Polen International Growth Portfolio Q2 2024 Commentary

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The Polen International Growth Composite Portfolio declined in the second quarter.Economic growth rates and inflation readings in most corners of the world remain positive but are evidencing ...

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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPolen International Growth Portfolio Q2 2024 Commentary\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-07-31 23:15 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4708512-polen-international-growth-portfolio-q2-2024-commentary><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>The Polen International Growth Composite Portfolio declined in the second quarter.Economic growth rates and inflation readings in most corners of the world remain positive but are evidencing ...</p>\n\n<a href=\"https://seekingalpha.com/article/4708512-polen-international-growth-portfolio-q2-2024-commentary\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4147","symbol_name":"半导体设备","start_time":0,"source_url":"https://seekingalpha.com/article/4708512-polen-international-growth-portfolio-q2-2024-commentary","article_id":"2456197106","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/993308576/image_993308576.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2456197106","pubTimestamp":1722438900,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Click to enlarge The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher. Periods over one-year are annualized. Performance figures are presented gross and net of fees and have been calculated after the deduction of all transaction costs and commissions, and include the reinvestment of all income. Please reference the GIPS Report which accompanies this commentary.Click to enlarge  Commentary The Polen International Growth Composite Portfolio  declined in the second quarter. Portfolio returns in the quarter were again largely driven by our higher conviction weightings. Most of these companies are seeing a healthy combination of building business momentum, accelerating earnings growth, and reasonable valuations. However, a few of our larger positions in the Healthcare and Information Technology sectors saw share price weakness in the quarter, adversely impacting returns. This is typical market action, in ou","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4147":"半导体设备","LU2244417387.USD":"FIDELITY SUSTAINABLE US EQUITY \"A\" (USD) ACC","LU0390134368.USD":"FRANKLIN GLOBAL GROWTH \"A\" (USD) ACC","BK4566":"资本集团","BK4558":"双十一","LU0310800379.SGD":"FTIF - Templeton Global A Acc SGD","BK4535":"淡马锡持仓","LU2362540622.SGD":"WELLINGTON NEXT GENERATION GLOBAL EQUITY \"A\" (SGDHDG) ACC","BK4121":"生命科学工具和服务","LU0728928796.USD":"abrdn SICAV I - GLOBAL SMALL&MID-CAP SDG HORIZONS EQUITY \"A\" (USD) ACC","HDB":"HDFC银行","BK4559":"巴菲特持仓","LU1804176565.USD":"EASTSPRING INV GLOBAL GROWTH EQUITY \"A\" (USD) ACC","TOELY":"Tokyo Electron Ltd.","LU0197229882.USD":"富达印度焦点基金","LSRCF":"Lasertec Corp.","BK4123":"调查和咨询服务","LU0472753341.HKD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"A\" (HKD) ACC","SGGEF":"Sage Group plc (The)","LU0348814723.USD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"A\" (USD) INC  NC","LU0057025933.USD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"AX\" (USD) ACC","LU2177674079.SGD":"Fidelity Asia Pacific Opportunities A-ACC-SGD (hedged)","TLPFF":"Teleperformance","LU0882574055.USD":"富达全球健康医疗A ACC","LU0511384066.AUD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"A\" (AUDHDG) ACC","LU1267930573.SGD":"TEMPLETON GLOBAL \"AA\" (SGD) ACC A","SAP":"SAP SE","LU1691799644.USD":"Amundi Funds Polen Capital Global Growth A2 (C) USD","LU1805238398.USD":"FIDELITY INDIA FOCUS \"A\" (USD) ACC","LU1267930656.SGD":"FRANKLIN INDIA \"AS\" (SGD) ACC A","BK4202":"服装、服饰与奢侈品","LU0708994859.HKD":"TEMPLETON GLOBAL \"A\" (HKD) ACC","BK4173":"保险经纪商","LU0918141887.USD":"安联亚洲实际收益股票基金","SG9999014906.USD":"大华全球优质成长基金Acc USD","ADDYY":"阿迪达斯","LU2362541273.HKD":"WELLINGTON NEXT GENERATION GLOBAL EQUITY \"A\" (HKD) ACC","LU1366333091.USD":"FIDELITY GLOBAL FOCUS \"A\" (USD) ACC","SG9999017495.SGD":"UGDP UNITED GLOBAL QUALITY GROWTH \"B\" (SGD) ACC","SG9999014880.SGD":"大华全球优质成长基金Acc SGD","LU2362541513.USD":"WELLINGTON NEXT GENERATION GLOBAL EQUITY \"A\" (USD) ACC","LU0348816934.USD":"ALLIANZ TOTAL RETURN ASIAN EQUITY \"AT\" (USD)","LU0287143357.SGD":"Fidelity India Focus A-SGD","LU0528227936.USD":"富达环球人口趋势基金A-ACC","SG9999014021.USD":"UNITED GLOBAL DURABLE EQUITIES (USDHDG) ACC","ICON":"Icon Energy Corp.","LU0128525929.USD":"TEMPLETON GLOBAL \"A\" (USD) ACC","SG9999014914.USD":"UNITED GLOBAL QUALITY GROWTH (USDHDG) INC","ICLR":"ICON plc","AON":"怡安保险"},"translate_title":"Polen国际增长投资组合2024年第二季度评论","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AON":1,"TOELY":1,"TLPFF":1,"SGGEF":1,"SAP":1,"LSRCF":1,"ICLR":1,"HDB":1,"ADDYY":1,"ICON":0.61},"content_text":"The Polen International Growth Composite Portfolio declined in the second quarter.Economic growth rates and inflation readings in most corners of the world remain positive but are evidencing decelerating trends.The top three contributors to the Portfolio’s relative and absolute performance in the quarter were HDFC Bank, SAP, and Teleperformance.The Portfolio’s top relative detractors were Sage Group, ICON, and Aon.Hiroshi Watanabe Summary  Economic growth rates and inflation readings in most corners of the world remain positive but are evidencing decelerating trends. Portfolio returns in the quarter were again largely driven by our higher conviction weightings. Most of these companies are seeing a healthy combination of building business momentum, accelerating earnings growth, and reasonable valuations. However, a few of our larger positions in the Healthcare and Information Technology sectors saw share price weakness in the quarter, which adversely impacted returns. The top three contributors to the Portfolio's relative and absolute performance in the quarter were HDFC Bank, SAP, and Teleperformance. The Portfolio's top relative detractors were Sage Group, ICON, and Aon. The top absolute detractors were Sage Group, ICON, and Adidas. During the quarter, we initiated a new position in Tokyo Electron with the proceeds from the sale of our position in Lasertec.   Seeks Growth & Capital Preservation (Performance (%) as of 6-30-2024)      QTR YTD 1Yr 3Yr 5Yr 10Yr Inception   Polen International Growth (Gross) -3.48 1.21 8.19 -1.65 3.92 - 8.51   Polen International Growth (Net) -3.76 0.62 6.90 -2.69 2.99 - 7.56   MSCI ACWI (ex-USA) 0.96 5.69 11.62 0.46 5.54 - 6.68  \nClick to enlarge The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher. Periods over one-year are annualized. Performance figures are presented gross and net of fees and have been calculated after the deduction of all transaction costs and commissions, and include the reinvestment of all income. Please reference the GIPS Report which accompanies this commentary.\nClick to enlarge  Commentary The Polen International Growth Composite Portfolio (MUTF:POIIX, MUTF:POIRX, \"the Portfolio\") declined in the second quarter. Portfolio returns in the quarter were again largely driven by our higher conviction weightings. Most of these companies are seeing a healthy combination of building business momentum, accelerating earnings growth, and reasonable valuations. However, a few of our larger positions in the Healthcare and Information Technology sectors saw share price weakness in the quarter, adversely impacting returns. This is typical market action, in our view, and we are encouraged by expectations of fundamental growth continuing at steady, above-market rates. So, while 90-day performance reflects short-term underperformance from a few large positions, our research shows that long-term positive business trends remain firmly intact. Economic growth rates and inflation readings in most corners of the world remain positive but are evidencing decelerating trends. As we see it, flagging growth and inflation across many economies puts a premium on security selection. We believe our focus on maintaining a concentrated portfolio of competitively advantaged companies geared to grow earnings at above-market rates is the best way to invest in such environments. Portfolio Performance & Attribution The top three contributors to the Portfolio's relative and absolute performance in the quarter were HDFC Bank (HDB), SAP (SAP), and Teleperformance (OTCPK:TLPFF). Reversing course from last quarter, HDFC Bank was our top relative contributor in the second quarter. Despite pressure on returns and margins in the near term, management is determined to avoid irrational competition that precipitates excessive risktaking on either side of the balance sheet. The company remains focused on sustainably growing its deposit franchise, improving profitability metrics, and growing earnings per share. As such, HDFC remains well-positioned as one of the dominant banks in the attractively growing Indian economy. After delivering a strong first quarter, SAP's stock price again rose in the second quarter on the back of an acceleration in the growth rate of the current cloud backlog-an indicator of cloud revenue to be booked within the next 12 months. Results showed that SAP's transition to the cloud (a core part of our thesis on the business) continues at pace, and the company is seeing both strong cloud revenue growth and expanding cloud gross margins. Management is guiding cloud sales growth through 2025 in the mid-20% range, which we view as both reasonable and attractive. We also view SAP as one of the more resilient software business models as it is an essential part of their customers' day-to-day operations and cannot easily be turned off or scaled back. As noted last quarter, Teleperformance's stock price has been under pressure over the past year owing to a combination of factors ranging from a challenging macro environment to a perception that artificial intelligence (AI) poses a threat to their core business. This extremely negative sentiment is reflected in the stock's current forward 12-month P/E multiple of 6.5x. Encouragingly, the company reported better-than-expected organic growth in the quarter and reiterated revenue growth guidance, which we view as a positive development given that the company had reduced guidance a few times in 2023. Over the long term, we continue to believe the company can grow its earnings at a healthy double-digit rate. The Portfolio's top relative detractors were Sage Group (OTCPK:SGGEF), ICON (ICLR), and Aon (AON). The top absolute detractors were Sage Group, ICON, and Adidas (OTCQX:ADDYY). Sage, an accounting and financial software provider to small and medium-sized ('SMB') businesses, was the Portfolio's largest detractor from relative performance during the quarter. The weakness in the stock stemmed from a 2H forecast for revenue growth that was revised lower, stoking concerns that an increasingly challenging macro backdrop is weighing on their core SMB customer. Taking a step back, Sage's core value proposition is providing mission-critical software to SMBs. This level of growth, coupled with modest margin expansion, should, in our estimation, allow Sage to grow earnings at a mid-teens annualized rate going forward. In contrast with the first quarter, when ICON was the Portfolio's top relative contributor, the stock experienced some weakness in the second quarter. Given a solid earnings report and an investor day on which the company increased guidance, the stock gave back some of its gains from the first quarter. As a very well positioned player in an industry with an increasingly healthy demand environment, we think ICON is poised to deliver respectable growth and returns over the next few years. Aon was another detractor to relative performance during the quarter. Aon reported solid results recently, albeit results that featured slightly slower organic growth in the commercial risk unit than expected. Additionally, the recent $13.4B acquisition of NFP positions Aon to enter the mid-market brokerage segment, though it represents a drag on margins in the near term. With all of this said, our long-term view remains intact, and we continue to view Aon as a steady, durable low-teens earnings compounder. Portfolio Activity During the quarter, we initiated a new position in Tokyo Electron (OTCPK:TOELY) with the proceeds from the sale of our position in Lasertec (OTCPK:LSRCF). We also added to and trimmed several existing positions. We eliminated our position in Lasertec after holding it for a little over a year. New information concerning light source components within Lasertec's APMI systems called our original investment thesis into question, and as such, we felt the best course of action was to exit the position and continue to watch Lasertec and the APMI category from the sidelines. We initiated a new position in Tokyo Electron, a leading semiconductor capital equipment vendor based in Japan. Tokyo Electron is a market leader in etch, deposition, wafer cleaning and other technologies. These are critical steps in the semiconductor manufacturing process. Beyond its meaningful scale advantages, Tokyo Electron strategically partners with customers to continuously improve its technologies (more than $17.5bn cumulatively on research and development over the last three decades) and are well managed, according to our research. Secular trends like digitalization and miniaturization in chip technology-and now the AI boom-are at work here, too. We believe Tokyo Electron is poised to grow total returns at a midteens rate over the coming years. Outlook Based on our research, the Portfolio holds competitively advantaged businesses whose weighted average earnings are expected to grow at a mid-teens rate over time. A Portfolio of well-positioned businesses supports our confidence that shortterm disruptions are speedbumps on the road to long-term success. Thank you for your interest in Polen Capital and the International Growth Portfolio. Please contact us with any questions. Sincerely, Todd Morris and Daniel Fields, CFA  Original Post Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. 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