When technology ruled the day in the early 2000s and the euro surged ahead in the late 2000s, Tweedy, Browne Global Value looked like an also-ran. It paled in comparison to flashier offerings owing to its insistence on buying stocks at deep discounts and hedging away currency risk. But it turns out that stodgy is the way to go, at least in this decade of low stock returns and sluggish economic activity.

Global Value is one of four offerings at New York-based Tweedy, Browne Co., which opened its doors in 1920 as Tweedy & Co., a brokerage specializing in highly discounted shares of inactively traded stocks. The firm launched its first mutual funds-Global Value and Value-in 1993. The firm's four funds (the other two are Global Value II and Worldwide High Dividend) are run by four managing directors: William Browne (pictured above), John Spears, Robert Wyckoff Jr. and Thomas Schrager.

The managers apply a strict value style to all four offerings. That strategy has helped $4.2 billion Global Value amass the best long-term record in the foreign large-value category for the past 15 years. Over that period, as of Aug. 13, Global Value was up 9.55% a year annually. More recently, the fund was up 1.7% in the 12 months ending Aug. 13, placing it in the category's top 1%.

MR. GRAHAM'S LEGACY

Global Value's strategy is well suited to the times. The faltering recovery brings out the appeal of the types of companies that Tweedy, Browne favors-unleveraged, with strong pricing power, a strong competitive advantage and selling at a deep discount.

"The price of a security is about what the expectations are for the future," Browne explains. "We think the future is uncertain, so that produces a tendency on our part to find businesses that have a higher probability of predictability."

The managers lean on the writings of Benjamin Graham, the father of value investing, to inform their stock selection. The connection with Graham is more than academic. Graham himself used the brokerage services of Tweedy & Co. to trade shares. Warren Buffett, Graham's student at Columbia University, did the same when he first started in the investment business in the 1950s.

Managers review holdings stock by stock. Each investment in the portfolio is in constant competition for a spot. But turnover is a very modest 7% per year, except when markets make wild moves-as they have been doing-and opportunities present themselves.

To qualify for the portfolio, a stock must trade at a third to what managers believe is a conservative estimate of intrinsic value. In other words, it is what an acquirer would pay to own the business. The discount is what Graham called an investor's "margin of safety."

"Over time, it's what you pay for a company that determines your return," Wyckoff says. "Entry-point pricing is very important."

BUYS AND SELLS

When a stock's margin of safety is no longer there, it's time to sell. In 2008, as the financial crisis deepened, the managers sold off many of their financial names, including the beleaguered AIG. Financial services had been a favored sector due to the stocks' low valuations, but the meltdown changed that.

"It was unclear what the future held in terms of valuations for these companies, given what was going on with their balance sheets," Wyckoff explains. Selling off their financials allowed the four to scoop up shares of stronger firms at depressed levels. They took the opportunity to add to existing positions.

A long-standing investment in Nestlé, the world's largest packaged food and beverages firm, was one such position. The breadth of Nestlé's brands-which include Haagen Dazs, Stouffer's and Nescafé-makes it a top supplier to grocery stores worldwide. That gives the firm a dominant presence even in a recession. Nestlé's business is particularly strong in developing and emerging markets, which are the source of close to a third of its revenue.

"Nestlé achieved volume growth of 3% not by increasing its existing products but by going into emerging markets," Schrager says. "In these tough times, Nestlé can grow its top line 5% or 6%." Over the last 12 months shares are up 30.7%.

EMERGING MARKETS SHY

The unrest in Thailand this past spring presented an opportunity to buy well-priced shares of Bangkok Bank Public, the largest commercial bank in Thailand. "Bad macroeconomics leads to good pricing in stocks," Wyckoff says.

The Thai bank is one of a small number of emerging-markets holdings in Global Value. The majority of the assets are domiciled in Europe. "The headquarters for the companies we own happen to be in Europe," Browne says. "But they all do an enormous amount of their business in places like China or Indonesia."