The pandemic, the 2022 tech selloff, and 2023 bank failures created stress-driven market opportunities that Hotchkis and Wiley exploited through willingness to look in areas where others were uncomfortable, including travel stocks during COVID, tech stocks during the 2022 panic, and financials during bank failures

To avoid mistakes during bear markets, investors should focus on three key variables: (1) care about the price paid for the business and ensure you get a good price; (2) ensure agreement on the quality of the business, preferring to buy the best business at an affordable price rather than lower-quality businesses at cheaper prices; and (3) only position in companies with strong balance sheets that can withstand shocks, because if you're positioned in the right companies when they sell off, you get excited to buy more

Hotchkis and Wiley's approach to valuation is flexible rather than dogmatic: for capital-intensive industries like banking, they consider book value and normalize it into earnings; for software businesses, price-to-book is not valuable and even price-to-earnings may be misleading for growing companies investing through the income statement; ultimately they determine what a business is worth and pay a discount to that value, recognizing that higher-quality businesses should be worth more

Mean reversion is not applicable to technology and service industries where products can fall out of favor and never recover, and there's no law requiring business revival; alternatively, some tech businesses have become near-monopolies with winner-take-all dynamics and are insulated from competition, making them powerful businesses if prices are right

While some large tech companies like Microsoft and Google have characteristics of monopolies with significant competitive advantages and the ability to last longer than past dominant firms, index rotations still suggest that significant company change is likely in coming decades, making permanence of tech dominance uncertain despite current apparent moat durability

Hotchkis and Wiley sources ideas through analysts with 19+ years of industry experience who hunt for ideas and meet with hundreds of companies annually, industry-specific screening tools customized by six sector teams, biweekly meetings to track ideas and decisions, and belief in developing specialists by industry rather than generalists

Hotchkis and Wiley doesn't lengthen time horizons in response to passive investing growth; their time frame has always been three-year-plus oriented focused on normalized earnings, so business fundamentals and opportunities are identified the same way regardless of macro shifts in passive flows

Catalysts are not necessary for value investing success if you get valuation and governance right; if a stock is trading at a low multiple and management is aligned with shareholders, the company can pay dividends, buy back shares, and grow earnings annually—and if the multiple contracts further, management can buy back more shares and earnings grow even faster, all without needing external catalysts for multiple expansion

Each analyst maintains spreadsheets for every company detailing products, business locations, sourcing, tariff impacts, and management discussions about potential adjustments (location changes, costs, competitive positioning), all to model tariff impacts as thoroughly as possible across individual companies

International stocks offer better valuations than U.S. stocks because while U.S. earnings growth has been better, much of U.S. outperformance has been driven by multiple expansion; comparable international companies in the same industries with similar business mixes and management teams trade at significant discounts to their U.S. counterparts

When investing outside the U.S., governance requires even more attention than in the U.S. because bad or misaligned management teams and poor governance structures in many non-U.S. countries persist for longer without market or shareholder pressure forcing change, creating value traps when low valuation is paired with poor governance

Hotchkis and Wiley's international governance checklist emphasizes: (1) alignment of management compensation with shareholder value creation; (2) board independence (not controlled by government or founding family); and (3) management motivation—determined through direct conversations—to generate shareholder returns or to service other stakeholder interests

Markets are as inefficient today as they have been throughout McBride's career despite more information availability, because more information does not equal market efficiency, and this creates opportunities

For intangible-heavy businesses like Microsoft, Price-to-Book ratio really means nothing about how attractive or overvalued the business is; traditional value metrics don't work for these businesses

For growing businesses that spend heavily on R&D or sales/marketing, you need to estimate 'maintenance R&D' or 'maintenance sales and marketing' to determine what margins will look like when the business matures, similar to estimating maintenance capex for capital-intensive businesses

Hotchkis and Wiley are willing to be very different than benchmark weights and willing to have big weights in particular sectors or be zero in a sector if it doesn't look interesting, rather than tracking benchmark sector weights

When selling positions at fair value, the art is recognizing when a business is reverting to normal or improving; sometimes the business improves more than forecasted, so being patient with high-quality businesses that are improving is important because you may find out things are much better than imagined

Hosking & Wyse uses a multi-factor rating system for every company where they rate financial strength (ability to withstand shocks) on a scale that helps them assess balance sheet quality as a risk control.

Hosking & Wyse is willing to be highly concentrated in portfolios, often taking 5% positions and in more concentrated strategies 10-15% positions when they identify stocks with good valuation, quality rating, strong balance sheet, and management alignment.

Hosking & Wyse is rarely willing to pay market multiples even for the world's best businesses and expects a discount to market valuation, especially when the market is trading above 20x earnings.