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Product Commentary
CLEARBRIDGE
VALUE TRUST
Sam Peters, CFA, and Jean Yu, CFA
Portfolio Managers
Market overview
Major U.S. averages opened the year with mixed gains, as
investors continued to focus on the Federal Reserves rate
strategy amid mixed economic reports, suppressed crude
prices, and the climbing dollar, as well as another flurry of
merger and acquisition announcements. The dollar
strengthened +12.7% against the euro over the quarter and it is
now up more than +20% against a broad basket of foreign
currencies over the past nine months. The 10-Year yield closed
March at 1.93%, after falling as low as 1.4% in January and
rising above 2.24% in mid-March. Oil prices fluctuated
between $45 and $54 throughout the quarter, largely reacting
to reports that capacity in Cushing, Oklahoma is running out
for crude supplies, as well as Saudi Arabia launching air strikes
against Iranian-backed rebels in Yemen while U.S. diplomats
carry out nuclear program negotiations with Iran and other
world leaders.
The S&P 500 and Dow Jones posted modest gains of +1.0% and
+0.3%, respectively, while the Nasdaq climbed +3.9% over the
quarter. The small-cap Russell 2000 and Russell MidCap each
jumped more than +4.0%, outstripping the +1.6% rise for the
large-cap Russell 1000. Meanwhile, growth outperformed value
substantially, with the Russell 1000 Growths +3.8% return
more than +450 bps above that of the Russell 1000 Value. The
S&P was weighed down by the utilities sector, off -5.2%, and
energy once more, down another -2.9%. Meanwhile, the health
care and consumer discretionary sectors paved the way higher,
up +6.5% and +4.8%, respectively.
INVESTMENT PRODUCTS: NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE
Class C
3-mo
1-yr
5-yr
Excluding sales
charges
0.23
9.09
11.68
2.49
12.06
1.77
1.77
Net
8.14
11.68
2.49
12.06
A three-factor attribution consists of the allocation effect, the selection effect and the
interaction effect, which sum to the portfolio's performance relative to the benchmark.
Allocation refers to excess performance attributable to the managers decision to
overweight and underweight certain sectors relative to the market. Selection represents
the portion of performance attributable to the managers stock-picking skills. Interaction,
as the name suggests, represents the interaction between weighting and selection
effects, and does not represent an explicit decision of the manager.
3.9
Microsoft Corp
3.6
3.0
3.0
2.9
Pultegroup Inc
2.9
2.8
Amgen Inc.
2.8
Medtronic PLC
2.7
2.7
22.0
Information Technology
19.2
Health Care
16.9
Consumer Discretionary
12.1
Energy
9.0
Industrials
8.2
Materials
4.6
Top detractors
Utilities
4.4
Consumer Staples
3.8
Telecommunication Services
0.0
Cash/Other
-0.1
Percentages are based on total portfolio as of quarter end and are subject to change at
any time. For informational purposes only and not to be considered a recommendation to
purchase or sell any security.
Top contributors
NXP Semiconductors shares rallied after the company
announced a deal to acquire Freescale Semiconductor for $12
billion, to create the fourth-largest semiconductor company.
NXPI is using stock to fund the bulk of the deal, though the
slim premium limits shareholder value-at-risk, according to our
analysis. The combined entity will enjoy a strong competitive
positioning as the market-leading automotive semiconductor
company and broad-based microcontroller unit (MCU)
supplier, and it should generate substantial cash synergy
beyond the $200 million to $500 million cost synergy range
that management projects. As such, we continue to hold the
stock despite the recent rally.
Amazon stock spiked after the company reported fourthquarter earnings that more than doubled Street estimates on
higher-than-expected margins. Investors were also pleasantly
surprised with a new tone from management focusing on cost
management and on transparency in operating reporting,
moves that suggest we could see a much more shareholderfriendly management team going forward. We believe the
company is poised to expand its operating margins into the
double digits by leveraging its hefty fulfillment center
Brandywine Global
ClearBridge Investments
Martin Currie
Permal
QS Investors
Royce & Associates
Western Asset
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The views expressed are those of the portfolio managers as of the date indicated, are subject to change, and may differ
from the views of other portfolio managers or the firm as a whole. These opinions are not intended to be a forecast of
future events, a guarantee of future results, or investment advice. All data referenced are from sources deemed to be
reliable but cannot be guaranteed. Discussions of individual securities are intended to inform shareholders as to the basis
(in whole or in part) for previously made decisions by a portfolio manager to buy, sell or hold a security in a portfolio.
References to specific securities are not intended and should not be relied upon as the basis for anyone to buy, sell or hold
any security. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment
strategies should consult their financial professional.
Portfolio holdings and sector allocations may not be representative of the portfolio manager's current or future investment
and are subject to change at any time.
Percentages are based on total portfolio as of quarter end and are subject to change at any time. For informational
purposes only and not to be considered a recommendation to purchase or sell any security.
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2015 Legg Mason Investor Services, LLC. Member FINRA, SIPC. 467867 CBAX107131 FN1511431 4/15