As the market continues to adjust to a regime of higher-for-longer interest rates and heightened geopolitical friction, Mackenzie Investments' Portfolio Manager and Team Lead of the Mackenzie Cundill Value Team Richard Wong sees it not as a threatābut as fertile ground.
Speaking with Rajan Bansi, Head of Portfolio Construction and Mackenzie Private Wealth, Wong lays out a disciplined yet opportunistic vision for global value investing in an environment where volatility is high, valuations are dislocated, and many investors remain risk-averse.
āUncertainty is when you get prices really cheap. And when you buy things really cheap, thatās when you get great returns. And thatās what weāre doing at Cundill right now,ā Wong explains.
Below, we unpack the full context of this wide-ranging and insightful discussion1,2, covering everything from macro shifts and European tailwinds to surprising bets in tech and the rigorous sell discipline that underpins Cundillās strategy.
The Tailwind of Higher Rates: A Rebirth for Value
The conversation opens with a foundational question: what does the current macro backdrop mean for value versus growth?
Wong begins by contrasting todayās interest rate environment with the post-2008, near-zero rate regime that dominated for over a decade. āThat really favored growth strategies,ā he notes. āBut if you look at history prior to 2008... value strategies tend to outperform because the discount rate is positive and valuation mattered.ā
Now, he argues, the market is returning to historical normsāwhere fundamentals, cash flows, and intrinsic value matter again. āInterest rate is positive, inflation is sticky. All of a sudden, valuation strategies work because valuation does matter,ā he says. āPresent earnings matter a lot more than earnings 20 years from now.ā
Volatility Creates OpportunityāIf Youāre Ready to Act
The early months of 2025 have been marked by uncertainty around trade and tariffs, spiking volatility, and widespread pullbacks across sectors. For Wong, that chaos is translating into opportunity.
āWhen the market was fearful, we were actually quite greedy,ā he says. āWe went on a shopping spree of sorts... April 6, April 7āthey were busy days for us.ā
Wong points out that āLiberation Dayā (the day President Trump announced exaggerated tariff rates) caused a spike in risk aversion, triggered by policy noise. That led to large, indiscriminate selloffs in the markets. For valuation-focused managers like Cundill, that kind of panic selling is a gift.
āWe donāt know where the marketās going to go. We just know valuation,ā he says. āIf we can buy [great businesses] at a discount... and they have solid catalysts, then weāre very happy to own them for the long run.ā
Where the Deals Are: Europe, Cyclicals, and⦠Tech?
When asked which sectors and regions offered the most compelling opportunities, Wong points to beaten-down areas of the marketāespecially those misunderstood or overlooked by peers.
āWe did some shopping in European cyclicals,ā Wong says. He emphasizes the recent shift in Germanyās fiscal posture, citing the governmentās half-trillion-euro stimulus announcement as a potential game-changer. āLater this year, you're going to see the unveiling of stimulus plans... many stocks [are] really well positioned to benefit,ā he notes.
One clear example? Siemens. āPeople donāt know this, [but] Siemens is the largest industrial software company in the world,ā Wong says. āWe continue to really like it.ā Alstom, a French train manufacturer, also made the list, alongside Daimler Trucks.
Yet the most surprising part of the discussion is where Cundill is also finding value: technology.
āIām able to buy AI tech stocks at cheaper valuations than banks and energy,ā Wong says with a chuckle. āYou canāt get any better than that.ā
He identified hardware (servers, storage, memory), networking infrastructure, and traditional semiconductors as three sub-sectors offering unusually attractive valuations. āStorage memory⦠networking⦠some of these are trading at 7 to 8 times PE,ā he emphasizes. āTo us, thatās insane prices.ā
Europeās Moment? Why the Market May Be Turning
Beyond sector-specific ideas, Wong sees a more structural opportunity in Europe. After a decade of underperformance, the combination of fiscal stimulus, proximity to China, and reaccelerating base growth could turn the tide.
āEurope has come a long way. The baseline economic growth... has been improving,ā he notes. āGermany had, for years and years, not allowed the government to run the deficit at all. And now theyāre saying they take that constraint away.ā
With potential tailwinds from both domestic stimulus and improved trade with Asia, Wong sees Europe as primed for revaluation. āIf U.S. growth slows a little bit and European growth picks up⦠I think you could definitely see significant improvement in valuation for European securities,ā he says. Cundill is overweight Germany, France, and the UK, with holdings in over 10 countries.
The Discipline Behind the Hunt: Holding and Selling
Despite the excitement about market dislocations, Wong stresses that Cundillās process is grounded in discipline. The team typically holds stocks for 3ā5 years, guided by two pillars: valuation and catalysts.
āIf the valuation is still compelling... and the catalyst is still valid, then we want to own the stock,ā he says.
Selling decisions, by contrast, are a mirror image: stretched valuation, broken thesis, or a better idea elsewhere. Wong gave the example of SNC-Lavalin, a long-term holding whose turnaround is still paying off. He contrasts that with Credit Suisse, which the team exited within six months due to compliance and risk issues. āRegardless of how cheap it was, the catalyst was totally broken. So we exitedāand it was a good thing.ā
Concentration with Conviction
Wong describes the Cundill Global Portfolio as a āfocused but diverseā strategy, holding around 60 names across 9 sectors and 10 countries. āAverage position size is 1.8% to 2%, with high-conviction names going to 3.5% or 4%,ā he says.
That level of concentration ensures ideas matter, while still maintaining enough diversification to manage idiosyncratic risk. ā60 is a good number,ā Wong adds. āIt lowers volatility but makes sure that the best ideas have enough weight.ā
What Makes a Value Stock? Itās All About Price
In closing, Bansi asked whether Wong would ever consider buying former growth darlings like the āMAG 7ā stocks. His answer reinforced a core truth:
āIf I can buy [a stock] at 20%, 30%, 40% below [its] intrinsic value, thatās a value stock,ā Wong said. āThe label that the market puts on different thingsāāgrowth,ā āvalueāāthose are just labels. Ultimately, itās about what are you paying for earnings, what are you paying for cash flow.ā
Final Word: Valueās Time to Shine
After a decade in the shadow of growth, Wong sees the current era as a return to rationalityāand a prime moment for disciplined value investors.
āThe last few years, value is starting to deliver good, competitive returns,ā Wong said. āWeāre very excited... Those stocks that we bought in Aprilātheyāre all up about 15% already.ā
With volatility high and prices dislocated, Wongās team is preparing for the next opportunity. āIām almost happy if the market turns around and retests its lows againābecause then I can do more shopping.ā
Footnote:
1 Mackenzie Investments. "Searching for Value in Volatile Markets | The Invested." 3 May. 2025, mackenzieinvestments.podbean.com/e/searching-for-value-in-volatile-markets.
2 āMackenzie Investmentsā Podcasts." Home, 2 May. 2025, www.mackenzieinvestments.com/en/institute/insights/mackenzie-investments-podcasts.