Black Creek International Update as of April 7, 2026

Transcript

Hello, this is Richard Jenkins of Black Creek Investor Management. I wanted to give an update on what we're doing in the international strategies. Obviously, a lot has changed over the last month, one year and several years. From the shock of COVID, the corresponding inflation when we reopened, to the tariff announcements a year ago, the ongoing Ukraine war and finally, the new outbreak of hostilities in the Middle East, there's obviously many things going on. I wanted to remind you that our basic strategy is to buy global leading companies at prices we think do not discount the prosperous future that business is going to bring. The pre-mentioned shocks that we're experiencing is by definition reducing the overall rate of growth in the global economy. It's also shifting trade patterns and causing inflation and deflation in numerous sectors in numerous countries. It's our job to assess the effect it will have on the businesses we own and to go out and find better businesses at better prices to reflect the new reality. Every time we have one of these shocks at Black Creek, we do the exact same thing. We go through the process of asking; how will this affect our existing businesses? Is it permanent or temporary? And is the management team responding? We go out to each company we own and speak to their management teams, usually the CEO or CFO, to understand what will that effect be? Once we get an answer to that, we start to think about, will that be a long-term effect? And will it make our company stronger, weaker in the future? And most importantly these days, will we have a headwind or a tailwind to the businesses we own? That said, money sloshes around in global markets at a pace which we've never seen before. And it jumps into themes at a pace we've never seen before. And in frankly, in many cases, investors shoot first and think later. This has been somewhat detrimental if you own businesses that are out of favor. That said, if you own businesses that are in favor, it can drive up their prices well beyond what we think are the proper fundamentals of a business. So, witness in 2025, with the view that there was going to be a resolution in Ukraine, we saw a big uptick in construction of building materials companies. We took advantage of it to sell our position in Heidelberg Cement and to reduce our position in Wienerberger. Correspondingly, this year, with the recent hostilities in the Middle East, we've seen a big uptick in the valuation of a business we own, Galp Energia, which is a low-cost producer of oil, primarily coming from offshore Brazil and offshore Africa. This has been quite positive for returns for that particular company. At the same time, we're seeing other businesses get affected in ways that we think are nonsensical. So, for instance, a long-term holding of ours, Accor Hotels, which we bought during the global pandemic, saw its share price fall by almost 20% over the last month. Yet their exposure in total to the Middle East is 7%. Therefore, we've taken advantage of this opportunity to buy more shares. It's comforting for us that also the management team has sought to increase their share buybacks in this environment, indicating that they think the share price is also undervalued. Finally, I wanted to talk about a new name, or two new names we've added to the portfolio. We added one company in Mexico, Cemex, which is a global leader in the cement and construction material business. It leads in Mexico, the southwest of the United States and parts of Europe. They're in encountering or embarking on a program to sell off their smaller minority assets and focus on their winning markets. Under their new CEO, we think the strategy makes great sense and it traded at a big discount to the players that it would compete against in the United States or in fact in Europe. And the last one is a company which has been owned in our global products, global leaders, etc. And it is a company called Bureau Veritas. Bureau Veritas is a testing and inspection company. It ensures that product quality and most importantly, origin is understood in this environment. Why is that important? Well, when you're trying to determine tariffs and supply chains of products, you want to know that the quality is up to standard and you also not want to know where the parts of those products came from. And we see their business as improving, even though the stock market marked it down by about 10%. Last thing I wanted to talk about is future developments around artificial intelligence. We view this as, well, incredibly important to be early days for the artificial intelligence revolution. Therefore, we're speaking to every management team, both of the companies we own and the ones we're looking to own, to understand how it will affect their business, both internally from a cost perspective and externally from the perspective of whether it will help to grow their end markets or shrink them. And obviously it's our job to come up with the appropriate companies for that new environment. We do think we're entering the second phase where the hype around AI fades and the practical matter of how you deploy it, how do you make it economically sensical, what benefits and what loses starts to come into our vision or our view. And stay tuned in the future as we talk more about what we're doing in that environment. So, I want to thank you for your attention. I also want to thank you for your loyalty during this period of incredible transition. I will leave with one thought. In the past periods of incredible transition, whether it was 1987, 1991, 2000, 2004, 2009, 2014 ¹, each one of these big periods of dislocation have given us opportunities to sell businesses whose future may be not as bright as the market thinks and to buy businesses that we think will win in the future. These periods of dislocation have proven in the long term to be beneficial to Black Creek's strategies and we believe they will be so in the future. Thank you.