Barrow Hanley: Insights from a Global Value Investing Leader

Cory Martin, CEO of Barrow Hanley Global Investors, reflects on the firm’s growth, its value investing philosophy, and how technology and ESG considerations are shaping the future of asset management.

Cory Martin’s Journey at Barrow Hanley

As the CEO of Barrow Hanley Global Investors, Cory Martin has witnessed and guided the firm’s transformation from a US-centric focus to a world-class global manager. With 26 years at the firm, he has overseen the expansion into multiple equity strategies, including US, Non-US, and Emerging Markets, along with various fixed-income strategies such as Bank Loans, and CLOs. Under his leadership, Barrow Hanley’s diversification has significantly grown its client base outside North America.

Martin’s initial interest in global investing began early in his career as a research analyst and consultant, focusing on Non-US and Emerging Market managers. Influenced by National Geographic as a child and the writings of Sir John Templeton, the first truly global investor, Martin’s passion for global investing only deepened. In addition to his role as CEO, he remains an active member of the firm’s global team, which manages approximately $10bn in client assets.

Barrow Hanley’s Value Investing Approach

Barrow Hanley’s value investing philosophy has remained consistent for over 45 years, despite changing market and economic conditions. According to Martin, the firm defines value by seeking companies that have temporarily disconnected from their intrinsic value. These are fundamentally strong businesses that have historically produced competitive returns, including metrics like Return on Equity and Earnings Per Share (EPS) growth.

Martin emphasises that Barrow Hanley looks for companies that offer multiple catalysts for potential outperformance, such as depressed stock valuations, stabilising fundamentals, and defined pathways to recovery. The goal is to buy securities that present immediate value, as opposed to investing in growth companies with projected earnings far in the future. “We love world-class technology companies,” Martin explains, “but we want to buy them, as we have in the past, at value multiples when opportunities arise.”

This value-oriented approach extends to the firm’s fixed-income strategies. Barrow Hanley’s fixed-income team focuses primarily on security selection, building portfolios from the ground up based on underlying fundamentals. By maintaining close collaboration with equity analysts, the team gains a comprehensive understanding of corporate fundamentals, allowing them to make informed selections that can outperform benchmarks across different phases of the credit cycle.

Integrating ESG into the Investment Process

As Environmental, Social, and Governance (ESG) factors become more integral to investment decisions, Barrow Hanley has fully integrated ESG considerations into its process. Martin explains that the firm uses a combination of third-party ESG research from sources like ISS Climate, MSCI, and Sustainalytics, alongside its own independent ESG scoring system.

“Creating our own composite ESG score is critical to our process,” Martin notes, “because our analysts assess financial materiality.” Barrow Hanley’s research team leverages these insights to engage with companies on ESG issues, fostering ongoing dialogues to better understand the challenges they face. This integrated approach allows Barrow Hanley to stay ahead in an investment landscape increasingly driven by ESG considerations.

Leveraging Technology in Asset Management

The rise of technology has revolutionised the asset management industry, and Barrow Hanley is no exception. The firm is leveraging advancements like artificial intelligence (AI) and data analytics to enhance its operations and streamline decision-making processes.

The use of AI tools, such as CoPilot and generative AI, has improved the firm’s efficiency. AI assists in reducing the time analysts spend combing through filings and press releases, enabling them to focus on the financial implications of new information. AI-driven market and portfolio summaries also allow Client Portfolio Managers to spend more time engaging with clients and discussing market movements.

Martin highlights that non-standard data sources are becoming increasingly useful, as advancements in technologies like Optical Character Recognition (OCR) further enhance the firm’s data-gathering capabilities. However, Barrow Hanley adopts a measured approach, ensuring that all new technologies undergo quality assurance to maintain the integrity of their research.

Risk Management in Uncertain Times

In today’s volatile market environment, risk management is more important than ever. Barrow Hanley approaches risk mitigation by adhering to portfolio construction guidelines and employing daily analytics to review holdings. These reviews, which assess diversification, factor exposure, and intra-portfolio correlations, help the firm manage risks while maximising potential returns.

Martin emphasises that while Barrow Hanley avoids making major macroeconomic bets, the team maintains a deep understanding of where its risks lie. The firm’s proprietary risk reports and regular meetings with the Investment Risk Committee ensure that portfolios are well-prepared for various market conditions.

Navigating the Future of Asset Management

Looking ahead, Martin sees sustainable investing as a lasting trend in the asset management industry. He believes that providing customised solutions for asset owners will be key to the future of active management. “Client requirements are shaping the future of long-only active managers,” Martin explains, adding that delivering competitive performance will remain the most important factor for maintaining relevance in the market.

Barrow Hanley is positioning itself for the future by staying true to its value-oriented philosophy while embracing new technologies and adapting to client-driven trends like ESG and sustainability.

Final Advice for Investors

When asked for advice on navigating today’s complex financial markets, Martin emphasises the importance of discipline. “Stay focused on executing your discipline and adhering to the process and philosophy that built your firm,” he advises. “Recognise that you cannot be everything to everyone—stay specialised.”

By maintaining this focus, Barrow Hanley continues to uphold its reputation as a leading global value investing firm, providing its clients with consistent, long-term returns in an ever-changing market environment.