Oct 17, 2026 · 1h 3m
Listen from 19:27
Listen at 19:27
International value finds an edge beyond U.S. tech
We Asked T. Rowe Price's $17B International Manager Why Value is Winning Again — and What the S&P 500 Leaves Out
With valuations, interest rates, and corporate reforms reshaping markets, the episode examines where disciplined value investors can still find mispriced businesses.
- 1Value investing now favors quality businesses with free cash flow and operational upside, not merely distressed assets.
- 2International markets may offer broader opportunity because they contain fewer dominant intangible companies and lower valuations than the U.S.
- 3Japan and Korea stand out for corporate reforms, while AI, China, and cyclicals require valuation discipline rather than sweeping narratives.
Don't miss
McQueen identifies Japan and Korea as the strongest regional opportunity set, combining very low valuations with corporate-governance reforms.
The brief
Colin McQueen of T. Rowe Price describes how his process moved beyond traditional deep value toward quality businesses with free cash flow and room to improve.
The 2010s punished value as intangible-heavy companies dominated markets, but inflation, higher rates, and geopolitical shifts may have narrowed that advantage.
International markets look cheaper partly because they contain fewer dominant technology companies; McQueen argues investors should not manufacture U.S.-style tech exposure to compare them.
AI creates opportunities across technology and industrial supply chains, but the central question remains familiar: how much growth is already priced in?
Japan and Korea emerge as the clearest regional opportunities, where governance reforms and low valuations could unlock value without requiring a precise macro forecast.
McQueen closes by favoring diversified, long-term ownership and resisting extreme narratives, which often follow stock prices rather than business conditions.
What was said on this episode
59 statements · 35 positive · 8 negative · 1 mixed · 15 neutral
- Colin McQueenon Value investingPositive2:34
Value investing outperformed during the first half of McQueen’s career.
“value investing works”
Listen at 2:34
- Colin McQueenon Global bond marketsNegative9:42
About one-third of global bond markets had negative interest rates during the 2010s.
“we were sitting with, what, a third of the world bond markets sort of sitting with negative interest rates”
Listen at 9:42
- Colin McQueenon Very low interest ratesNegative10:03
Very low interest rates created a headwind for value stocks.
“that interest rate formed a headwind, both for kind of value”
Listen at 10:03
Inflation is unlikely to return to zero.
“it's probably not going back to zero”
Listen at 12:27
- Colin McQueenon Positive interest rates and banksPositive12:50
Positive interest rates create a healthier environment for banks.
“That's a much healthier environment for those sort of companies.”
Listen at 12:50
- Colin McQueenon Tangible-capital suppliersPositive14:10
Companies supplying tangible capital currently have better margins and record-high order books.
“Margins are better. Order books are at record highs.”
Listen at 14:10
- Colin McQueenon Higher rates, inflation, and tangible-goods investmentPositive14:55
Higher rates, inflation, and tangible-goods investment are likely durable changes.
“some of these changes around interest rates, inflation, tangible goods are probably sort of here to stay”
Listen at 14:55
- Colin McQueenon Industrial and commodity-linked companiesPositive15:27
Industrial and commodity-linked companies have a more durable growth path.
“it gives them a better, more durable growth path”
Listen at 15:27
- Colin McQueenon Japanese corporate asset releases and restructuringPositive18:02
Japanese asset releases and restructuring have become a major value tailwind.
“that sort of asset release and restructuring side has really sort of come to the fore”
Listen at 18:02
- Colin McQueenon International-market AI supply-chain stocksNeutral18:36
About 14–15% of international-market stocks connect to the AI supply chain.
“there's probably about... 14-15% of the stocks in the international market that are kind of connected into the AI supply chain”
Listen at 18:36
Samsung Electronics traded at approximately one times book value 18 months earlier.
“We've had a very big holding in Samsung Electronics, which it's hard to believe 18 months ago, Samsung Electronics was sitting at one times book value”
Listen at 19:06
McQueen’s portfolio has held a large position in Samsung Electronics.
“We've had a very big holding in Samsung Electronics”
Listen at 19:06
Samsung Electronics trades at just under three times book value currently.
“What is it now? Today it would be just under three.”
Listen at 19:18
Samsung Electronics’ price-to-book ratio may fall to about 1.2 within several years.
“if you believe the forecast, it comes down to about 1.2 in the next couple of years”
Listen at 19:26
Samsung Electronics’ valuation could fall to about 1.2 times book value.
“it comes down to about 1.2 in the next couple of years”
Listen at 19:27
- Colin McQueenon International AI-supply-chain stocksPositive19:36
Some international AI-supply-chain stocks have performed extremely well.
“some of the international stocks that supply into the AI chain have done extremely well”
Listen at 19:36
- Colin McQueenon AI’s impact on companiesMixed20:36
Markets have not yet determined which companies will benefit or suffer from AI.
“the market is still in the discovery phase to figure out which companies are going to really benefit from putting AI to work, which companies are going to see disruption that's negative to their business models”
Listen at 20:36
- Colin McQueenon AI growthNeutral22:07
AI growth is more capital-intensive than typical dot-com-era growth.
“AI growth is, I guess, by its nature, more capital intensive”
Listen at 22:07
AI systems perform well when supplied with large amounts of data.
“AI works well with lots of data”
Listen at 22:31
AI works well with large amounts of data.
“AI works well with lots of data.”
Listen at 22:31
- Colin McQueenon Company intrinsic valueNeutral23:49
McQueen’s team tracks companies’ intrinsic value using free-cash-flow returns.
“we kind of like to track, we term the intrinsic value of a company”
Listen at 23:49
- Colin McQueenon Company intrinsic valuePositive23:58
Intrinsic value corresponds to a 6% long-term real free-cash-flow return.
“what's the level at which. The free cash flow of this company gives us sort of a 6% real return over time”
Listen at 23:58
- Colin McQueenon Free-cash-flow valuation frameworkPositive23:59
The team values companies by targeting a 6% long-term real return from free cash flow.
“the free cash flow of this company gives us sort of a 6% real return over time”
Listen at 23:59
- Colin McQueenon McQueen’s portfolioNeutral25:51
The portfolio is approximately two-thirds tangible-asset companies and one-third intangible-asset companies.
“the portfolio sits about two thirds tangibles, one third intangibles”
Listen at 25:51
- Colin McQueenon McQueen’s stock purchasesNeutral26:59
About 60% of purchased stocks have a restructuring angle.
“probably about 60% of the stocks we buy have a restructuring angle”
Listen at 26:59
- Colin McQueenon AI research toolsPositive27:54
AI primarily saves McQueen’s research time currently.
“a lot of where I'm finding with AI is... principally probably around a time-saving at the minute”
Listen at 27:54
- Colin McQueenon US-international valuation gapNeutral30:04
The US-international valuation gap is around its historical 25th percentile.
“we're kind of in about the 25th kind of percentile versus history”
Listen at 30:04
- Colin McQueenon International versus US stocksPositive30:40
International stocks are cheaper than US stocks in nine of eleven industries.
“international is cheaper in nine out of 11 industries”
Listen at 30:40
- Colin McQueenon International equities including emerging marketsPositive30:43
Including emerging markets, international equities are cheaper in all eleven industries.
“If we throw it over to include the emerging markets as well, it becomes 11 out of 11.”
Listen at 30:43
S&P 500 investors’ technology exposure rose from about 20% to 40%.
“your exposure to tech as an industry has gone from like 20 to 40%”
Listen at 31:32
- Colin McQueenon International portfolioPositive31:45
An international portfolio provides diversification alongside the S&P 500.
“an international portfolio alongside that gives you a bit more diversification”
Listen at 31:45
- Colin McQueenon International stocksPositive32:37
“international has kind of risen to about 4.5% per annum”
Listen at 32:37
- Colin McQueenon Developed international technology stocksNeutral33:18
Technology stocks comprise about 11% of developed international markets.
“technology stocks, they're about 11% of the market”
Listen at 33:18
- Colin McQueenon Long-term interest ratesNeutral34:10
Long-term interest rates affect which types of stocks perform well.
“interest rates long-term, it has an impact on the type of stocks that work in the market”
Listen at 34:10
- Colin McQueenon Bottom-up stock selectionPositive34:53
Bottom-up stock selection is the primary investment driver.
“the primary driver. And that's what we spend most of the time on.”
Listen at 34:53
- Colin McQueenon McQueen’s risk dashboardNeutral35:46
The risk dashboard is primarily driven by valuation ranges and historical spreads.
“it's primarily driven off sort of looking at the market in terms of valuation ranges”
Listen at 35:46
- Colin McQueenon Greece and France borrowing costsPositive37:49
Greece’s borrowing costs are lower than France’s.
“Greece pays less than France”
Listen at 37:49
- Colin McQueenon Greece and France borrowing costsNeutral37:49
Greece’s borrowing costs are lower than France’s.
“Greece pays less than France.”
Listen at 37:49
Southern European economies have recently outperformed the European average economically.
“some of those economies have actually been doing better than average in Europe”
Listen at 38:35
- Colin McQueenon Italy, Spain, and GreecePositive38:45
Italy, Spain, and Greece have better economic outlooks than some European markets.
“we're seeing a bit of a better economic outlook in markets like sort of Italy, Spain. you know, Greece”
Listen at 38:45
- Colin McQueenon Italian banks versus MAG-7Positive39:04
Italian banks have outperformed the Magnificent Seven technology stocks.
“Italian banks were going to outperform the MAG-7”
Listen at 39:04
- Colin McQueenon Italian banksPositive39:04
Italian banks outperformed the Magnificent Seven.
“Italian banks were going to outperform the MAG-7.”
Listen at 39:04
Hitachi now grows faster than the economy and earns mid-teens returns and margins.
“we're kind of now to a company that's growing ahead of the economy, making mid-teens return on capital, mid-teens margins”
Listen at 41:24
McQueen’s portfolio has reduced its Japan exposure to underweight.
“we've been reducing moving underweight now in Japan”
Listen at 41:53
The yen could appreciate sharply after deviating far from purchasing-power parity.
“when you're this far away from purchasing power parity, if it moves, it could move quite sharply the other way”
Listen at 42:39
- Colin McQueenon Korean company boardsPositive43:38
Korean company boards now have fiduciary responsibility toward shareholders.
“boards of directors now have fiduciary responsibility towards shareholders for the first time”
Listen at 43:38
Seventy percent of the KOSPI index trades below book value.
“70% of the Cosby index is still trading below book value”
Listen at 44:29
- Colin McQueenon Korean companiesPositive44:39
Some Korean companies trade at 0.6–0.7 times book, earn 15–16% ROE, and trade at five times earnings.
“we find plenty of other companies that are sitting at 0.6, 0.7 a book making. 15, 16% return on equity, five times PE.”
Listen at 44:39
- Colin McQueenon China’s AI technology stackPositive46:49
China has the world’s only other competitive AI technology stack.
“you're probably getting the only other competitive tech stack for AI in the world”
Listen at 46:49
Alibaba trades at approximately fourteen times earnings.
“you're buying it at sort of 14 times earnings for companies like Alibaba”
Listen at 46:54
- Colin McQueenon Asian companiesPositive47:45
Asian companies can be bought at roughly five to six times earnings.
“we're buying. world beating companies at five six times earnings in a lot of cases”
Listen at 47:45
- Colin McQueenon European financial companiesPositive48:55
European financial companies may return 7.5%–8% annually through dividends and buybacks.
“we're looking at about a 7.5% to 8% combined dividend and share buyback return per annum out of companies”
Listen at 48:55
A US recession would materially affect the global economy.
“if the US goes into recession, it's going to have a material impact on the rest of the world economy”
Listen at 50:56
- Colin McQueenon Average European companyNeutral52:11
The average European company earns less than half its profits in Europe.
“the average European company now earns less than 50% of its profits in Europe”
Listen at 52:11
- Colin McQueenon European technology marketNegative54:24
Scaling technology products across Europe is harder than across the United States.
“it's harder to scale across a European market than it is across the US”
Listen at 54:24
- Colin McQueenon McQueen’s investment strategyNeutral55:31
The strategy typically holds 100 to 150 stocks.
“We run typically 100 to 150 stocks in the strategy.”
Listen at 55:31
Rolls-Royce reached £14 and quadrupled expected free-cash generation after restructuring.
“It's now trading at 14 pounds a few years later, having roughly quadrupled what we thought it could make in terms of free cash generation.”
Listen at 58:55
- Colin McQueenon McQueen’s portfolioNeutral1:00:32
The portfolio’s average holding period exceeds four years.
“we have an average holding period of a bit over four years”
Listen at 1:00:32
- Colin McQueenon Market optimismNegative1:01:31
Market optimism usually overstates how good conditions are.
“things are rarely as good as the market paints it when things are going well”
Listen at 1:01:31
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
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