2Q2022 – Global Growth Commentary

A variety of factors can affect markets and stocks in the short term, but underlying results will ultimately be weighed

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  • The conditions during the second quarter of the year have largely been a continuation of what we experienced during the first quarter, with a long list of exogenous factors continuing to weigh on the market, including persistent inflation, tightening monetary policy, and ongoing supply chain issues.
  • During the quarter, consumer discretionary, information technology, and health care companies have been broadly punished amid a backdrop of rising rates, valuation resets, and waning consumer confidence, which impacted the Portfolio. The three smallest absolute detractors for the period were ADP, CSL, and Starbucks. The three largest absolute detractors were Alphabet, Amazon, and Align Technology.
  • We exited our position in Netflix and added to our positions in ADP, Amazon, and Siemens Healthineers in the second quarter of 2022.
  • The recent market drawdown seems indiscriminate, but we expect fundamentals to eventually come back into focus. When we combine our ongoing expectations for mid-teens earnings per share growth from the Portfolio with what we believe are now very reasonable valuations, we are optimistic despite the many exogenous factors that are weighing on the market today.

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