Hughes: I mentioned the eclectic portfolio, and of course, there is the small-cap stocks that are included in the portfolio, but also it's one of the few international funds that has as small a stake in Europe as it does right now at under 30%, I think. Europe, of course, is top of mind for a lot of international investors. Even though it's not a big part of your portfolio, can you comment on what your thoughts are on what's going on with Greece and Europe and how you've responded?
Wadhwaney: Here is the thing. There is no predetermined geographic allocation in the portfolio. The allocation is really a by-product of a security selection. So if we own a German company, it will wind up as per the Germany allocation, if you will. We do not think in terms of we'll have X percent in Germany, Y percent in Italy and so forth. We will be guided by valuation, we will be guided by safety and the general attractiveness as a business.
Now, in the case of Europe, what this is beginning to present us with is an opportunity to buy and buy more. If you look at the most recent quarter's report, you will see that we've actually been expanding our ownership of a number of European financial companies, both in Continental Europe as well as in the U.K.
Now, the thought behind this is the following. Greece, while I think it is a source of great difficulty – the Greece financial situation is a source of great difficulty for the country itself at the level both of the government as well as the banks and the corporates that borrow from them. Greece, of course, is in a difficult pinch right now.
There has, however, been a flow-on impact into companies in Germany, very well-financed companies, companies that have minimal to no exposure to Greece – in terms of their portfolios, in terms of their assets. So, now, if a company is unfairly tarnished, a very good company, by merely being in a bad neighborhood at the wrong time to no fault of its own, to my mind that presents a tremendous opportunity.
Now, there has been some degree of wanton selling; wanton in terms of unwarranted selling, taking place in, for example, insurance companies in the U.K., a life insurance company that we owned. It went from being at 30% discount to NAV to, I think, in excess of a 50% discount to NAV.
Meanwhile, even as its performance – its operating performance improved, became more cash generative as it began to – its cost efficiency program kicked in, the company is better capitalized than it's ever been in its history and is also the cheapest. I think that makes for interesting circumstances to buy more of these companies.