BBH U.S. Large Cap Equity Monthly Update – October 2022

October 31, 2022
Portfolio Manager, Nicholas Haffenreffer, discusses how the U.S. Large Cap Equity portfolio companies performed over the most recent month-end.

Equity markets rebounded sharply in October, reflecting a relative moderation of inflationary factors, stability in the U.S. Dollar and 10-Year Treasury yields, as well as satisfactory corporate earnings. The BBH US Large Cap Equity Composite (“US Large Cap Equity” or “the Strategy”) gained 6.18% for the month compared to 8.10% for the S&P 500. From an attribution perspective, key contributors were Information Technology selection and an overweight position in Financials. Primary detractors included security selection in the Health Care sector and a lack of investment in Energy – a sector that outperformed all other sectors by a wide margin with a gain of almost 25% for the month. At the security level, top contributors included Mastercard (15.61%), Oracle (28.49%), and Berkshire Hathaway (9.49%). Primary detractors included (-9.35%), Pool Corp (-6.18%), and Alphabet (-1.55%). At month-end, the Strategy held 29 securities, 46.5% in the top 10, and 6.3% in cash. Turnover during the trailing 12 months was approximately 25%.

Early in the month we increased our position in leading online travel agency Booking Holdings (BKNG). Demand trends for travel, particularly leisure travel, remain healthy despite elevated inflation and high hotel occupancy rates. Excellent cost controls and a strong pricing environment continue to benefit company margins and we are pleased with management’s substantive share repurchase program; year-to-date, the company has repurchased $4.8 billion in shares, reducing its outstanding shares by 5%. Over the last five years, the share count has declined by 20% and we are encouraged that management is deploying cash in a way we expect will generate considerable long-term shareholder value.

We sold our investment in industrial distributor Pool Corp (POOL). We decided to exit the position for several reasons despite the company being an excellent fit with our investment criteria. First, we wanted to reduce our portfolio exposure to the U.S. residential and commercial real estate markets given current and potential changes to monetary policy. U.S real estate fundamentals have only just begun to deteriorate, and the risk of further material weakening is significant. Second, while we have high conviction the quality and resiliency of the company’s business has improved over the past 15 years, we believe their financial performance guidance in a recessionary environment is overly optimistic. During the last real estate-led recession, Pool’s revenues and profits declined 20% and 45%, respectively. While we do not believe such a level of operating degradation would be repeated, the company’s suggestion that top line and profit declines would range in the low-to-high single-digit range should a normal recessionary environment develop in 2023, seems optimistic. In short, the near-to-medium term operating environment appears challenging, and we believe it is prudent to move to the sidelines.

Our focus remains on earnings and cash flow durability. Like the market, we are pleased to see some moderation of inflation, but acknowledge the fact that these factors remain extremely elevated. We recognize the Federal Reserve’s tools are limited and imprecise with the ability to produce a wide range of outcomes, but take comfort in the view that our clients’ portfolios are well-positioned to endure and potentially even thrive through a full cycle.


  Total Returns Average Annual Total Returns
As of 10/31/2022 1 Mo.* 3 Mo.* YTD* 1 Yr. 3 Yr. 5 Yr. 10 Yr. Since
BBH U.S. Large Cap Equity
Composite (Gross of Fees)
6.18% -9.59% -22.37% -18.48% 5.22% 7.67% 9.74% 9.49%
BBH U.S. Large Cap Equity
Composite (Net of Fees)
6.10% -9.82% -23.02% -19.30% 4.18% 6.61% 8.66% 8.41%
S&P 500 8.10% -5.86% -17.70% -14.61% 10.22% 10.44% 12.79% 9.12%
As of 09/30/2022 1 Mo.* 3 Mo.* YTD* 1 Yr. 3 Yr. 5 Yr. 10 Yr. Since
BBH U.S. Large Cap Equity
Composite (Gross of Fees)
-9.44% -6.77% -26.88% -17.70% 3.68% 6.58% 9.05% 9.15%
BBH U.S. Large Cap Equity
Composite (Net of Fees)
-9.52% -7.01% -27.45% -18.53% 2.66% 5.53% 7.98% 8.07%
S&P 500 -9.21% -4.88% -23.87% -15.47% 8.16% 9.24% 11.70% 8.67%

* Returns 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 October 31, 2022

Common Stocks


Cash & Cash Equivalents


Total 100%

Representative Account
Portfolio Characteristics
As of October 31, 2022

Composite Assets (mil) $806.4

Number of Securities Held


Average P/E


Average Market Cap (bil)


Turnover (Rolling 12-Months)


Exclude cash equivalents

Representative Account
Sector Weighting
As of October 31, 2022

Communication Services 6.5%
Consumer Discretionary 10.9%
Consumer Staples 8.1%
Energy 0.0%
Financials 21.3%
Health Care 13.8%
Industrials 12.4%
Information Technology 20.1%
Materials 6.9%
Real Estate 0.0%
Utilities 0.0%
Total 100.0%
Reported as a percentage of portfolio securities, excluding Cash and Cash Equivalents.

Representative Account
Top 10 Companies
As of October 31, 2022

Berkshire Hathaway Inc 6.5%
Alphabet Inc 6.1%
Mastercard Inc 5.3%
Arthur J Gallagher & Co 4.8%
Linde PLC 4.7%
Progressive Corp 4.3%
Costco Wholesale Corp 3.7%
Waste Management Inc 3.7%
Alcon Inc 3.7%
Zoetis Inc 3.7%
Total 46.5%
Reported as a percentage of total portfolio.

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. 2022. All rights reserved.

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