Vine Street Presentation Final
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Transcript of Vine Street Presentation Final
Protecting and growing wealthSeptember 8, 2015
Contents
I. Experience and structure
II. Mission and philosophy
III. Our approach
IV. Why we win
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Vine StreetCapital Management, LLC
Experience and structureA history of success
Zachary Perry, CFA 20 Years of successful investing • Franklin Templeton - 13 years - Small cap portfolio
manager for Private Client Group for ten years. Grew assets from less than $50 million to more than $1 Billion. Annualized return of >10% vs Proxy Index of ~4%**
• Osterweis Management - 6 years - Investments outperformed the S&P 500 during tenure**. Expanded Osterweis’ investments to Latin America
• Vine Street Capital Management - Partner at Corte Madera based Registered Investment Advisor. Provide investment management and financial advice to individuals and institutions
Education • Princeton University BA• Wharton MBA
**Source: Franklin Templeton performance documents and Osterweis Mgt performance documents 3
Vine StreetCapital Management, LLC
John C Bernabei, CFP 23 years of Institutional Investing Experience • Prudential Financial – 12 years. Head of west coast equity
desk. Provided investment advice to money managers and hedge funds in equity strategy, sector and stock selection.
• Wells Fargo – 4 years. Provided investment advice on US equity strategy, sector and stock selection
• CLSA / Tucker Anthony – 6 years. Provided investment advice on asian strategy and stock selection (CLSA) and small cap stock selection (Tucker Anthony)
• Vine Street Capital Management - Partner at Corte Madera based Registered Investment Advisor. Provide investment management and financial advice to individuals and institutions
Education • Michigan State University – BS in Mechanical Engineer• University of Southern California – MBA in Finance
Experience and structureA history of success
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Vine StreetCapital Management, LLC
Our Structure Registered Investment Advisor • Products include internally managed Core Equity, Income Equity, and
portfolio allocation services into other asset classes• Offers full transparency into portfolio through custodial Schwab• Client avoids dilution and tax inconsistency of funds• $500,000 minimum
Diversified portfolio of 25-35 investments • Diversify by industry, geography and capitalization to control volatility• Top 20 holdings = 70-80% of portfolio• Invest globally• No leverage
Experience and structureSimple and transparent
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Vine StreetCapital Management, LLC
Our Mission
Protect and grow client’s wealth through strong performance while controlling risk
Our Philosophy
We partner with our clients • Culture of honesty and transparency• Stable investment strategy• Rigorous risk control• Invest our liquid net worth along side clients
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Mission and philosophyA partnership with our clients
Vine StreetCapital Management, LLC
Our Objective
Outperform the S&P 500 over rolling 5-year periods
By compounding at reasonable returns with good companies webelieve we can outperform through a business cycle (which typicallylast 4-6 years) without taking undue risk.
We do not seek to outperform every quarter or every year becausesuch expectations require unwarranted risk taking that leads to poordecision making, trend following, and eventually, value destruction.
We recommend that clients consider Vine Street a multi-year investment opportunity
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Mission and philosophyA consistent measure of success
Vine StreetCapital Management, LLC
Our Premise We can outperform Wall Street because our focus is: • Long term compounding• Business Analysis• Concentrated portfolio selection can add alpha over the long term
Wall Street focuses on: • Short term price movements• Marketing and asset accumulation
Investment community is driven by a casino mentality • High turnover• High priced performance and trading fees• Opaque and complicated strategies• Marketing gimmicks
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Mission and philosophyInvest - don’t gamble
Vine StreetCapital Management, LLC
Using a multi-year horizon offers an advantage
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The Wall Street Casino
Vine StreetCapital Management, LLC
The Street is focused on marketing over stock picking
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Stock Pickersare becoming rare
Our approach
Client Trust
Multi-Year
Investment
Horizon
Disciplined
Value
Approach
Appropriate
Risk Control
Strong
Five-Year
Returns
Vine StreetCapital Management, LLC
Long Term Investing means: •Assuming 4 to 10 year holding periods•Analyzing a company’s prospects throughout a business cycle•To understand risk to earnings and the balance sheet in a recession•To understand how industry changes may help or hurt the firm•To understand hidden value/risks and compounding returns/costs
Long Term Investing allows the following strategies: •Buy below intrinsic value when volatility strikes•Use intrinsic value to determine portfolio – not indexes•Own well-managed firms without market timing•Wait for non-linear returns•Allow investments to compound their advantage
Investors with short horizons cannot follow these strategies 12
Our approachMulti-year horizon
Vine StreetCapital Management, LLC
Value investing means buying companies that have the following characteristics:
A strong sustainable market position • High or growing returns on capital• Strong management focused on shareholder value• Trading below intrinsic value
Buying below intrinsic value means: We look to purchase these businesses when trading at a compoundedreturn of 15% or greater based on discounted cash flows
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Our approachBuying value
Vine StreetCapital Management, LLC
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Our risk control is fundamental analysis
Causes of Permanent Losses Our Risk Control
Overpaying for future growth • Invest only at discount to intrinsic value• No fads or trends
Disintermediation risk Discard businesses that are dying or have little defensibility
Liquidity risk• No leverage at portfolio level• Cash flow to support balance sheet at
investment level
Agency risk• Partner with our clients• Transparency and communication• Measure for long term investing
Vine StreetCapital Management, LLC
But only with the proper risk control and client staying power
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Why we winValue wins over time
Why We WinOur investment process works
Because we partner with our clients
Client Trust
Multi-Year
Investment
Horizon
Disciplined
Value
Approach
Appropriate
Risk Control
Strong
Five-Year
Returns
Vine StreetCapital Management, LLC
Benefits for Vine Street Clients: • 40 combined years of successful investing• Experience and an approach that has succeeded in a wide range of difficult markets
• A partner for your long term investing needs with skin in the game• An approach focused on value and risk control• A firm that offers transparency and access to the manager• Portfolio allocation services and financial planning
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Why our clients win