Transcript of Hermes presentation
- 1. American BeautyFinding value in US small and mid cap
equitiesRobert Anstey US Equities, Small & Mid Cap21 March
2013For professional investors only
- 2. Hermes Fund ManagersIntroduction Established 1983 Breakdown
by asset type (%) Fixed Income 32.4 Owner BT Pension Scheme (BTPS)
Equities 15.9 Head office London Commodities 4.9 Boston, New York,
Sydney and Hedge Funds 6.6 Other offices Singapore Private Equity
15.6 No. of boutiques 14 Real Estate 21.6 Assets under management
$45.4bn1 Cash 3.0 Assets under stewardship $161bn AuM No. of
investment professionals 119 by client type (%) Third party 15.0 BT
Pension Scheme 85.01Please note the total AuM figure includes
$10.0bn of assets managed or under an advisoryagreement by Hermes
GPE LLP (HGPE), a joint venture between Hermes Fund Managers(HFM)
and GPE Partner Limited. HGPE is an independent entity and not part
of the Hermesgroup. $0.7bn of total group AuM figure represents HFM
mandates under advice.Source: Hermes as at 31 December
2012.www.hermesfundmanagers.co.uk | 12Q4 1
- 3. Hermes US SMIDStrategy overviewAssets: $987.5mBenchmark:
Russell 2500Approach: Bottom-up, fundamental researchInvestment
horizon: 3-5 year average holding periodStyle: Core/ValueRisk:
3.9%1 tracking error relatively low for the asset classPerformance:
11.0% per annum for 11 years (since Fund Manager inception)15 year
ex-post.Source: Hermes; all data as at 31 January 2013. Note: The
composite performance record of the Fund Manager is shown for
illustrative purposes only and data refers to returns of the Hermes
US Smalland Mid Cap composite measured in US Dollars, net of 75 bps
management fees and costs. Fund Manager inception: 30 September
2001. Performance shown is illustrative.The Hermes US SMID Equity
Fund (UCITS) launched on 26 September 2012. Past performance is not
a reliable indicator of future results.www.hermesfundmanagers.com |
US SMID | March 2013 2
- 4. Hermes US SMIDInvestment teamRobert Anstey, CFA, Director,
Lead Mark Sherlock, ACA, CFA, Director, Alex Knox, ACA, Senior
Investment Henry Biddle, ACA, InvestmentManager Co-manager Analyst
Analyst19 years industry experience 14 years industry experience 14
years industry experience 7 years industry experience11 years at
Hermes 8 years at Hermes 3 years at Hermes 1 year at Hermes One of
the largest US small/mid cap teams based in London Extensive travel
(15 US trips, 250 company meetings every year) Co-invested
alongside our clientsSource: Hermes. As at 31 December 2012.Note:
CFA is a trademark owned by the CFA
Institute.www.hermesfundmanagers.com | US SMID | March 2013 3
- 5. Hermes US SMIDInvestment philosophy We believe that
long-term investment in high quality companies, bought at a
discount to intrinsic value, produces the best risk-adjusted
returns for clients.www.hermesfundmanagers.com | US SMID | March
2013 4
- 6. Hermes US SMIDInvestment
philosophywww.hermesfundmanagers.com | US SMID | March 2013 5
- 7. Hermes US SMIDInvestment philosophyLeave no stone unturned
Find investments that others are not looking atThe tortoise beats
the hare We prize consistency and stabilityWhere is the value? What
businesses are out of favour currently?Micro not macro Understand
what you can, not what you cantwww.hermesfundmanagers.com | US SMID
| March 2013 6
- 8. Hermes US SMIDResultsHermes US Small & Mid Cap composite
vs. benchmark since Fund Manager inception 1 Annual returns(%)
(%)350 Hermes US Russell SMID composite 2500300 YTD 6.9 6.8250 2012
21.8 17.9 2011 1.5 -2.5200 2010 22.7 26.7 2009 35.2 34.4150 2008
-31.8 -36.8100 2007 5.9 1.4 2006 15.6 16.2 50 2005 6.6 8.1 2004
22.6 18.3 0 May 02 May 04 May 06 May 08 May 10 May 12 Jan 03 Sep 01
Sep 03 Jan 05 Jan 07 Jan 09 Jan 11 Jan 13 Sep 05 Sep 07 Sep 09 Sep
11 2003 37.1 45.5 2002 -12.2 -17.8 2001 9.5 1.3 US SMID (75bps)
Russell 2500 S&P 5001 Fund Manager inception: 30 September
2001.Source: Hermes; all data as at 31 January 2013. Note: The
composite performance record of the Fund Manager is shown for
illustrative purposes only and data refers to returns of the Hermes
US Smalland Mid Cap composite measured in US Dollars, net of 75 bps
management fees and costs. Performance shown is illustrative. The
Hermes US SMID Equity Fund launched on 26 September 2012.
Pastperformance is not a reliable indicator of future results.
Benchmark: Russell 2500.www.hermesfundmanagers.com | US SMID |
March 2013 7
- 9. Hermes US SMIDA tortoise $1.5 billion market cap Dull
business office, janitorial, industrial supplies Below the radar
minimal coverage Consistent 12% EPS growth for a decade Repurchased
30% of shares outstanding last 5 years Invisible business Amazon,
Costco 10% free cash flow yield with margin improvement
storySource: Bloomberg.Note: Position purchased September
2012.www.hermesfundmanagers.com | US SMID | March 2013 8
- 10. Hermes US SMIDSummary Long track record of outperformance
Experienced, stable team Lower risk for the asset class Hermes US
SMID Equity Fund (Dublin-UCITS, $113m1) launched 26 September 20121
Source: Hermes as at 31 January 2013.www.hermesfundmanagers.com |
US SMID | March 2013 9
- 11. Appendixwww.hermesfundmanagers.com | US SMID | March 2013
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- 12. Hermes US SMIDInvestment processHow do we find our ideas?
Meeting 250 companies every year extensive travel around the US
Proprietary idea generation screen S&P quality ratings and
Piotroski scores The Watchlist (c.200 companies) quality companies
which meet our criteriaHow do we construct and monitor the
portfolio? Database contains our own detailed fundamental reports
and cash flow models Position sizes determined with reference to
quality, liquidity and risk Proprietary portfolio construction tool
(the Composition Review) Regular conference calls with management
teams Peer reviews Sell disciplineHow do we manage risk? Risk
systems Barra and MultiFRAME (proprietary multifactor model)
Investment Office acts as internal control between client and fund
managerwww.hermesfundmanagers.com | US SMID | March 2013 11
- 13. Hermes US SMIDImportant informationThis document is for
Professional Investors only. In Australia this document is directed
at Wholesale Clients only. Any investment products referred to in
this document are only available to such clients. Investing
withHermes may be restricted in other countries and as such, any
person who receives this document is required to make themselves
aware of their respective jurisdictions and observe any
restrictions.This document does not constitute a solicitation or
offer to any person to buy or sell any related securities or
financial instruments; nor does it constitute an offer to purchase
securities to any person in the United States or to any U.S.Person
as such term is defined under the US Securities Exchange Act of
1933. It pays no regard to the investment objectives or financial
needs of any recipient. No action should be taken or omitted to be
taken based on this document.Tax treatment depends on personal
circumstances and may change. This document is not advice on legal,
taxation or investment matters so investors must rely on their own
examination of such matters or seek advice. Before makingany
investment (new or continuous), please consult a professional
and/or investment adviser as to its suitability.Any opinions
expressed may change. The value of investments and income from them
may go down as well as up, and you may not get back the original
amount invested. Any investments overseas may be affected
bycurrency exchange rates. Past performance is not a reliable
indicator of future results and targets are not guaranteed.
Investments in emerging markets tend to be more volatile than those
in mature markets and the valueof an investment can move sharply
down or up. Investing in smaller/medium sized companies may carry
higher risks than investing in larger companies. Investing in
property is an illiquid investment and may result indeferment of
redemption of units. The value of the property is a matter of a
valuers opinion rather than fact. All figures, unless otherwise
indicated, are sourced from Hermes. For more information please
read any relevantOffering Documents or contact Hermes.All figures,
unless otherwise indicated, are sourced from Hermes. FTSE is a
trade mark of London Stock Exchange Plc and The Financial Times
Limited and is used by FTSE under licence. All rights in the FTSE
Indicesvest in FTSE and/or its licensors. Neither FTSE nor its
licensors accept any liability for any errors or omissions in the
FTSE Indices or underlying data. No further distribution of FTSE
Data is permitted without FTSEsexpress written consent. Further
information on investment products and any associated risks can be
found in the Funds Key Investor Information Document (KIID) and the
Prospectus available from Hermes on requestor via our website:
www.hermes.co.uk. The articles of association; annual and
semi-annual reports are available at Hermes Investment Funds plc,
Georges Court, 54-62 Townsend Street, Dublin 2, Ireland; and at
itsrepresentative in Switzerland (ACOLIN Fund Services AG,
Stadelhoferstrasse 18, CH-8001 Zurich, www.acolin.ch). The Paying
agent in Switzerland is NPB New Private Bank Ltd., Limmatquai 1/am
Bellevue, P.O. Box, CH-8022 Zrich.Issued and approved by Hermes
Investment Management Limited which is authorised and regulated by
the Financial Services Authority. Registered address: Lloyds
Chambers, 1 Portsoken Street, London E1 8HZ. This document
isdistributed in Australia by Hermes Fund Managers (Australia) Pty
Ltd which is registered with the Australian Securities and
Investments Commission (ASIC) under financial services licence
number 351784.The main entities operating under the name Hermes
are: Hermes Investment Managers Limited (HIML); Hermes
Administration Services Limited (HASL); Hermes BPK Partners LLP
(HBPK); Hermes Sourcecap Limited (HSL);Hermes Real Estate
Investment Management Limited (HREIML); Hermes Equity Ownership
Limited (HEOS); Hermes Fund Managers (North America) LP (HFMNA) and
Hermes Fund Managers (Australia) Pty Limited (HFMA). Allare
separately authorised and regulated by the Financial Services
Authority except for HREIML, HEOS, HFMNA and HFMA. HIML currently
carries on all regulated activities associated with HREIML. HIML,
HBPK, HFMNA, and HSL areall registered investment advisers with the
United States Securities and Exchange Commission (SEC). Telephone
calls may be recorded for training and monitoring purposes.
Potential investors in the United Kingdom are advised
thatcompensation will not be available under the United Kingdom
Financial Services Compensation Scheme.CM132184 Citywire
03/13www.hermesfundmanagers.com | US SMID | March 2013 12
- 14. Excellence. Responsibility. Innovation.Hermes Fund
ManagersHermes Fund Managers is a multi-boutique asset manager
witha growing global presence. Our pursuit of excellence is defined
bya commitment to deliver innovative investment solutions througha
responsible asset management approach. We offer investmentsolutions
across alternatives, fixed income and specialist equityproducts, as
well as being one of the market leaders in responsibleinvestment
advisory services.Our investment solutions
include:AlternativesCommodities, Hedge Fund Solutions,
Infrastructure, Private Equityand Real EstateEquitiesAsia, Emerging
Markets, Europe, Global, Japan, Quantitativeand Small & Mid
CapFixed IncomeGlobal High Yield Bonds, Investment Grade Credit, UK
& GlobalGovernment Bonds and UK & Global Inflation-Linked
BondsResponsible Investment Advisory ServicesCorporate Engagement,
Intelligent Voting, Public PolicyEngagement and UNPRI
complianceOfficesLondon | Boston | New York | Singapore |
SydneyEnquiriesmarketing@hermesfundmanagers.com