10 May 2010 Tweedy Browne - Q1 2010 Commentary ( Portfolio )
As we mentioned in our last quarterly update, there is a quality bent to the portfolio today reflecting where value is showing up in global equity markets. While higher quality companies performed quite nicely during the last year, the bounce off the recession low was largely driven by lower quality stocks, led by financial, media and small cap securities as well as emerging market equities. The top 20 holdings across our four Funds continue to consist for the most part of larger, globally diversified high return on capital businesses that trade at very reasonable multiples of estimated earnings and have a dividend yield on average of nearly 3%. They generally have strong balance sheets, which should allow them to withstand any economic turbulence we may face, and many of them benefit significantly from sales into the emerging markets. So, while our direct exposure to the emerging markets may be modest, our indirect exposure is quite significant and we think at much better prices than those available investing on a direct basis.

As a value-based, bottoms-up investment manager, our market view is a function of individual security values, and given the advance of global equity markets over the last year, global equities in general are pretty fairly valued today. Finding opportunities as a result has become more challenging. Nevertheless, we are still uncovering opportunities, albeit at a slower pace. Despite the healthy returns we enjoyed over the last year, we feel that our Fund portfolios are still very reasonably valued and well positioned for the future.