Global Value Investing in 2025: Navigating Wasatch's International Strategies for Tactical Reallocation

In 2025, global value investing has entered a pivotal phase, marked by stark contrasts between high-performing contributors and underperforming detractors in international portfolios. For investors seeking to capitalize on market inefficiencies, the Wasatch International Value Fund and its sister strategies offer a compelling case study. By dissecting the roles of key holdings like Alibaba Group Holding Ltd. and Baltic Classifieds Group PLC, and evaluating small-cap value opportunities, this analysis argues for a tactical reallocation toward undervalued, high-conviction international positions.

Top Contributors: Alibaba's Resilience in a Fragmented Market

The Wasatch International Value Fund's third-quarter 2025 performance was significantly bolstered by Alibaba Group Holding Ltd., which emerged as its top contributor. Alibaba's rebound reflects its ability to navigate macroeconomic headwinds in China and global e-commerce volatility. The fund's exposure to Alibaba underscores the importance of identifying companies with durable competitive advantages and strong balance sheets, even in sectors facing regulatory or cyclical challenges.

Samsung Electronics Co. Ltd. also contributed positively, highlighting the resilience of technology stocks in the value-investing framework according to analysis. These successes demonstrate that large-cap value stocks, when selected with a focus on long-term fundamentals, can deliver outsized returns in a fragmented market.

Detractors: Baltic Classifieds and the Risks of Overexposure

In contrast, the Wasatch International Opportunities Fund faced a significant drag from Baltic Classifieds Group PLC, which was identified as its largest detractor in Q3 2025. The Lithuanian-based company's struggles-linked to declining digital advertising demand and regional economic instability-exposed the risks of overconcentration in niche markets. Baltic Classifieds' 3.0% portfolio weight in the Opportunities Fund further illustrates how underperforming positions can disproportionately impact returns.

This case serves as a cautionary tale for global value investors: even well-regarded holdings can falter when macroeconomic or sector-specific risks materialize. The episode underscores the need for rigorous due diligence and active portfolio rebalancing to mitigate such vulnerabilities.

Small-Cap Value Opportunities: Fallen Angels and Undiscovered Gems

Wasatch's small-cap value strategies, particularly the International Small Cap Value Fund, offer a roadmap for exploiting market inefficiencies. The fund's focus on "Fallen Angels" (former growth companies facing temporary setbacks) and "Undiscovered Gems" (undervalued growth stocks) aligns with a bottom-up, fundamental approach. For instance, the fund added Certara, a Fallen Angel in the pharmaceutical sector during Q3 2025, capitalizing on its discounted valuation amid long-term growth potential.

The fund's portfolio typically holds 40–80 positions, emphasizing diversification while targeting companies with market caps under $7 billion. This strategy leverages the inefficiencies inherent in small-cap markets, where mispricings are more common and less widely recognized. The fund's 34.75% return in 2025-compared to the -8.31% return of the International Opportunities Fund in the same period according to Q3 commentary-highlights the potential rewards of this approach.

The Case for Tactical Reallocation

The contrasting performances of contributors like Alibaba and detractors like Baltic Classifieds reveal a critical insight: global value investing in 2025 demands a nuanced, tactical approach. Large-cap value stocks can provide stability, but small-cap opportunities-particularly those categorized as Fallen Angels or Undiscovered Gems-offer asymmetric upside.

For investors, this suggests reallocating capital toward high-conviction international small-cap holdings. The fund's emphasis on price-sensitive, high-quality companies exemplifies how such a strategy can capitalize on market dislocations. By prioritizing firms with strong fundamentals but depressed valuations, investors can position themselves to benefit from eventual market re-rating.

Conclusion

As 2025 unfolds, the interplay between top contributors and detractors in Wasatch's international strategies highlights the evolving dynamics of global value investing. While Alibaba's success reaffirms the value of sector resilience, Baltic Classifieds' struggles caution against complacency. Meanwhile, the small-cap value opportunities identified by Wasatch-particularly in the Fallen Angel and Undiscovered Gem categories-present a compelling case for tactical reallocation. For investors willing to navigate the complexities of international markets, these strategies offer a path to outperformance in an increasingly fragmented landscape.