FROM: Lisa Sorani, Manager of HR Employee Services LS -

Additional Considerations
Barrow Hanley is a 75% owned subsidiary of Old Mutual investment adviser located in Dallas,
Texas. Employees own the remaining 25%.
Capital Assets / Clients
Firm-wide
Large Cap Value Equity
Assets
Assets
($ millions) Clients ($ millions) Clients
2012-12 67,665 418 42,899 185
2011-12 59,680 402 41,346 196
2010-12 60,345 387 43,295 202
2009-12 55,032 375 41,599 209
Source: eVestment Alliance
Barrow Hanley’s approach to the equity market is based on the underlying philosophy that
markets are inefficient. These inefficiencies can best be exploited through adherence to a valueoriented
investment process dedicated to the selection of securities on a bottom-up basis. The
firm does not attempt to time the market or rotate in and out of broad market sectors, as it
believes that it is difficult, if not impossible, to add incremental value on a consistent basis by
market timing. They stay fully invested with a defensive, conservative orientation based on the
belief that superior returns can be achieved while taking below average risks. The firm
implements this strategy by constructing portfolios of individual stocks that reflect all three value
characteristics; price/earnings and price/book ratios below the market and dividend yields above
the market (S&P 500).
Barrow Hanley’s history indicates that a strategy of emphasizing low price/book ratios and high
dividend yields provides a measure of protection in down markets, as well as participation in
improving economic cycles.
The firm starts by looking at a stock’s price relative to its (1) current earnings level, (2) current
tangible book value, and (3) stated dividend, identifying stocks with a low P/E, low price/book, and
high yield. They then make five-year forecasts on ROE, book value, dividends and earnings per
share. Each stock must be attractive on their Relative Return and Dividend Discount Models
before it can be bought. Once purchased, securities are monitored through those two models.
When a stock becomes fairly valued on either of the models, the liquidation process begins. The
firm does not try to judge when the holding might reach a speculative level of overvaluation.
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