amounts of leverage.“ We like to invest in companies that can grow in different business scenarios,” McKinnon says.
Small Team, Flat Structure
The Artisan Global Value Fund’ s benchmark is the MSCI All Country World Index, but the fund’ s managers don’ t peg their portfolio to that bogey in any meaningful way.“ We’ re never thinking about a benchmark when we build the portfolio. The benchmark is really just a client tool that they use to evaluate us,” McKinnon says.
The fund’ s valuation focus results in a portfolio where the allocation to U. S. stocks is significantly less than its benchmark and the allocation to Europe is substantially greater. Meanwhile, it holds a much lower weighting to technology than the benchmark, partly because it holds only two of the so-called Magnificent Seven stocks that propelled the bull market in U. S. equities in 2023 and 2024( the two are Google parent Alphabet Inc. and Facebook parent Meta Platforms).
McKinnon and his partner don’ t ignore macro concerns, but theirs is a bottom-up approach that looks at four key investment characteristics. Their ideal companies possess high-quality businesses, strong finances and good management teams. And a company’ s stock must trade at a discount to what the managers believe is its intrinsic value.
They run various screens that narrow their investment universe to those key characteristics. That includes regional screens to make sure they’ re not missing anything in a particular market.
As described by McKinnon, parent company Artisan Partners is a federation of 11 different autonomous investment management teams employing different strategies under the umbrella of the Artisan platform. The Global Value team has six members, including four research analysts. All the members are heavily involved in the research process.
McKinnon says the team members are all generalists assigned industries and companies according to geography, poring over company reports and frequently
traveling the world for in-person meetings with companies.
“ We keep the team small to encourage interaction and maintain a flat structure,” he says. He adds that he and O’ Keefe meet with each of the analysts once a week to review the items on their work list. The duo ultimately decide which companies to add or delete from the portfolio.
Monetizing Opportunities Two recent portfolio additions— PayPal Holdings and Universal Music Group— illustrate the fund’ s investment process.
PayPal is a financial technology company best known for its online payments system. The company underwent a reorganization in the last couple of years; McKinnon believes past management
Manager Michael McKinnon Age 50
“ The plan of the new CEO is pretty simple: Invest in new technology, improve the user interface and offer a rewards program that encourages more usage.”
He says this model is similar to a successful strategy employed by American Express, one of the Artisan fund’ s longterm holdings.
“ PayPal is a company that should have a pretty bright future,” he offers.“ We paid about 13 or 14 times earnings a few years out, which is a nice price for a business with quality characteristics and a growth profile.”
Universal Music Group is a Dutch- American company that owns record labels in more than 60 countries.“ They own one of the most valuable music libraries in the world, and it has a large
Their ideal companies possess high-quality businesses, strong finances and good management teams. And a company’ s stock must trade at a discount to what the managers believe is its intrinsic value.
could have been generating more revenue from its business and wasn’ t monetizing as much as it could have been. He notes that PayPal has about 200 million monthly users, and maybe double that number of annual users.
“ The opportunity here is to increase customer engagement in their branded checkout business,” McKinnon explains. stable of current and popular artists,” McKinnon says.
He believes that business is also under-monetized. Most of the company’ s revenues come from the big streaming providers such as Spotify, Apple, Google and Amazon, he says, and he believes music ought to be a bigger streaming business than Netflix, giving content owners
Professional Background He is a managing director of Artisan Partners and a portfolio manager on the Artisan Partners Global Value Team, overseeing the research process and conducting fundamental research as a generalist.
Before joining Artisan Partners in 2010 he was a securities analyst at Legg Mason Capital Management for all the firm’ s funds. Earlier in his career, he was a research analyst for Himalaya Capital, a long / short equity fund affiliated with Tiger Management, and a senior consultant at Arthur Andersen LLP.
Outside Interests Spending time with family and paying attention to his health by exercising and going to the gym.
PHOTOGRAPHY OF PORTFOLIO MANAGER COURTESY OF ARTISAN PARTNERS MAY 2025 | FINANCIAL ADVISOR MAGAZINE | 43