Nicole Kornitzer discusses her strategy for the Buffalo International Fund
Investors always face contradictory forces in the stock market, and this recovery year of 2023 has been marked by a “bad news is good news” mentality, with sentiment directed toward an eventual decline in interest rates. For investors who grew used to better returns in the U.S. during the long bull market that ended last year, the best path forward may be one that is more spread out geographically.
Kornitzer described the fund as “index agnostic,” but also said it could be useful to look at the MSCI EAFE Growth Index, which includes large-cap and midcap companies in developed markets outside the U.S. and Canada; and the MSCI ACWI ex USA Growth Index, which includes emerging markets , for comparison.
Growth with “moats” Kornitzer said the fund looks for stocks that are attractively priced for long-term growth, focusing on companies that have “strong moats.” This means pricing power or strong relationships with customers to protect against economic downturns. She also said that STM is trading at a forward price-to-earnings ratio of 13, based on the consensus 2024 earnings estimate among analysts polled by Bloomberg. This is “at the low end of historic multiples,” she said, probably reflecting the weakness in smartphone sales. But over time, she likes the stock for improved free-cash flow as the silicon carbide market expands, and shorter-term, as the phone market recovers.
Kornitzer liked the company as a long-term play on the growing number of affluent people around the world. When asked about a possible decline in luxury purchases during a time of economic uncertainty, she said LVMH would continue to have pricing power because of the demand for its brands, which include Tiffany, Christian Dior, Fendi and many others, noting its “ability, in the face of a downturn, to cut costs.
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