BBH U.S. Large Cap Equity Monthly Update – November 2020

November 30, 2020
Portfolio Manager, Michael Keller, discusses how the U.S. Large Cap Equity portfolio companies performed over the most recent month-end.

In November 2020, BBH US Large Cap Equity Composite1 (“US Large Cap Equity” or “the Strategy”) rose by 9.78%, which compared to a gain of 10.95% for the S&P 500 Index. One of our top performers in the month was Linde PLC and our largest detractor was Progressive Corp. (“Progressive”).

We were pleased with Linde’s Q3 financial results and the sequential improvement in many of its key operating measures considering the challenging backdrop that remains in many of its end markets and the impact of the COVID-19 pandemic. Despite year-over-year volume reductions linked to weaker demand, adjusted earnings per share increased 11% year-over-year and 13% sequentially. Linde achieved price improvement across all geographic operating segments, and the company continued to make progress on its productivity initiatives. Operating margin expansion of 230 basis points2 year-over-year highlights Linde’s relentless focus on operational excellence. Operating margins have now increased by 600 basis points over the last seven quarters, a testament to the attractiveness of the industrial gas business model and Linde’s strong execution. We continue to have high conviction that Linde has a leading competitive position in the industry, and we foresee continued opportunities for significant value creation given the company’s long history of strong execution and focused capital discipline.

Progressive shares declined modestly as monthly results for October (reported in November) showed a modest uptick in lost costs from recent levels. Given the unique nature of the company's monthly reporting it is not unusual to see some share price volatility around its monthly releases, with such variance typically becoming muted in the quarterly or annual figures. Lost costs and combined ratios remain at very attractive low levels while growth in premiums and policies-in-force remains robust. Financial results for Q3 (ended in September) continued to be exceptionally strong for Progressive, with operating earnings growing by 42%. On all critical metrics, the company continued its industry-leading performance. Premiums and policies-in-force both increased 11% as the company’s market share gains continued. Net investment income has been pressured by the fall in interest rates, but given that Progressive’s operating profit is dominated by its underwriting results, the interest rate impact has been more than offset. The company’s balance sheet remains very well capitalized and liquid.

BBH Core Select Composite Gross and Net of Fees versus the S&P 500 benchmark as of November 30, 2020 and September 30, 2020.
  Total Returns Average Annual Total Returns
As of 11/30/2020 1 Mo.* 3 Mo.* YTD* 1 Yr. 3 Yr. 5 Yr. 10 Yr. Since Inception
BBH U.S. Large Cap Equity Composite (Gross of Fees)
9.78% 6.25% 10.04% 11.15% 10.73% 11.50% 12.50% 10.55%
BBH U.S. Large Cap Equity Composite (Net of Fees)
6.02% 9.07% 10.09% 9.65% 10.41% 11.39% 9.46%
S&P 500 Index
10.95% 3.89% 14.02% 17.46% 13.17% 13.99% 14.19% 9.64%
As of 09/30/2020 1 Mo.*
3 Mo.* YTD* 1 Yr. 3 Yr. 5 Yr. 10 Yr. Since Inception
BBH U.S. Large Cap Equity Composite (Gross of Fees) -1.28% 9.68% 2.24% 6.97% 9.69% 11.35% 11.98% 10.13%
BBH U.S. Large Cap Equity Composite (Net of Fees) -1.37%
9.41% 1.48% 5.91% 8.61% 10.25% 10.88% 9.04%
S&P 500 Index
-3.80% 8.93% 5.57% 15.15% 12.28% 14.15% 13.74% 9.19%
* Returns are not annualized.
Sources: BBH & Co. and S&P
Past performance does not guarantee future results, and current performance may be lower or higher than the past performance data quoted. The investment return and principal value will fluctuate, and shares, when sold, may be worth more or less than the original cost.
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 November 30, 2020. Equity weighting to include Common Stock and Cash and Cash Equivalents.
Representative Account
Equity Weighting
As of November 30, 2020
Common Stock 98.8%
Cash and Cash Equivalents 1.2%
Representative Account Portfolio Characteristics as of November 30, 2020, includes Composite Assets, Number of Securities, Average Price/Earnings, Market Cap and Turnover.
Representative Account
Portfolio Characteristics
As of November 30, 2020
Composite Assets (mil)
Number of Securities Held 32
Average P/E 34.4
Average Market Cap (bil) $198.6
Turnover (Rolling 12 Months)
Exclude cash equivalents.
Composite Risk Statistics as of November 30, 2020.
Composite Risk Statistics
As of November 30, 2020
Beta 0.86
Alpha -0.73%
Tracking Error 4.79%
Upside / Downside Capture 81.6% / 88.3%
Risk statistics are reported gross of fees and are based on trailing 60 months.
Representative Account Sector Weighting as of November 30, 2020.
Representative Account
Sector Weighting
As of November 30, 2020
Communication Services
Consumer Discretionary
Consumer Staples
Financials 12.5%
Health Care 16.8%
Industrials 12.1%
Information Technology
Real Estate 0.0%
Utilities 0.0%
Reported as a percentage of portfolio securities.
Representative Account Top 10 Companies as of November 30, 2020.
Representative Account
Top 10 Companies
As of November 30, 2020
Alphabet Inc
Berkshire Hathaway Inc 
Zoetis Inc 4.5%
Mastercard Inc 4.4%
Linde PLC 4.3%
Arthur J Gallagher & Co 4.2%
Copart Inc 4.1% Inc
Alcon Inc 3.7%
Celanese Corp 3.4%
Reported as a percentage of total portfolio.

1 On 10/1/2020, the BBH Core Select Equity Composite was renamed the BBH US Large Cap Equity Composite.
2 Basis point (bps) is a unit that is equal to 1/100th of 1% and is used to denote the change in price or yield of a financial instrument.

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.

Contribution figures are presented gross of fees and do not include cash and cash equivalents.

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 fund'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.

Data presented is that of a single representative account ("Representative Account") that invests in the strategy. It is the account whose investment guidelines allow the greatest flexibility to express active management positions. It is managed with the same investment objectives and employs substantially the same investment philosophy and processes as the proposed investment strategy. It is the largest account as of the end of the most recent quarter.

For purpose of complying with the GIPS® standards, the firm is defined as Brown Brothers Harriman Investment Management ("IM"). IM is a division of Brown Brothers Harriman & Co. ("BBH"). IM claims compliance with the Global Investment Performance Standards (GIPS®). To receive a list of composite descriptions of IM and/or a presentation that complies with the GIPS standards, 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. Time Weighted Rate of Return is used to determine performance of a portfolio in a Composite. A portfolio's rate of return is the percentage change from the beginning balance to the ending balance of the period. Capital changes as well as dividends and other income earned during a period are included in the ending balance. Any reinvestment of dividends or other income will be reflected in the beginning balance of the following period. Sub-periods returns are linked to calculate a portfolio return for the period. 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. 2020. All rights reserved.

Not FDIC Insured        No Bank Guarantee        May Lose Money

IM-08815-2020-12-11        Exp. Date 01/31/2021

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