Elite East West Value Fund
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Transcript of Elite East West Value Fund
Elite LWM East-West Value Fund
© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
Introduction
• Founder and MD of LWM
• LWM is a boutique investment company
• Just launched a UK-authorized fund
• Will talk about the fund but before that…
© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
Background
• Set up what is now the largest IP in Beijing• Many investment products incorporate
conflicts of interest• Established LWM Investment Team 2005• Marcos Dando Head of Research• We’ve tried to align our interests with those of
our clients wherever possible• Built up a great international team
© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
Value Investment
• Value Investment – buying for less than its worth
• Our interpretation of value – classical view focused on controlling risk – housing example
• Short Term inefficiency – Long Term efficiency• Intrinsic Value vs. Market Cap• Look for undervalued companies offering a
significant Margin of Safety• Wm. Morrisons
© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
Case Study
Wm. Morrison• 100+ years of profitability• Struggling with acquisition of Safeways• End 2005 loss due solely to takeover related costs• Nearly 200 city centre properties• Listed on balance sheet at purchase price• Entire company worth less than net property assets
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© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
Value Investment
The Value Pedigree• Benjamin Graham• Warren Buffett
Looks at companies from an ownership perspectiveContrarian by nature Research intensiveProduces superior returns over the longer termDiligent research reduces riskHistorically-proven
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© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
The Value Premium
Example: Value vs. Growth Investing
Between 1963 and 1990, the average returns for growth and value stocks in the US were:
__________________________________________________________________________________________
Average Returns Growth Stocks Value StocksPer year 11.4% - 12.3% 16.2% - 18.7%Over a five-year period 71.7% - 81.8% 138.8% - 143.4%
___________________________________________________________________________________________
Over the period, value stocks outperformed growth stocks by around5%-6% per year
Source: Josef Lakonishok, Andrei Shleifer, Robert Vishny, “Contrarian Investment, Extrapolation and Risk”, Journal of Finance 48 (1994): 1541-1578
More than 40 studies have demonstrated the “value premium”
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© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
Exploiting the Current Market
• Great companies at phenomenal prices
• Strategy is not to chase high returns but to reduce risk
• Long term buy and hold strategy
• Holding 25/35 stocks at any one time
© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
Elite LWM East-West Value Fund
• UK-authorised fund
• Investment advice provided by LWM
• Global investment mandate
• Focused portfolio of only 25-35 stocks
• Beijing – London perspective
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© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
LWM 3-Year Performance History
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-60
-40
-20
0
20
40
60
Total Returns
LWM
FTSE
MSCIW
DJIA
S&P 500
Nikkei
DAX
CAC
1 Year 2 Years 3 Years
LWM 6.75% 7.49% 46.65%
FTSE -40.09% -37.19% -25.72%
MSCIW -46.45% -38.40% -25.84%
DJIA -38.73% -30.91% -19.00%
S&P 500 -42.16% -36.35% -26.41%
Nikkei -53.24% -54.42% -42.90%
DAX -45.13% -31.24% -12.35%
CAC -43.72% -40.91% -27.62%
© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
Daily Returns & Volatility
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-0.06%
-0.04%
-0.02%
0.00%
0.02%
0.04%
0.06%
0.80% 0.90% 1.00% 1.10% 1.20% 1.30% 1.40% 1.50% 1.60% 1.70%
Daily Returns vs. Risk
LWM
MSCIW
DJIADAX
S&P 500
FTSE
CAC
N225
Higher Returns ?
Higher Risk ?
"Risk" in this graph is measured by the standard deviation of total daily returns from October 27th 2005 to October 26th 2008 for each index. The standard deviation is a measure of statistical dispersion that
shows the variability of returns earned by an investment portfolio.
© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc 13
LWM Research Process
1. Multiple screens for global
markets using value metrics
designed to uncover classic
value and turnaround stocks
2. Remaining companies
assigned amongst analysts to
eliminate unsuitable
companies3. Analysts write full reports on
all remaining companies,
eliminating those that emerge
as unsuitable
4. Reports are presented and
each member of the
investment management team
has the right to veto any
company they deem
unsuitable
5. Companies graded – only
companies achieving a certain
average grade are put forward
for inclusion
6. Remaining companies
sorted for diversification and
only accepted if superior to
existing portfolio holdings
LWM Global
Portfolio
Stage 1
Stage 2
Stage 3
Stage 4
Stage 5
Stage 6
© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
What Are We Looking For?
• Well established companies from around the world
• Trading substantially below their real value
• Minimum market value of GBP £100M
• Good dividend record
• Substantial trading volume
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© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
Fund Availability
• Platforms available:• Transact, Hargreaves Lansdowne, Self Trade,
Ascentric & Direct Investment• ISAs• SIPPs• Onshore &Offshore Bonds• Minimum Investment £5K
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© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
To Conclude
The Fund offers:
Proven philosophy & rigorous process
Global investment mandate
Focused portfolio
3-year performance track record
Ideal for the current conditions
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© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
Stocks Under Consideration
ConocoPhillips
Disney
Dow Chemical
AiphoneJapanese telecom infrastructure
Bukwang Pharmaceutical IndustrialKorean pharmaceutical / personal care
Grupo Modelo SAB de CVMexican brewer / beverage distributor
© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
Current Market Conditions
• Systemic risk has been alleviated
• Still plenty of bad news to come
• De-leveraging still to work though the market
• Companies prices being marked down across the board
• Fantastic opportunity for value investors looking to benefit in the medium-long term
© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
Elite LWM Portfolio Fund Prospectus/Structure
Authorised Corporate DirectorWAY Fund Managers Ltd (FSA Regulated)3 Cedar ParkCobham RoadWimborneDorsetBH21 7SBAuthorised and regulated by the FSA
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© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
Elite LWM Value Portfolio Fund/Structure
Investment Adviser
Lewis Jarrett & Co (FSA Regulated)62a Spixworth RoadNorwichNR6 &NF
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© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
Elite LWM Value Portfolioi Fund/Structure
Investment Sub-Adviser
Lowes Wealth ManagementA-407 Tian Shui Yuan Centre2 Tian Shui Yuan Dong JieBeijing 100026China
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© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
Elite LWM Value Portfolio Fund/Structure
Company Registered Head officeC/O WAY Fund Managers LtdCedar HouseCobham RoadWimborneBH21 7SB
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© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
Elite LWM Value Portfolio Fund/Structure
DepositoryState Street Trustees LtdOne Canada SquareLondonE14 5AFAuthorised and regulated by the FSA
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© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
Elite LWM Value Portfolio Fund/Structure
SolicitorsBurges Salmon LLPNarrow Quay HouseNarrow QuayBristolBS1 4AH
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© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
Elite LWM Value Portfolio Fund/Structure
AuditorsGrant Thornton UK LLP30 Finsbury SquareLondonEC2P 2YU
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© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
Elite LWM Value Portfolio Fund/Structure
AdministratorNorthern Trust International Fund Admin Services50 Bank StreetLondonE14 5NT
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© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
Elite LWM Value Portfolio Fund/Structure
RegistrarWAY Fund ManagersCedar HouseCobham RoadWimborneBH21 7SBAuthorised and regulated by the FSA
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© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc
Elite LWM Value Portfolio Fund/Structure
RegistrarWAY Fund ManagersCedar HouseCobham RoadWimborneBH21 7SBAuthorised and regulated by the FSA
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