Co LLe G e pL a NNING | eSTaT e pL a NNING | INVe STING | POrTFOlIO SPOTlIgHT | R eaL e STaT e | R e TIRe M e NT | Ta X p L a NNING
Seafarer Overseas Value Fund
TIckEr ASSETS
SIVLX $ 45 million
PErFOrMAncE |
YTD |
1 yr . |
3 yr . |
5 yr . |
|
– 2.08 % |
2.96 % |
5.55 % |
4.19 % |
Paul Espinosa
TOP FIVE HOldIngS
cOnTAcT InFO
Qatar Gas Transport Co .; National Central Cooling Co .; DFI Retail Group Holdings ; WH Group ; Moneta Money Bank
415.578.9080 • seafarerfunds . com
EquITy SEcTOr AllOcATIOn ( As a % of portfolio ) Consumer Staples 25 % Consumer Discretionary 14 % Financials 14 % Industrials 14 % utilities 7 % Materials 6 % Communications 3 % Real estate 3 % Technology 3 % energy 2 % Cash And Other Assets 9 %
Performance and asset numbers as of 8 / 4 / 22 . Holdings , sector weightings as of 6 / 30 / 22 . Sources : Seafarer Capital Partners and Morningstar .
Finding Hidden Value In Emerging Markets
The Seafarer Overseas Value Fund shows that value and emerging markets aren ’ t mutually exclusive . By Jeff Schlegel
WhAT ’ S ThE VAluE in “ VAluE ” EMErging markets investing ? After all , for many investors the allure of emerging markets is their tantalizing growth prospects , fueled by the sector ’ s favorable one-two punch of a youthful population demographic and potential for a blossoming middle-class consumer society . given those features , emerging markets are generally viewed as a way to juice the growth profile of an equity portfolio , with the value component to be filled in with supposedly cheaper and / or less risky u . S . or other developed market stocks .
But value investing isn ’ t just about finding stocks with low price-to-whatever multiples . “ Because people pursue growth in the emerging markets universe , it stands to reason that there ’ s a lot of latent value there ,” says Paul Espinosa , lead portfolio manager at the Seafarer Overseas Value Fund . “ it ’ s not that i don ’ t look at growth , but i minimize that factor in what i look for .”
One of the key metrics that Espinosa and his team focus on is the spread between the return on equity and the cost of equity of a company . According to Seafarer , the team looks for a return on equity significantly higher than the cost of equity throughout most of the economic cycle . This analysis forces them to understand the actual operations of the business and the cost of its growth , instead of just the growth it delivers . They believe this process can produce better investment results .
“ To the extent that most EM investors are focused on the growth factor , they leave these other two factors on the table for the picking that can be bought at very attractive prices . That ’ s the opportunity ,” Espinosa says .
And for the most part this approach has meant success since the Seafarer Overseas Value Fund launched in 2016 . According to Morningstar , the fund has been a top-quartile performer in the one- , three- and five-year periods within its diversified emerging markets category . And year to date as
pHoToGRapHY CouRTeSY oF SeaFaReR CapITaL paRTNeRS SepTeMBeR 2022 | FINaNCIaL aDVISoR MaGazINe | 47