20 May 2010 Thornburg Value Fund - Q1 2010 Commentary ( Portfolio )
We believe the positioning of the portfolio today seems to leave some room for outperformance if the market has, in fact, gotten ahead of itself. As of March 31, 2010, our Basic Value basket of stocks was still larger as a percentage than our Consistent Earner basket (43.3% vs. 41.2%) – but importantly, we consider many of our Basic Value holdings to be relatively conservative. For example, we now have large weights in Exxon Mobile, Ace Insurance, and Transatlantic Holdings. Exxon is an industry leader with a stronger balance sheet and longer lived reserves than its industry peers, and the premium in its valuation is relatively modest. Ace Insurance and Transatlantic are both insurers with very strong balance sheets and conservative underwriting that should weather any environment reasonably well. These three companies are less volatile than typical Basic Value names, and if we were to include them with our Consistent Earners, the combined weight would be much larger than our Basic Value basket.