BBH U.S. Large Cap Equity Monthly Update – February 2023

February 28, 2023
  • Investment Management
Portfolio Manager, Nicholas Haffenreffer, discusses how the U.S. Large Cap Equity portfolio companies performed over the most recent month-end.

February marked a pause in the fourth quarter’s strong equity recovery and the momentum that continued through January. A steep rise in interest rates and the U.S. Dollar, coupled with moderating earnings expectations, held investor enthusiasm in check. For the month, the S&P 500 declined -2.44% and the BBH US Large Cap Equity Composite (“US Large Cap Equity” or “the Strategy”) declined -3.20%. At the sector level, Materials and Industrials posted modest gains, and Communication Services and Health Care were the weakest sectors. Consistent with this framework, leading industrial gas provider Linde (LIN) was the largest contributor for the period, and search giant Alphabet (GOOG) was the largest detractor.

Linde’s fourth quarter operating and financial results brought another strong year of absolute and relative performance to a close, helping drive the Company’s strong near term absolute and relative stock price performance. We believe Linde’s operating and financial guidance for 2023 was well received by investors, as were votes to de-list the Company’s shares on German stock exchanges where certain structural rules likely impeded their natural, economic share price progression. The de-listing of Linde stock in Germany affected over the month-end transition from February to March and is now complete with the Company’s stock being traded exclusively on the New York Stock Exchange.

Alphabet shares underperformed in February due to fears of rising competitive intensity in search advertising following a product announcement from Microsoft that ChatGPT’s generative artificial intelligence (AI) technology had been integrated into its search engine, Bing. At this early stage, we believe Alphabet’s history of investing in AI products and technology should allow it to defend its leading position as a search engine and continue to incrementally integrate AI as it has done for over a decade. Alphabet’s leading market share of more-than-90% of search queries offers a compelling data advantage critical for training AI and over time should result in the highest quality model. While Bing’s product announcement generated consumer interest, the proven return on investment of Alphabet’s AdWords for advertisers should continue to support customer retention and provide time to develop and integrate its own generative AI capabilities with the recent launch of Bard.

The probability, duration and magnitude of a recession remains in the forefront for investors as the Federal Reserve nears the conclusion of its historic tightening cycle, the impact of which will take time to play out. While inflation has followed a steady path lower, key elements such as labor and wages have remained stubbornly high. Partially offsetting these economic headwinds is a consumer who has demonstrated remarkable resilience. As this cycle evolves our focus remains on investing in businesses characterized by durable cash flow and earnings growth, healthy balance sheets, and attractive valuations. From this perspective, we continue to believe the Strategy represents compelling value and is well-positioned to generate attractive returns throughout the business cycle.


Total Returns

Average Annual Total Returns

As of 02/28/2023

1 Mo.

3 Mo.


1 Yr.

3 Yr.

5 Yr.

10 Yr.



BBH US Large Cap Equity Composite (Gross of Fees)









BBH US Large Cap Equity Composite (Net of Fees)









S&P 500 Index









As of 12/31/2022

1 Mo.

3 Mo.


1 Yr.

3 Yr.

5 Yr.

10 Yr.



BBH US Large Cap Equity Composite (Gross of Fees)









BBH US Large Cap Equity Composite (Net of Fees)









S&P 500 Index









Returns of less than one year are not annualized.

The BBH US Large Cap Equity Composite inception date is 10/01/2005.

Sources: BBH & Co. and S&P

Past performance does not guarantee future results.

The S&P 500 is an unmanaged weighted index of 500 stocks providing a broad indicator of stock price movements. The composition of the index is materially different than the Strategy’s holdings. The index is not available for direct investment.

Representative Account
Equity Weighting
As of February 28, 2023

Common Stocks


Cash & Cash Equivalents




Representative Account
Sector Weighting
As of February 28, 2023

Communication Services


Consumer Discretionary


Consumer Staples






Health Care




Information Technology




Real Estate






Reported as a percentage of portfolio securities, excluding Cash and Cash Equivalents.

Representative Account
Top 10 Companies
As of February 28, 2023

Berkshire Hathaway Inc


Mastercard Inc


Linde PLC


Alphabet Inc


Arthur J Gallagher & Co


Microsoft Corp


Progressive Corp


Alcon Inc


Zoetis Inc


Waste Management Inc




Reported as a percentage of total portfolio.

Representative Account
Portfolio Characteristics
As of February 28, 2023

Composite Assets (mil)


Number of Securities Held


Average P/E


Average Market Cap (bil)


Turnover (Rolling 12-Months)


Excludes cash equivalents.

Holdings are subject to change. Totals may not sum due to rounding.

Price/Earnings (P/E) ratio is a company’s current share price divided by earnings per-share.

Turnover ratio is the rate of trading in a portfolio; higher values imply more frequent trading.

Opinions, forecasts, and discussions about investment strategies represent the author’s views as of the date of this commentary and are subject to change without notice. References to specific securities, asset classes, and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as recommendations.

Purchase and sale information provided should not be considered as a recommendation to purchase or sell a particular security and that there is no assurance, as of the date of publication, that the securities purchased remain in a strategy’s portfolio or that securities sold have not been repurchased.


Investors should be able to withstand short-term fluctuations in the equity markets in return for potentially higher returns over the long term. The value of portfolios changes every day and can be affected by changes in interest rates, general market conditions and other political, social and economic developments. Each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market.

The strategy may assume large positions in a small number of issuers which can increase the potential for greater price fluctuation.

Foreign investing involves special risks including currency risk, increased volatility, political risks, and differences in auditing and other financial standards.

The Representative account is managed with the same investment objectives and employs substantially the same investment philosophy and processes as the strategy. Contribution figures are of the Representative Account and do not include cash and cash equivalents. Performance of the Representative account is available upon request.

Brown Brothers Harriman Investment Management (“IM”), a division of Brown Brothers Harriman & Co (“BBH”), claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive additional information regarding IM, including a GIPS Composite Report for the strategy, contact Craig Schwalb at (212) 493-7217, or via email at

Gross of fee performance results for this composite do not reflect the deduction of investment advisory fees. Actual returns will be reduced by such fees. Net of fees performance results reflect the deduction of the maximum investment advisory fees. Returns include all dividends and interest, other income, realize and unrealized gain, are net of all brokerage commissions and execution costs. Results will vary amount client accounts. Performance calculated in U.S. dollars.

The Composite is fully discretionary, fee-paying accounts over $5 million that invest in a portfolio of approximately 25-35 companies with market capitalizations greater than $5 billion that are headquartered in North America, as well as in certain global firms located in other developed regions. This strategy is benchmarked to the S&P 500 Index.

Brown Brothers Harriman & Co. (“BBH”) may be used as a generic term to reference the company as a whole and/or its various subsidiaries generally. This material and any products or services may be issued or provided in multiple jurisdictions by duly authorized and regulated subsidiaries. This material is for general information and reference purposes only and does not constitute legal, tax or investment advice and is not intended as an offer to sell, or a solicitation to buy securities, services or investment products. Any reference to tax matters is not intended to be used, and may not be used, for purposes of avoiding penalties under the U.S. Internal Revenue Code, or other applicable tax regimes, or for promotion, marketing or recommendation to third parties. All information has been obtained from sources believed to be reliable, but accuracy is not guaranteed, and reliance should not be placed on the information presented. This material may not be reproduced, copied or transmitted, or any of the content disclosed to third parties, without the permission of BBH. All trademarks and service marks included are the property of BBH or their respective owners. © Brown Brothers Harriman & Co. 2023. All rights reserved.

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IM-12607-2023-04-03 Exp. Date 05/31/2023

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