Cambiar Investors LLC—Cambiar Opportunity Fund
Q1 2008 Market Commentary

In what has been a dismal start to 2008, the equity markets incurred one of their worst quarterly declines since 2002. Marked by a continued deleveraging of the credit bubble that began to unravel in the second half of 2007, equities experienced a broad and indiscriminate decline that was felt across all market capitalizations and investment styles. Other factors such as record petroleum prices and ongoing weakness in the housing and consumer markets provided additional momentum to the sell-off.

While unable to escape the downdraft in the markets, the -8.1% return for the Cambiar Opportunity Fund managed to outperform the S&P 500 Index, which posted a -9.5% return for the quarter. Although the Cambiar investment philosophy is based on a fundamental process that is primarily focused at the company level, our interpretation of the current macro environment (and subsequent sector allocations) strongly contributed to the portfolio’s outperformance in 1Q.

An overweight sector allocation and strong selection within the Energy sector produced the largest positive contribution to performance during the quarter. The fact that oil prices are hitting record levels in the face of a downturn within the U.S. economy illustrates that there is a more global phenomenon occurring within this sector. Cambiar’s Energy positions are diversified across various energy sub-sectors (e.g. larger integrates, exploration & production, and energy services), and we remain bullish on the earnings outlook for our holdings.

Despite ongoing concerns with regards to the strength of the consumer, Cambiar’s exposure within the Consumer Discretionary and Consumer Staples sectors were additional positive contributors to performance for the quarter. Holdings such as Target, Altria Group and DirecTV should continue to meet earnings expectations - regardless of the current economic climate. Valuation sensitivity at the point of purchase has provided downside protection in this environment.

The Fund continues to maintain a significant underweight to Financials, primarily due to the anticipation of additional write-downs and declining profits for many of these companies. At some point, the risk/reward profile for Financials will be too compelling to ignore – however, at this point, we anticipate there to be more downward revisions to earnings and unknown risks for many companies in this space.

Although Financials dominated the headlines in 1Q, Technology was the poorest-performing sector in the first quarter. While Cambiar’s higher Tech exposure detracted from performance over the short-term, we continue to believe the Technology sector will be one of few areas of the market capable of generating solid earnings growth.

Cambiar remains of the opinion that the U.S. markets have entered a shallow recession that will likely be followed by a sluggish growth trajectory for the economy over the next 12-24 months. Despite extraordinary measures undertaken by the Fed, the conditions that triggered the current market downturn are not going to evaporate in 1-2 months. That said, the current market conditions have presented the Cambiar investment team with a number of unique investment opportunities whose long-term prospects remain intact. As always, Cambiar’s interests remain closely aligned with those of our clients, as has been the case for the past 35 years.

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice.

As of 3/31/08, the annualized performance of the Fund was: 1 year: -8.59%, 3 year: 3.72%, 5 year: 13.59%, and since inception (6/30/98): 9.91%. The performance quoted represents past performance and the investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost, and current performance may be lower or higher than the performance quoted. For performance data current to the most recent month-end, please call 1-866-777-8227 or visit our website at www.cambiar.com. Holdings are subject to change. Weightings as of 3.31.2008 are: Target (3.06%); Altria Group (0.96%) and DirecTV (4.95%).


The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value weighted index, with each stock's weight in the Index proportionate to its market value.

The Russell 1000® Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.