The screens are flashing red for Big Tech. With Nvidia ($NVDA) and the broader semiconductor sector stumbling on "AI fatigue" fears, the easy money of the last few years seems to be evaporating. The crowded trade in US mega-caps is unwinding, leaving investors asking: Where is the safe harbor?

The answer might lie outside of Silicon Valley, in the deep value pockets of the global market. This is the domain of Sarah Ketterer and her team at Causeway Capital. While the retail crowd panics over daily tech volatility, the latest updates from the Sarah Ketterer portfolio suggest a continued focus on "unloved" equities that offer a margin of safety.

1. The Case for International Value

For most of 2025, the valuation gap between the US S&P 500 and the rest of the world reached historic extremes. Ketterer’s strategy has always been to exploit this gap. Her fund typically identifies companies in Europe and Asia that are fundamentally sound but trading at steep discounts due to temporary macroeconomic clouds.

In a market environment where interest rates remain sticky and growth slows, paying 30x earnings for tech becomes risky. Paying 8x earnings for a global industrial giant or a European pharmaceutical leader, however, provides a buffer. Ketterer’s allocation often favors these cash-rich, dividend-paying stalwarts that the market has ignored.

2. Buying When Others are Selling

One of the hallmarks of Ketterer’s approach is her contrarian discipline. She buys when blood is in the streets—but only specific types of "blood."

The Causeway "Life Raft" Criteria

She doesn't just buy cheap stocks; she buys "fixable" problems. Her target companies usually share these traits:

• Capital Discipline: Management is committed to returning cash to shareholders via dividends or buybacks.
• Restructuring Potential: There is a clear path to cutting costs or spinning off bad assets.
• Cyclical Lows: The stock is beaten down due to a sector cycle (like Aviation or Energy) that is bound to turn.

3. Financials and Industrials: The New Defensive Play

While tech stocks are priced for perfection, many global banks and industrial firms are priced for disaster. Ketterer has historically maintained significant exposure to these sectors.

Today's mixed bank earnings reports in the US (with Wells Fargo stumbling while others beat) highlight exactly the kind of dispersion Ketterer exploits. She looks for the banks that have cleaned up their balance sheets but are still trading below book value. As the AI hype cools, this rotation into "real economy" stocks—companies that build things, move people, and finance trade—is likely to accelerate.