“We are fundamental, bottom-up stock pickers. We have the flexibility to seek value broadly, employing our basket structure to ensure diversification. We want each holding to matter to performance; we therefore keep the portfolio focused amongst just 35–65 positions. Since 1995, we have worked to invest in promising companies selling at a discount to their intrinsic values. We believe this approach to be a durable and common-sense investment strategy. Importantly, it has worked over the long term for our investors.”
— Connor Browne
Thornburg U.S. Equity Strategy has never been a deep-value portfolio seeking only beaten-up, tired businesses trading at low multiples. Rather, we believe that future price appreciation can belong to businesses with a bright future, businesses with promise.
We employ more flexibility than other value strategies in that the companies we consider tend to have attractive growth prospects. We don’t limit ourselves to a traditional, one-dimensional view of value.
We focus on constructing a core portfolio with potential to outperform its benchmark over time. We diversify the portfolio via several means, one of which is Thornburg’s three-basket diversification construct:
Basic value companies are, in our opinion, financially sound, well-established businesses selling at low valuations relative to net assets or earnings power.
Consistent earners normally exhibit steady earnings growth, cash-flow characteristics, and/or dividend growth. These companies may have above-average profitability measures, and may sell at above-average valuations.
Emerging franchises are often in the process of establishing a leading position in a product, service, or market, or have the potential to grow at an above-average rate.