International Growth Equity

Hartwell’s International Growth Equity invests in high quality growth stocks with sustainable earnings for long-term appreciation. We invest in companies with high returns on equity and high earnings growth. Our process aims to deliver alpha over a full market cycle through successful stock selection. We use active, bottom up management and invest in large cap American Depositary Receipts (ADRs) and US listed shares of foreign securities. Most holdings are conservative, low beta growth which tends to be consistent in a choppy market. We rarely invest in cyclical or turnaround growth. We do not market time, we are fully invested and we do not hedge.

Competitive Advantage:

This is a well defined, disciplined, tax efficient, growth focused investment product with performance dating to January 1, 2007. Before October 1, 2011 performance was from a prior firm. The portfolio manager, Jennifer Miller, has been investing in international equities using American Depositary Receipts (ADRs) and US listed shares for 22 years. Past performance has shown that, in general, the product style has participated in up movements of the market and outperformed when the market has had big downward trends. The yield component also provides some protection during market downturns.

Our objective is to maximize long-term total returns by holding industry-leading large capitalization companies that possess significant potential for growth.

We start with a universe of 2000 ADRs and choose the ones with Market Caps (free float) >$1B, double digit EPS and ROE growth, reasonable PE and PEG ratios. That results in a pared down universe of 400 ADRs which we screen for financial strength, earnings and price momentum, supply of and demand for shares, and geographic revenue exposure. A buy list of approximately 100 ADRS is then vetted with fundamental and economic analysis resulting in the construction of the portfolio which currently holds 40 securities.

Sell Criteria:

We sell a holding when one of these occurs: our investment rationale changes, the catalyst we identified no longer exist, there is a technical breakdown (deterioration of fundamentals), the projected growth rate has a negative change, valuation becomes less attractive, or a stronger candidate replaces it. We also trim positions to manage price appreciation.

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