BBH Mid Cap Fund Sells Stake in Globant After Prolonged Underperformance

New York, NY – Brown Brothers Harriman’s BBH Select Series – Mid Cap Fund eliminated its position in technology services provider Globant S.A. during the third quarter of 2025, citing sustained share-price weakness and an opportunity to realize tax losses.

Fund Trails Benchmark in Challenging Quarter

In its latest investor letter, the fund reported a -0.9 percent total return for the three months ended 30 September 2025, lagging the Russell Midcap Index, which gained 5.3 percent over the same period. Year-to-date through the close of the quarter, the fund was down -1.8 percent compared with a 10.4 percent increase for its benchmark.

Management attributed the shortfall in part to what it called a “low-quality rally” that began in late 2024 and accelerated through 2025, favoring securities outside its quality-focused universe. Three holdings – Shift4 Payments, Globant and Bruker Corporation – accounted for the largest negative contributions to third-quarter performance.

Rationale Behind the Globant Exit

Globant, headquartered in Luxembourg and listed on the New York Stock Exchange under the ticker GLOB, provides software development and digital transformation services to corporate clients worldwide. Although the stock advanced 11.28 percent during the most recent one-month period cited in the letter, it remained down 68.83 percent over the previous 52 weeks.

On 9 December 2025, Globant closed at $68.74 per share, giving the company a market capitalization of roughly $3.03 billion. Fund managers noted that the persistent drawdown created an opportunity to offset taxable gains elsewhere in the portfolio. They also pointed to external pressures—including tariffs and reduced spending in life-science and academic markets—that continued to weigh on Globant’s operating results.

“Any potential re-entry would depend on evidence that the business has stabilized,” the managers wrote, without specifying a timeline for reassessment.

Impact of Tariffs and Funding Cuts

According to the letter, tariffs imposed on cross-border technology services have raised costs for several of the fund’s holdings, but Globant and Bruker were most affected. Concurrently, budget reductions among U.S. universities and research institutions have dampened demand for specialized software that supports life-science projects, another end-market for Globant.

Imagem: financial planning 45

The combination of higher expenses and weaker revenue growth sharpened the fund’s decision to exit both names during the quarter. Shift4, by contrast, remained in the portfolio despite its short-term drag on returns.

Portfolio Positioning Going Forward

The fund continues to emphasize mid-cap companies it views as financially sound and competitively advantaged, a discipline that management says has historically generated attractive risk-adjusted returns. However, the recent rally in what it classifies as lower-quality issuers has presented a headwind.

Management indicated that it has redeployed capital from the sale of Globant and Bruker into positions where it sees more favorable risk-reward profiles, though specific replacements were not disclosed in the letter. The managers reiterated that their investment process remains centered on business fundamentals rather than short-term market trends.

With three weeks remaining in the calendar year at the time of publication, the fund will look to close the gap with its benchmark while maintaining its stated strategy. Any material change to portfolio composition, including a possible return to Globant, would depend on improvements in underlying company performance and a clearer macroeconomic backdrop.

Crédito da imagem: Brown Brothers Harriman