2012 08 31 evp pres
DESCRIPTION
TRANSCRIPT
European Value Partners —
Patience. Discipline. Transparency.
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For financial advisor or consultant use only — not for general public distribution
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EVP
One goal: create wealth for our clients with a low level of risk
One investment product: European All Cap Equity
Focus on sustaining the optimal environment for long-term investment excellence
Clear separation of portfolio management from the business functions
Fully integrated IT systems which supports the trading, portfolio construction, accounting and
reporting
A team approach to the business based on clearly defined roles and procedures
Strong outsourcing partnerships with quality service providers
100% owned; no outside investors
Focus on a limited number of distribution partners who understand our investment approach and our
commitment to our clients
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EVP
Founded in 2008
Assets under management of 880 million EUR
Portfolio managers’ European equity track record began in 1998
Second longest track record in the Morningstar peer group
Annualised outperformance after fees of 438 basis points versus the reference index
Registered in the following jurisdictions
EU
Switzerland
USA
GIPS compliant since inception of the firm
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Our Commitment
We strive to ensure our partners have the opportunity to assess fully our capabilities and
performance
Clear understanding of our business
Clear understanding of the investment approach
Clear communication based on timeliness, relevance, and quality
Clear alignment of interests
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Our Investment Philosophy
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EVP Investment Philosophy
Our investment philosophy is focused on two central elements:
Earning Power
We define Earning Power as the ability to generate discretionary free cash flow over a business cycle
Margin of Safety
We will only invest our clients’ assets when a company can be bought at a minimum discount of 40% to
our estimate of fair value
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EVP Investment Philosophy
Value
We define value as paying significantly less for a business than it is worth —
Earning power is the primary determinant in identifying an undervalued company
Risk
We believe that risk is linked to the fundamentals of a business, not the stock price
Cash
We will only invest when it makes sense to invest and when the money
can be invested at an attractive valuation
Benchmarks
We seek an absolute investment return. We do not allow benchmarks to influence the
construction or management of our portfolios
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EVP’s Investment Process
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Generating Investment Ideas
Assessing the Universe
of Companies
Approximately 1,500 publicly listed
European companies
Identifying Investment Ideas:
Companies are analysed and scored using our
proprietary screening process which is based on
various quantitative factors.
Generally, one-third of our ideas are
generated by market insight, referrals or
other intelligence.
Evaluating Specific Companies:
Only a select few companies survive all
phases of the Seven Point Due Diligence
Process.
EVP’s Proprietary Screening Process Seven Point Due Diligence Process European Equities Universe
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Evaluating The Company
Seven Point Due Diligence Analysis
Proxy Investigation
Financial Statements
Industry Structure
Value Chain
Lifecycle of Products
Operating Environment
Earning Power 7
Management
1 2 3 4 5 6
Evaluate historical financial statements
Key Business
Drivers
Key Risks
Factors
Build financial model
Adjust financial model based on findings
When we have high conviction in the sustainability of the company’s
earning power, we then continue to the valuation phase.
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Valuing The Company
Our calculation of the company’s Earning Power is the starting point for valuation
Capitalise Earning Power using a fixed rate that is not adjusted for risk
Company’s financial model is adjusted for risk factors during the Due Diligence Process
Valuation is not based on forecasting future growth in earnings or cash flows
If our valuation is 40% below the current market price then the company goes on the Buy List
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Constructing the Portfolio
• We invest in a limited number of European-listed companies
• We invest in companies across all market capitalisation ranges
• We are high conviction managers: each investment must have a meaningful impact on the portfolio
• Our investment perspective is long-term: portfolio turnover should average 10% to 20% per year
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Selling Discipline
When a company approaches our estimated fair value
If the weight of the investment in the portfolio becomes excessive
If we uncover information that leads us to believe the risk characteristics and fundamentals are
deteriorating
When we generate an investment idea with more conviction and more attractive valuation
When we recognise that we have made a mistake we will move on to better opportunities
We will sell an investment under the following circumstances:
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EVP’s Daily Trading and Operations Environment
Fully Integrated Process from PM Decision to Relationship Management
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APX Portfolio Accounting
and Reporting System
Moxy Trade Order
Management System
Portfolio
Management
& Order
Generation Pre-Trade
Compliance
Order
Management/
Trading
Straight-through- processing
Post-Trade
Compliance
& Final
Allocations Settlements
&
Reconciliation
Portfolio
Accounting
Reporting
& Analytics
CRM
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The Results
Composite Performance and Current Positioning
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EVP Manager Return versus Reference Index
Growth of €100,000 for the period 31/12/1998 to 31/08/2012
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
€ 131,156
€ 233,101
Period ending August 31, 2012 YTD 1 Year 3 Years 5 Years
Since
31/12/98
EVP – Net Return (%) 12.46 13.67 11.90 -3.05 6.38
MSCI Europe – Net Return (%) 11.35 15.87 7.10 -3.84 2.00
EVP vs. Reference Index (%) +1.11 -2.20 +4.80 +0.79 +4.38
Periods greater than 1 year are annualised (%)
EVP – Net Return
MSCI Europe –
Net Return
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Top Ten Holdings
Company Current Weightings
De la Rue Plc 4.51%
A P Moller – Maersk A/S – B 3.94%
UBS AG – Reg 3.73%
Husqvarna AB – B 3.70%
Société Bic SA 3.65%
Astrazeneca Plc 3.61%
Novartis AG- Reg 3.54%
Flsmidth & Co A/S – B 3.52%
Nestlé SA - Reg 3.40%
Rockwool Intl A/S - B 3.26%
Total 36.86%
Note: Holdings are listed in descending order as a percentage of the European Value Partners total assets.
As of June 30, 2012
Source : EVP
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Composite Breakdown By Sector
Sector Current Weightings Index Weightings
Industrials 35.4% 10.7%
Consumer Discretionary 16.3% 8.6%
Health Care 12.6% 12.4%
Financials 7.5% 18.3 %
Information Technology 5.8% 2.8%
Consumer Staples 3.4% 15.0%
Energy 0.0% 11.7 %
Materials 0.0% 9.4%
Telecommunications Services 0.0% 6.5 %
Utilities 0.0% 4.6 %
Total 81.0% 100.0%
As of June 30, 2012
Note: Sectors are listed in descending order as a percentage of total assets.
Source : EVP / MSCI Inc.
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Composite Country Breakdown
As of June 30, 2012
Country Current Weightings Index Weightings
Switzerland 31.3% 13.3 %
Denmark 16.8% 1.8 %
United Kingdom 15.4% 36.3%
Sweden 8.2% 4.9%
Germany 7.2% 12.5%
France 4.5% 14.3%
Belgium 3.9% 1.8%
Austria 3.8% 0.4%
Finland 3.1 % 1.1%
Italy 2.7% 3.4%
Netherlands 1.8% 3.7%
Ireland 1.3% 0.5%
Other 0.0% 6.0%
Total 100.0% 100.0%
Note: Countries are listed in descending order as a percentage of total assets.
Source : EVP / MSCI Inc.
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Appendix
Tom Stubbe Olsen
Founding Partner and Portfolio Manager
Mr. Olsen is the Co-Founder and Portfolio Manager at EVP. He is the architect of the firm’s
investment strategy. Mr. Olsen was the Head of Value Management and Chief Investment Officer
for the Value Funds at Nordea Investment Funds S.A. He joined Nordea in 1993 as Senior
Portfolio Manager of the Far Eastern Value Fund. From 1998 to 2007, Mr. Olsen was the Senior
Portfolio Manager of the Nordea European Value Fund. Prior to joining Nordea, Mr. Olsen worked
for Sparinvest as portfolio manager on its Far Eastern, European and North American funds for 7
years. He earned his Master of Science degree in Economics and Business Administration from
the Copenhagen Business School.
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Biographies
Léon Kirch, CFA
Founding Partner and Co-Portfolio Manager
Mr. Kirch is the Co-Founder and Co-Portfolio Manager at EVP. Prior to forming EVP in 2008, Mr.
Kirch was Co-Portfolio Manager for the Nordea European Value Fund since 2002. He joined
Nordea after 5 years in investment management at Banque de Luxembourg where he served as
portfolio manager and buy side analyst on industrial and pharmaceutical, food and beverage and
utilities companies. Mr. Kirch earned the Chartered Financial Analyst designation in 2001 and is
the Founding President of the Luxembourg CFA Society. He earned his Master of Sciences
Management degree from Ecole de Commerce Solvay, ULB.
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Mark Bole
Chief Executive Officer
Mr. Bole is Chief Executive Officer of EVP. He is responsible for the execution of the firm's strategy
and has direct oversight of the business functions. Prior to joining EVP he was Executive Vice
President for Private Capital Management, LLP from 2005 to 2008. Prior to joining PCM, he was
Managing Director of Third Party Distribution for INVESCO PLC where he managed the client
relations and business development activities for the largest banks, insurance companies and
brokerage firms. Mr. Bole joined INVESCO as Group Treasurer, a position he held for 4 years.
Prior to joining INVESCO, he worked for Toyota Motor Corporation in various treasury positions in
the United States and for Wachovia Corporation in relationship management within the Corporate
Bank. He earned a Bachelor of Business Administration in 1984 from the University of Texas. He
also qualified as a CPA.
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