discount to their of intrinsic values. Estimates of intrinsic value are based on proprietary analysis of prospective free cash flows and returns on capital. We apply a disciplined investment selection process focused business, management, and financial attributes.
BBH Global Core Select will generally hold investments in 30-40 companies with market capitalizations greater than $3 billion that are domiciled both in the U.S. and internationally. We seek to own a minimum of 40% non-U.S. companies in the portfolio. The targeted holding period is three to five years and investments are typically sold if they appreciate above our estimate of intrinsic value.
By applying our criteria consistently and adhering to our process, we aim to provide attractive risk-adjusted absolute results for our clients over the long-term. Our key guiding principles are the following:
- We believe that companies that possess specific business attributes, management attributes, and financial attributes are well positioned to create value for investors through varying economic and market environments.
- We feel that the quality of a business and its ability to grow over time are closely linked. Our selection process focuses on owning businesses with leading competitive positions in healthy, growing industries. We focus closely on understanding the cash flow characteristics of each business. It is our expectation that revenue growth, free cash flow growth and management’s ability to effectively allocate capital will be key drivers of a business’ ability to increase its intrinsic value over the long-term.
- We purchase securities when we can identify a Margin of Safety which we define as a meaningful discount between the market price at which a company’s shares trade and our estimate of a company’s intrinsic value. We typically seek to purchase businesses at 75% of our estimate of intrinsic value. We believe that the benefit of investing with a margin of safety is that it provides added downside protection against permanent capital loss and the potential for significant value creation.
Investors in the Fund should be able to withstand short-term fluctuations in the equity markets in return for potentially higher returns over the long term. The value of portfolios changes every day and can be affected by changes in interest rates, general market conditions and other political, social and economic developments.
The Fund is `non-diversified' and may assume large positions in a small number of issuers which can increase the potential for greater price fluctuation.
Foreign investing involves special risks including currency risk, increased volatility, political risks, and differences in auditing and other financial standards.
Prices of emerging market securities can be significantly more volatile than the prices of securities in developed countries, and currency risk and political risks are accentuated in emerging markets.
Investing in medium sized companies typically exhibit greater risk and higher volatility than larger, more established companies.