Colin McQueen of T. Rowe Price explains what is changing for international value stocks and how he separates cheap businesses from opportunities that can improve. Higher interest rates, industrial investment, and corporate reform are reshaping the opportunity set, but his process still starts with free cash flow and the price investors pay for it.
Colin joins Justin Carbonneau and Jack Forehand to discuss his evolution from deep value investing to a broader approach that includes quality businesses and restructuring opportunities. We explore why value struggled in the 2010s, what has changed outside the US, and how he uses valuation signals and diversification to manage risk.
The conversation also covers AI suppliers and disruption, governance changes in Japan and Korea, opportunities and risks in China, and the case for financial stocks. Colin shares examples involving Samsung, Hitachi, and Rolls-Royce, along with his experiments using AI to challenge investment theses and recognize when conviction has become stubbornness.
Topics covered:
- The lessons Colin McQueen learned from deep value, quality investing, and a difficult decade for value
- How higher rates and spending on infrastructure, defense, and power can change the opportunity set
- AI supply-chain opportunities and the uncertainty around future winners and losers
- Valuing tangible and intangible businesses through normalized free cash flow
- Using AI as an alternative voice when deciding whether an investment thesis is broken
- The US-international valuation gap, earnings growth, and diversification beyond tech
- Japan's corporate reforms, Korea's value-up effort, and the importance of what is already priced in
- China's contrarian appeal and the governance risks that accompany it
- How restructuring, management changes, and better capital allocation can unlock value
- Building a diversified portfolio and looking beyond quarterly earnings and market narratives
T. Rowe Price International Value Fund
https://www.troweprice.com/financial-intermediary/us/en/investments/mutual-funds/us-products/international-value-equity-fund/advisor-class.htmlTimestamps:
00:00 Colin McQueen's evolution as a value investor
07:04 Why deep value struggled in the 2010s
11:20 Higher rates and a more balanced opportunity set
16:20 International value, financials, and AI suppliers
21:20 AI versus the dot-com era and managing valuation risk
25:27 Free cash flow, restructuring, and AI-assisted research
29:56 Comparing US and international valuations
35:39 The risk dashboard and changing European markets
40:00 Corporate reform and opportunities in Japan and Korea
44:57 China, Asia ex Japan, and financial stocks
49:31 Global connections and why a stock market isn't an economy
54:55 Diversification and researching corporate turnarounds
59:57 Looking beyond quarterly earnings and extreme narratives
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No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.
