“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 generally operating in mature industries and which generally exhibit more economic sensitivity and/or higher volatility in earnings and cash flow.
Consistent Earners: Companies which generally exhibit predictable growth, profitability, cash flow and/or dividends.
Emerging Franchises: Companies with the potential to grow at an above average rate because of a product or service that is establishing a new market and/or taking share from existing participants.