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| At Home Around the World |
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Watch the video version of Sarah Ketterer's 10 Questions.
Since she was a teenager in the Los Angeles area, Sarah Ketterer has had her eye on faraway places.
"I was so eager to get out of my hometown that I spent my junior year of high school in Japan," she says. "From then on, I realized that there's just so much more happening in the world than the events in my own backyard."
As head of Causeway Capital Management, a firm she cofounded in 2001 that specializes in global investing, she gets to see plenty of the world. She's a manager of Causeway International Value CIVVX, which is a Morningstar Fund Analyst Pick in the foreign large-value category. Ketterer and her team follow a strict value discipline in their pursuit of large-cap stocks from developed markets.
1. You've had a global view of the financial crisis. What has surprised you the most?
The severity. What was to be a U.S. credit crisis turned out to be one that was shared by economies globally. There was absolutely no place to hide--no geographic region or asset class.
2. What lessons have you learned?
Stay away from nationalization. If it appears that government may want to limit systematic risk, don't hang out in the equity. Head for the exits quickly.
3. Has the crisis made you reconsider any aspects of your investing process?
No. In fact, just the opposite. We are all the more convinced that our bottom-up, active, value approach is effective, especially in one particular area, financial strength. We've been advocates of companies with superior financial strength since the early 1990s, and it has paid off in the last year.
4. Are you placing greater importance on certain metrics of yours?
We're looking at areas that could potentially be impaired, such as goodwill, so we want to make sure that companies that have been acquisitive in the last four years of our wonderful credit bubble don't find themselves needing to write down that goodwill. It could be another hit to earnings after all that we've been through.
5. What's a high-conviction idea for you right now?
Many of the cyclical stocks, especially industrials--companies that are well capitalized and well situated for an economic recovery. They include industrial automation company Fanuc in Japan or, in the Netherlands, ASML, which is a semiconductor production equipment company, or, in the U.S., Rockwell Collins COL.
6. What do you like best about international investing?
The inefficiency. Many investors overseas are not as experienced in equities and they tend to panic. Take Japan as an example; there's a market where investors tend to get very pessimistic in a downturn and they are often far too optimistic when times are good. So that creates an opportunity for us to exploit.
7. What was the first investment you ever made?
As a teenager, I was absolutely fascinated with Asia. My first investment was a media company called South China Morning Post. It's an English-language newspaper based in Hong Kong.
8. What's your favorite city in the world?
London, for its culture, architecture, parks, and people.
9. If you weren't a portfolio manager, what would you be doing?
A writer, because so many fascinating events happen to me. I keep sketchy details. Somebody might want to read about them someday.
10. What is the best remedy for jet lag?
Green tea, without any doubt.
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