In this episode, Peter Lampert, lead portfolio manager of the International Equity Strategy, provides insights on the team’s investment process, the state of the portfolio, and the main drivers that are currently having an outsized impact on performance, namely, semiconductors, obesity medicines, and defense companies. He details his team’s rigorous approach to evaluating management teams from both a quantitative and qualitative standpoint, providing an in-depth example of Hitachi. The conversation concludes with a brief discussion of the current macro environment.

Key Takeaways:

• As enthusiasm surrounding artificial intelligence continues to grow, semiconductor companies have strong competitive advantages and dominant market share in their niche industries.
• According to the team’s DCF model, the long-term growth rates of companies like TSCM have increased, so they have trimmed back some positions to manage risks.
• With Novo Nordisk leading the way, the growing market for obesity drugs is expected to become the largest therapeutic drug class as more and more companies look to enter the space.
• Amid ongoing geopolitical conflicts, there is a strong long-term investment case for select European defense companies, as European governments increase defense spending to protect Western values.
• Regarding areas of opportunity, Peter highlighted the theme of improved corporate governance in Japan as companies in the country aim to meet global standards.
• When evaluating a company’s management team from a qualitative perspective, there are four defining elements: Strategy, operational excellence, capital allocation, and trustworthiness.

Host: Rob Campbell, CFA, Mawer Institutional Portfolio Manager
Guest: Peter Lampert, CFA, Mawer Portfolio Manager

This episode is available for download anywhere you get your podcasts.

Founded in 1974, Mawer Investment Management Ltd. (pronounced "more") is a privately owned independent investment firm managing assets for institutional and individual investors. Mawer employs over 250 people in Canada, U.S., and Singapore.

Visit Mawer at https://www.mawer.com.

Follow us on social:

LinkedIn - https://www.linkedin.com/company/mawer-investment-management/

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In this episode, Grayson Witcher, the lead manager of the U.S. Equity Strategy, discusses the key drivers currently impacting the U.S. economy, including inflation, interest rates, artificial intelligence, and the upcoming presidential election. He emphasizes the importance of diversification and avoiding sharp edges—particularly during an election year. Grayson outlines the importance of and reasoning for his team’s practice of monitoring company management changes in real-time and the value of investing in companies with strong leadership.

Key Takeaways:

• The three big themes driving the U.S. market over the past six months are interest rates and inflation, artificial intelligence, and the election.
• While food, energy, and goods inflation has fallen, service inflation is proving to be a bit stickier, as it entails things like car insurance, rent, and medical services. Wage inflation has also remained relatively strong.
• With artificial intelligence, there is no denying the initial hype and surrounding success of the excitement for companies like NVIDIA. However, the question remains as to whether the trend will continue or start to fizzle out, similar to other technology trends from the 90s and 2000s.
• Regarding the upcoming U.S. election, both candidates’ agendas could impact the economy in inflationary ways, though the impacts would differ depending on the prevailing candidate.
• For Grayson, his election strategy for the portfolio is to prepare, not predict. He avoids sharp edges, which are the industries and companies that are highly dependent on one outcome, and leans into diversification.
• Within the U.S. portfolio, there are two main ways the team diversifies the single-country portfolio: diversification by geography and by industry or sub-industry.
• For long-term investors, management and culture drive a significant amount of value because they reinvest the cash flows generated by these businesses, and they are responsible for managing risk.

Host: Andrew Johnson, CFA, Mawer Institutional Portfolio Manager
Guest: Grayson Witcher, CFA, AB, Mawer Portfolio Manager

For more details and full transcript visit: https://www.mawer.com/the-art-of-boring/podcast/the-u-s-equity-landscape-inflation-artificial-intelligence-and-elections-ep166

This episode is available for download anywhere you get your podcasts.
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Founded in 1974, Mawer is a privately owned independent investment firm managing assets for institutional and individual investors. Mawer employs over 250 people in Canada, U.S., and Singapore. Visit Mawer at www.mawer.com.

Visit Mawer at https://www.mawer.com

Follow us on social:

LinkedIn - https://www.linkedin.com/company/mawer-investment-

management/ Instagram - https://www.instagram.com/mawerinvestmentmanagement/

Twitter - https://www.twitter.com/Mawer_Invest

In this episode of the podcast, credit analyst Curtis Elkington provides a comprehensive overview of the $50 trillion global commercial real estate market. He covers the current headwinds facing various property sectors, such as pandemic-induced challenges in the office sector and touches on the surprising resilience of the retail segment. Elkington sheds light on the complexities of the commercial mortgage-backed securities market and details the credit analysis process his team uses to evaluate potential investments with examples.

Key points from this episode:

• Over the past four years, commercial real estate as an asset class has faced potentially the most significant of headwinds, most notably the pandemic and the rise in interest rates.
• While the pandemic had a different impact on each property sector within commercial real estate, higher rates had a much more uniform impact across the various industries.
• The overall size of the commercial real estate market, which includes multifamily, office, retail, and industrial properties, is massive. In 2023, Savills estimated the total global property value was $50 trillion, of which the U.S. is the largest component.
• Vacancy and capitalization rates are the two primary metrics used to assess the health of the commercial real estate sectors. In office, both vacancy and capitalization rates have increased significantly since 2019.
• According to the St. Louis Federal Reserve, the 25 largest commercial banks have ~$860 billion in commercial real estate loans, which is only 6% of their collective assets. All the other banks outside of the top 25 have $2 trillion in commercial real estate loans, but that accounts for 30% of their total assets.
• Over the past six months, the risk-reward on the credit side for several real estate companies was unattractive in all scenarios.
• Some market participants believe that upwards of $100 billion, or 15%, of U.S. CMBS is currently mis-rated.
• The credit team does two main things in its intensive analysis credit review. They assign a Mawer credit rating that's tied to valuation, and they establish a margin of safety that's tied to downside production.
• With commercial real estate, just like any potential investment, the team reviews each issue and issuer on a case-by-case basis following a thorough and rigorous process before committing investor capital.

Host: Rob Campbell, CFA, Mawer Institutional Portfolio Manager Guests: Curtis Elkington, CFA, Mawer Credit Analyst

For more details and full transcript visit: https://www.mawer.com/the-art-of-boring/podcast/skyscrapers-and-storefronts-insights-on-the-commercial-real-estate-market-in-2024-ep165

This episode is available for download anywhere you get your podcasts.

Founded in 1974, Mawer Investment Management Ltd. (pronounced "more") is a privately owned independent investment firm managing assets for institutional and individual investors. Mawer employs over 250 people in Canada, U.S., and Singapore.

Visit Mawer at https://www.mawer.com.

Follow us on social:

LinkedIn - https://www.linkedin.com/company/mawer-investment-management/

Instagram - https://www.instagram.com/mawerinvestmentmanagement/