Cory Martin, Chief Executive Officer of Barrow Hanley, discusses how the firm came into being, its expansion over the years, its disciplined approach to value investing, common misconceptions about value stocks and the outlook for the future.

Mark Giambrone, Executive Director & Head of US Equities, outlines the Barrow Hanley US Mid Cap Value Strategy - the rationale for its launch, its philosophy and process, the investment team's experience and expertise, why mid cap stocks are frequently overlooked, and the outlook for US mid cap generally and mid cap value specifically.

Managing assets is an art. From understanding the nuanced details of investment-grade capability to comprehending the dynamics of leveraged finance, the task is complex. Yet, amidst the competition, one firm has embarked on a unique trajectory: Barrow Hanley.

Barrow Hanley: Unique in Its Market Space

As a $55 billion asset manager across public equity and credit markets, Barrow Hanley sets itself apart in the asset management space. Unlike many of its competitors, Barrow Hanley leverages its in-house equity expertise to learn about industries and management teams, gaining an upper hand in the highly competitive credit management industry.

The Company’s Distinctive Value Strategy

Barrow Hanley is a value-focused firm. Their approach revolves around a deep understanding of each company’s cash flow characteristics, profile, and the durability of that cash flow. This clear focus on value is complemented by the firm's size, which it describes as "ideally sized." Large enough to forge meaningful relationships with management teams and companies, yet not too large to lose the charm of a closely-knit office space.

The Power of Experience

Experience is a cornerstone of Barrow Hanley's operational strategy. With the leadership boasting a quarter of a century of experience in asset management, the firm brings time-proven methodologies and practical insights gained through different market cycles to bear on the complex world of asset management. This wealth of experience helps Barrow Hanley better understand and manage the risks within various portfolios.

Barrow Hanley: A Long-Term Commitment

For driven professionals, Barrow Hanley is a magnet. The organization holds value in its collaborative environment, contributing extensively to the firm’s appeal for those seeking a long-term commitment in asset management. It's not just a place to work - it's a hub for career development and business growth. Professionals are drawn in by the chance to work side by side with large equity shops, fostering a sense of camaraderie and mutual growth.

Extensive Expertise in Leveraged Finance

With 25 years of experience in leveraged finance, the firm offers a broad spectrum of options including leveraged loans, high-yield bonds, and levered equities across varied investment vehicles. This investment diversity, along with their significant experience managing assets through multiple cycles, gives Barrow Hanley a competitive advantage in delivering highly effective portfolio management.

In Conclusion

Barrow Hanley represents a unique position in the asset management industry, owing to its value-focused strategy, extensive industry knowledge, and a collaborative environment that continues to attract seasoned finance professionals. If there's one takeaway to have from the story of Barrow Hanley, it's that asset management thrives not just on the science of money but on the art of people and relationships.

If you are a leader looking to navigate the complexities of the financial world, connect with Perpetual Asset Management and explore the unique advantages that our partnership with Barrow Hanley Global Investors offers. Act now, invest in clarity, stability, and expertise. Visit www.perpetual.com to learn more about how we can help you succeed.

Would you believe that mastering investment risk involves a similar approach to mastering chess? Both games require deep analysis, strategic thinking, and the ability to adapt to changing circumstances. We at Perpetual Asset Management take a strategic, thoughtful approach to managing risk, ensuring solid returns regardless of market fluctuations. Curious to know how we do it?

Understanding Our Investing Philosophy

Our investment philosophy draws from two polar fields - bottom-up analysis, and top-down analysis. Where bottom-up analysis takes a microscope to the individual companies within our portfolio, the top-down approach broadens the view to contemplate factors that influence these positions.

We aim to fill our portfolios with companies that demonstrate low cash flow volatility, offering stability and a predictable growth curve. We want to understand each company’s possible stress points, how their cash flows might fluctuate, the value of their assets, and their potential outcomes in volatile situations.

The Unique Layer of Risk Management

Risk is at the center of our investment philosophy. Our team of analysts considers risk from every angle, scrutinizing cash flow volatility, the capital structure, the corporate structure, and the governing debt documents. This meticulous process ensures a comprehensive understanding of the risk profile associated with each investment.

In conjunction with a dedicated risk committee, we analyze our portfolio on a daily basis, adjusting our strategies as required, to ensure sustained growth in all market conditions.

The Diversification Advantage

One key strategy we employ is diversification. This doesn't merely involve a variety of industries, but extends to all aspects of credits. Our goal is to construct a diversified portfolio, safeguarding from potential downside risk and ensuring stable growth even in turbulent market conditions.

Our Nimble and Robust Platform

A cornerstone of our success lies in our nimble and robust platform. As a smaller asset manager, we have the flexibility to assess and act on opportunities quickly. What sets us apart is our significant insight into industry dynamics. With over 750 management meetings every year with CEOs and CFOs from a vast array of industries, we maintain a comprehensive understanding of market trends and brewing risks.

Think of us as a boutique firm with the resources of a $55 billion asset manager. Our unique position provides access to a wealth of information, serving as a distinct advantage for us and our clients.

Whether you're a seasoned investor or just beginning your journey, we hope our insights provide a measure of clarity on the importance of strategic risk management in asset investment. Remember, the nuanced strategy, detailed risk analysis, and adept diversification are the keys to mastering this game, just like chess!

Ready to take the next step? Explore how Perpetual Asset Management’s unique investment strategies can help build your financial future at www.perpetual.com.

In the ever-evolving investment landscape, navigating credit products can be challenging, particularly for investors pursuing a risk-averse approach. However, savvy investors can harness the power of leveraged credit as a compelling diversifying component for their broader portfolios. This article provides insights into understanding credit products and how they can fit seamlessly into an investment approach driven by calculated decision-making.

The Asymmetric Nature of Credit and Risk Considerations

Investing in credit, such as high-yield bonds, leveraged loans, and private credit, represents an asymmetrical trade-off. With the maximum gain dictated by the interest, or the coupon and payout at maturity, the risk profile of credit necessitates comprehension of the nature of these assets. The decision to invest in levered loans, for example, exempts investors from taking any interest rate risk and thus presents a favorable opportunity for the astute investor.

The Diversified Portfolio: A Place for Credit

With its role primarily via interest income, credit resides comfortably in a diversified portfolio. Purchasing high-yield bank loans or collateralized loan obligations (CLOs) can provide robust current interest. Notably, the high-yield bond market boasts close to $1.5 trillion, the CLO market, which consists mainly of levered loans, is nearly $1 trillion, and private credit, a newer asset class, slightly surpasses $1.5 trillion.

Bank Loans, High-Yield Bonds: A Comparative Glimpse

Bank loans typically carry a flexible interest rate and usually take a senior-secured position in the capital structure. These loans have direct access to collateral, which can range from receivables and inventory to hard assets. In contrast, high-yield bonds possess a fixed coupon and aren't callable for a few years, implying some interest rate risk. However, the lower duration vis-a-vis investment grade means reduced downside.

Choosing the Right Credit Team

Investment success in the credit market requires partnering with the right team. A firm understanding of credit, the factor-specific risks within credit, and an ability to leverage information effectively for decision-making should be the key traits investors seek in their credit management team.

Leveraged credit can complement and boost the performance of your portfolio. As researchers for Perpetual Asset Management (Americas), these insights emanate from a deep experience across myriad asset classes and a firm commitment to deliver investment excellence. We look forward to helping you navigate these complex markets and turn risk into opportunity. Learn more about the world-class investment strategies we offer at www.perpetual.com.

We pride ourselves on having a clear investment philosophy that serves as a driving force behind all of our investment decisions. For the team at Barrow Hanley, that means taking a bottom-up stock selection approach, while maintaining our long-term perspective on the past and future.

It comes down to striking a balance between growth and value. Our team looks for undervalued companies dealing with downside that have clear upside potential — and we believe are poised for a rewarding turnaround.

Learn why we’re “different than the benchmark” in Part III: Philosophy of our showcase video series spotlighting Barrow Hanley’s US Equity Investing.