Finding Value: From Vegas to Macau, and Everywhere in Between

John D. Hock, CFAChief Investment OfficerAltrinsic Global Advisors

2

• Global equity boutique with offices in Greenwich, London, Sydney and Toronto

• Disciplined bottom-up fundamental intrinsic value process

• All-cap, all market, unconstrained in pursuit of investments

Ideas typically fall into two categories:Type 1: Undervalued higher-quality companies with more sustainable return on capital profilesType 2: Undervalued businesses in which profitability levels are depressed and/or are likely to improve

1As of 06/30/14; Based upon a representative fully discretionary account with the global mandate; data are presented as supplemental information to a full disclosure presentation found in the appendix.

25

50

75

Aug-00

Jun-03

Mar-0

6

Dec-0

8

Sep-11

Jun-14

Global Equity % Exposure to "Type 1 vs. Type 2 Stocks"1

Type 1

Type 2

Introduction to Altrinsic Global Advisors

0

2

4

Jul-

06

Nov

-07

Mar

-09

Jun

-10

Oct

-11

Feb

-13

Jun

-14

($T)

Fed Balance Sheet & Underlying Composition

Other Treasuries MBS

As of 06/30/14; Source: The Federal Reserve

Investment landscape

Aggressive monetary policies continue to be the primary driver of what has been a synchronized rise in risky assets.

3

Investment landscape

Rates near all-time low based upon any historical measure, including the Dutch 10-year bond yields going back to 1517.

Netherlands 10-yr Government Bond Yields

Source: Deutsche Bank, GFD 4

Investment landscape

• Share prices being led by the most speculative “theme” stocks in social media

• Bond markets being led by junk bonds and peripheral European sovereign debt

• Real estate is led by markets already in elevated territory• Contemporary art auctions are producing towering values

The $58 million Balloon Dog

Source: Christie’s/AP5

6

Source: Bloomberg and Sandler O’Neill

Note: 2014E represents actual YTD through 05/30/14 annualized.Source: Bloomberg and Sandler O’Neill + Partners

An increased focus on shareholder value creation and an acceleration of mergers and acquisition (M&A) activity are unlocking value as part of a theme that will likely persist.

Health care, financials, energy, technology and consumer/media holdings are best positioned to benefit.

Investment landscape

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As of 06/30/14Source: Bloomberg

Post TechBubble Average

2.18

1.0

2.0

3.0

4.0

Jan-95

No

v-97

Aug-00

May-0

3

Feb-06

No

v-08

Sep-11

Jun-14

MSCI World Price to Book Ratio

2.7

2.2

1.5 1.5

1.2

0.0

0.5

1.0

1.5

2.0

2.5

3.0

S&P500 MSCI World MSCI EM EuroStoxx Topix

Regional Price to Book Ratio

+10% +4% -17% -6% -9%Premium/Discount to long term average:

World equities

Close to long-term average but with big regional sector differences

8As of 06/30/14Source: Robert Shiller, http://www.econ.yale.edu/~shiller/data.htm

0

9

18

27

36

45

1881.0

1

1889.0

5

1897.0

9

1906.0

1

1914.0

5

1922.0

9

1931.0

1

1939.0

5

1947.0

9

1956.0

1

1964.0

5

1972.0

9

1981.0

1

1989.0

5

1997.0

9

2006.0

1

2014.0

5

U.S. Stock Market Cyclically Adjusted PE

CAPE Average Ave. (Period Adjusted)

Pre First World War Second World War, mid-century Post Berlin Wall

A longer-term perspective

An “Absolute Value” focus

QUALITY(i.e. ROE, ROIC sustainability)

VALU

EHIGH

LOW

LOW HIGH

Type 2 Companies Type 1 CompaniesUndervalued businesses in which profitability levels are depressed and/or are likely to improve.

Undervalued higher quality companies with more sustainable return on capital profiles.

“Efficient Frontier”

High-quality

blue-chip franchises

Diverse range of holdings across

industries

Japanese

holdings

Current positioning

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OR?

Abenomics

10

11As of 08/31/14Source: Nomura, FactSet

Japan has had seven prime ministers in six years. Confidence in leadership has been rare in Japan, and Abe’s influence should not be underestimated. Abe’s average approval ratings are now the highest of any prime minister in 30 years.

0.5

1.0

1.5

2.0

2.5

3.0

Dec-9

4

Ap

r-96

Sep-9

7

Feb-9

9

Jul-0

0

Dec-0

1

May-0

3

Oct-0

4

Mar-0

6

Aug-0

7

Dec-0

8

May-1

0

Oct-1

1

Mar-1

3

Aug-1

4

Japan Topix Price-to-Book Ratio

Abe

No

da

Kan

Hato

yam

a

Aso

Fukud

a

Abe

Ko

izum

i

Mo

ri

Obuch

i

Hash

imoto

Mura

yam

a

Japan – can Abenomics work?

12

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Japan Nikkei Index Dividend Yield Japan 5-year Bond Yield

Is it different this time?

Have we heard it all before?

Bottom line – valuations reflect another false start

As of 05/31/14Source: FactSet

Japan – valuations reflect another false start

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Investors don’t believe in a Japanese recovery

-20%

0%

20%

40%

60%

80%

100%

120%

-50%

-45%

-40%

-35%

-30%

-25%

-20%

-15%

Jul-

02

Jan

-04

Jul-

05

Jan

-07

Jul-

08

Jan

-10

Jul-

11

Jan

-13

Jul-

14

Japan Discount to MSCI World

Price to Book Basis (LHS)

Fwd PE Basis (RHS)

Source: FactSet, Bank of Japan, Nikkei

Japan – rising sun or false dawn?

Don’t underestimate the benefits of confidence in leadership

Japan – rising sun or false dawn?

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But Japanese corporations appear to…

-12%

-8%

-4%

0%

4%

8%

12%

16%

Dec-8

4

Mar-91

Jun-9

7

Sep-0

3

Dec-0

9

Japan Lending Growth

Total Business

Highly Deflationary

Near 25-year High

Jun-1

4

0

30

60

90

Jun-1

1

Sep-1

1

Dec-1

1

Mar-1

2

Jun-1

2

Sep-1

2

Dec-1

2

Mar-1

3

Jun-1

3

Sep-1

3

Dec-1

3

Mar-1

4

Jun-1

4

Survey of 100 Japanese Corporate PresidentsCapex Expanding or Showing Signs of Expanding

(%)

Source: FactSet, Bank of Japan, Nikkei

15Preliminary as of 08/31/14, Source: MSCI World (Net) Index. Regional portfolio weights, based upon a representative fully discretionary account with the global mandate, are presented as supplemental information to a full disclosure presentation found in the appendix. The securities identified above are not necessarily held by Altrinsic Global Advisors, LLC for all client portfolios, and should not be considered a recommendation or solicitation to purchase or sell these securities. It should not be assumed that any investment in these securities was, or will be, profitable.

0

10

20

Japan Austr/NZ Other

% o

f Assets

Geographic Exposure

Altrinsic Global Equity MSCI World (Net) Index

Mitsubishi CorporationBank of YokohamaSumitomo Mitsui Trust HoldingsSMC Suzuki MotorMS&AD Insurance GroupSompo Japan Nipponkoa NintendoInpex Kyowa Hakko KirinMitsubishi UFJ Financial GroupTokio Marine Japan DisplayHitachi

Golden Agri Resources

Genpact

Bangkok Bank Cheung

Kong

Hyundai MotorKB FinancialSamsung

Asia-Pacific

Overweight Japan – value emerging in developing markets

Preliminary as of 08/31/14, Source: MSCI World (Net) Index. Regional portfolio weights, based upon a representative fully discretionary account with the global mandate, are presented as supplemental information to a full disclosure presentation found in the appendix. The securities identified above are not necessarily held by Altrinsic Global Advisors, LLC for all client portfolios, and should not be considered a recommendation or solicitation to purchase or sell these securities. It should not be assumed that any investment in these securities was, or will be, profitable.

Deutsche BörseWillis Group AONStandard Chartered

UnumPrudential Financial AllstateBrown & BrownIntercontinental Exchange

0

6

12

% o

f Assets

North America

0

4

8

% o

f Assets

Europe

Differentiated positioning in financials

Our greatest relative risk

Aggregate exposure gives a “false read” of underlying risks.

0

12

24

% o

f A

ss

ets

Financial Sector Exposure

Altrinsic Global Equity MSCI World (Net) Index

Financial Exposure by Region

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Our greatest relative risk

Differentiated positioning in financials

Preliminary as of 08/31/14, Source: MSCI World (Net) Index. Regional portfolio weights, based upon a representative fully discretionary account with the global mandate, are presented as supplemental information to a full disclosure presentation found in the appendix. The securities identified above are not necessarily held by Altrinsic Global Advisors, LLC for all client portfolios, and should not be considered a recommendation or solicitation to purchase or sell these securities. It should not be assumed that any investment in these securities was, or will be, profitable.

Financial Exposure by Region

Aggregate exposure gives a “false read” of underlying risks.

Bank of Yokohama MS&AD Insurance Group Sompo Japan Nipponkoa Tokio MarineSumitomo Mitsui Trust HoldingsMitsubishi UFJ Financial Group

Bangkok BankSberbankKB Financial

0

12

24

% o

f A

ss

ets

Financial Sector Exposure

Altrinsic Global Equity MSCI World (Net) Index

0

4

8

% o

f Assets

Japan

0

2

4

% o

f Assets

Other

17

4

8

12

16

Feb-

02

Mar-

04

Ap

r-06

May-

08

Jun-

10

Jul-1

2

Aug-

14

European Bank Price to Forward Earnings Expectations

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Structural challenges in Europe co-exist with a fragile political environment.

As of 08/31/14; Source: FactSet

As of 08/31/14; Source: FactSet

Capital Tangible

Equity/Assets

Liquidity Loan/

Deposit

U.S. 8.5% 86%

Japan 5.2% 72%

Europe 4.2% 128%

• Banks still pose a significant risk and valuations are at lofty levels

• Private loan growth constrained

• 12% unemployment still very high

As of 03/31/14; Source: Deutsche Bank, Bank of America Merrill Lynch, Citigroup, FactSet

5

10

15

20

25

30

35

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Assets

/Eq

uity

Much More Deleveraging Necessary in EuropeLeverage Ratio of European & U.S. Financial Sector

Europe

U.S.

Europe and its banks – value or trap?

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“Innovative” Lending Growth“Traditional” Lending Growth

Total Social Financing

Economic developments in China have far-reaching implications

• Accounts for 40% of the world’s base metal consumption, 23% of agricultural crop consumption, 20% of non-renewable energy consumption

• Imports are 30% of GDP, an important contributor to the global economy

As of 06/30/14; Source: Bloomberg, CEIC.

China’s economy has been supported by credit and financial “innovation” – an unstable foundation.

0%

10%

20%

30%

40%

2000

2001

2003

2005

2007

2008

2010

2012

2014

Chinese Banking System Annual Lending Growth

China

As of 08/31/14. Based upon a representative fully discretionary account with the global mandate and presented as supplemental information to full disclosure presentation found in the appendix. The securities identified above are not necessarily held by Altrinsic Global Advisors, LLC for all client portfolios, and should not be considered a recommendation or solicitation to purchase or sell these securities. It should not be assumed that any investment in these securities was, or will be, profitable.

QUALITY (i.e. ROE, ROIC sustainability)

VALU

E

HIGH

LOW

LOW HIGH

“Efficient Frontier”

New buys during 2014

20

Preliminary as of 08/31/14, Source: MSCI World (Net) Index. Sector and regional portfolio weights, based upon a representative fully discretionary account with the global mandate, are presented as supplemental information to a full disclosure presentation found in the appendix. 1Based upon a representative fully discretionary account with the global mandate and presented as supplemental information to full disclosure presentation found in the appendix.

0

30

60

North America Latin America

% o

f A

ssets

AmericasGeographic & Sector Exposure

0 6 12

Telecom Svcs

Materials

Industrials

Healthcare

Cons. Staples

Utilities

Energy

Info. Tech.

Financials

Cons. Disc.

% of Assets

Altrinsic Global Equity MSCI World (Net) Index

0

15

30

Europe ex-UK

UK Emerging EMEA

% o

f A

ssets

EMEAGeographic & Sector Exposure

0 6 12

Info. Tech.Utilities

MaterialsCons. Disc.

IndustrialsTelecom Svcs

EnergyFinancials

Cons. StaplesHealthcare

% of Assets

Altrinsic Global Equity MSCI World (Net) Index

0

10

20

Japan Pacific ex-Japan

Emerging Asia

% o

f Ass

ets

Asia-PacificGeographic & Sector Exposure

0 3 6 9

Cons. StaplesTelecom Svcs

UtilitiesMaterials

EnergyHealthcare

Cons. Disc.Info. Tech.IndustrialsFinancials

% of Assets

Altrinsic Global Equity MSCI World (Net) Index

Portfolio risk exposure

21

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Equity markets are at all-time highs, interest rates are near historical lows, credit spreads are historically tight, and the correlation among many assets is at high levels. A high degree of confidence is being bestowed on policymakers.

• Not a time to be greedy • Essential to evaluate symmetry of upside vs. downside payoff for individual stocks• Margin of safety in stock selection is as important as ever in this environment

At the aggregate level, global equities reflect fair value with large regional and sector differences. At the stock level, we see a growing source of new ideas with idiosyncratic characteristics and drivers.

Summary

Summary

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From a risk perspective, we believe that portfolio market risk has come down while company-specific risk factors have increased.

• Emphasizing concentration within portfolio – number of holdings at low end of historical range. • Differentiated positioning:

– Financials: significantly underweight European banks, overweight Japanese financials– Overweight Japan with a domestic focus– Overweight health care companies (valuation, renewed focus on shareholder value, and

underappreciated innovation)– Embedded balance sheet strength– Blue-chip consumer franchises

Increased M&A activity coupled with greater management focus on shareholders’ interests to further unlock value in the portfolio.

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Commissions, trailing commissions, management fees and expenses may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. ®CI Investments, the CI Investments design, are registered trademarks of CI Investments Inc. This communication is published by CI as a general source of information and is not intended to provide personal legal, accounting, investment or tax advice. Facts and data provided by CI and other sources are believed to be reliable when posted; however, CI cannot guarantee that they are accurate or complete or that they will be current at all times. CI and its affiliates will not be responsible in any manner for direct, indirect, special or consequential damages howsoever caused, arising out of the use of this presentation.

FOR ADVISOR USE ONLY – NOT FOR DISTRIBUTION TO CLIENTS

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