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Top investor, up 15% in 2016, sees value investing comeback

Sarah Ketterer, chief executive officer of Causeway Capital Management
Patrick T. Fallon | Bloomberg | Getty Images

Sarah Ketterer, whose firm Causeway Capital Management oversees more than $40 billion in assets, believes value investing is back in style.

"Value investing has started resurgence in global equity markets, led by US monetary policy, and supported by central banks placing a floor under interest rates while still remaining accommodative," wrote Ketterer in an email to CNBC PRO.

"Undervaluation, superior financial strength plus generous dividend payouts should be a winning combination, especially if managements are employing self-help measures to improve profitability through greater operating efficiency," she added.

So far this year, Ketterer's picks for her "Squawk Box" Platinum Portfolio are up 15 percent compared with a return of 4.7 percent for the S&P 500.

Below the money manager explains, in her own words, why she's making these stocks her top investment ideas for the competition.


Barclays (ADR: BCS US)

"Inevitable run off of Barclays non-core banking assets will likely improve the banks return on capital and lead to a higher valuation. Assume that the 17% decline in pound sterling (GBP) vs the US dollar year-to-date makes the UK more competitive and offsets uncertainty of Brexit, then banking activity in the UK should improve. Barclays profitability of US and European operations will increase simply via translation into GBP."

Qualcomm (QCOM)

"Despite significant outperformance year-to-date, the stock remain undervalued, especially if QCOM acquires NXP Semiconductors."

Royal Dutch Shell (RDSA-GB)

"6% dividend yield. Continued cuts in non OPEC exploration and production should keep crude oil prices on a gradual ascent through 2018, according to Causeway research. RDS is a lower volatility way to get access to a rising crude oil price than the stock it replaced several months ago in the platinum portfolio, SM Energy."

SK Telecom (SKM)

"5% dividend yield, low beta, and the potential for renewed growth in revenues via increasing mobile data usage intensity and 5G launch."