Franklin Regional Retirement SystemSecurity Weight TJX Companies 4.06% Exxon Mobil Corp 3.65% Copa...
Transcript of Franklin Regional Retirement SystemSecurity Weight TJX Companies 4.06% Exxon Mobil Corp 3.65% Copa...
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Randell A. Cain, Jr., CFA – Principal / Portfolio Manager
Marc O. Sydnor – Senior Vice President, Marketing & Client Services
Presentation To:
Franklin Regional Retirement System
Wednesday, January 11, 2012
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INTRODUCTION
OUR FIRM and OUR PHILOSOPHY - Experience, Discernment, Reliance
OUR INVESTMENT PRODUCTS - Committed to Excellence
Large Cap US Value Equity
OPERATIONS OVERVIEW
APPENDIX
PERFORMANCE DISCLOSURES
T A B L E O F C O N T E N T S
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O U R L E G A C Y
WHO WE ARE
Herndon Capital Management, LLC
Herndon Capital Management, LLC (formerly Atlanta Life Investment Advisors, LLC) is an institutional investment management
firm specializing in large and mid capitalization equity strategies. Founded and registered with the SEC in 2001, the firm is an
affiliate of the Atlanta Life Financial Group, a 106 year old financial services firm. All of the members of the portfolio management
team have an ownership stake in the firm.
As of September 30, 2011 Herndon Capital Management managed approximately $4.04 billion* in institutional client assets.
* Includes discretionary and non-discretionary assets
Drake J. Craig, CFA
Principal / Portfolio Manager
22 yrs experience
MBA - 1997
Kenan Flagler School of Business
University of North Carolina
BA - 1989
Morehouse College
Joined Herndon Capital
Management, LLC in 2002
Previous employment was as
Director of Equities/Senior VP at
NCM Capital Management Group,
Inc.
Randell A. Cain Jr., CFA
Principal / Portfolio Manager
20 yrs experience
MBA - 1994
Harvard Business School
BIE - 1991
Georgia Institute of Technology
BS - 1991
Morehouse College
Joined Herndon Capital
Management, LLC in 2002
Previous employment was as
Portfolio Manager/Vice President at
NCM Capital Management Group,
Inc.
Kenneth R. Holley, CFA
Chief Investment Officer / Principal /
Portfolio Manager
25 yrs experience
MBA - 1987
The Wharton School
BS - 1982
University of Pennsylvania
Joined Herndon Capital
Management, LLC in 2002
Previous employment was as
Portfolio Manager / Principal at
Morgan Stanley Asset Management
OUR PORTFOLIO MANAGEMENT TEAM
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5
$-
$500.00
$1,000.00
$1,500.00
$2,000.00
$2,500.00
$3,000.00
$3,500.00
$4,000.00
$4,500.00
$5,000.00
12/31/2002 12/31/2003 12/31/2004 12/31/2005 12/31/2006 12/31/2007 12/31/2008 12/31/2009 12/31/2010 9/30/2011
$52.11 $53.90 $156.30
$453.30
$711.07
$1,093.23 $883.80
$1,577.29
$2,483.84
$4,041.28
GROWTH IN AUM (in millions)
A S S E T S U N D E R M A N A G E M E N T
Breakdown of Assets Under Management
by Client Type:
(in millions)
by Strategy:
(in millions)
Total Assets as of September 30, 2011: $4.04 billion (167 accounts)
Client Type # of Accounts % of Mkt Value
Public Funds 78 45%
Mutual Funds 4 25%
Corporate Assets 7 8%
UMA (Non-Discretionary Models) 10 6%
WRAP Platforms 15 6%
Endowments/Foundations/Other 30 4%
Commingled Trusts 3 2%
Taft Hartley 12 2%
ALFG (Affiliate) Assets 8 0%
Corporate Assets, $322.91
Public Funds, $1,804.22
Commingled Trusts, $82.17
Taft Hartley, $88.35
ALFG (Affiliate) Assets, $18.60
Endow ment / Foundations/
Other, $196.56 WRAP Platforms, $250.14 UMA (Non-Discretionary
Models), $250.41
Mutual Funds, $1,027.94
Strategy # of Accounts % of Mkt Value
Large Cap Value** 122 83%
Large Cap Core International 19 10%
Large Cap Growth 18 5%
Large Cap Core* 11 4%
Mid Cap Value 5 2%
Other 3 0%
Large Cap Value, $3,360.15
Large Cap Grow th, $216.51
Large Cap Core International,
$384.52
Mid Cap Value, $66.50
Other, $13.60
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*Assets represented in Large Cap Value & Large Cap Growth Strategies
**One Hospital Plan closed and one Model Account is not included **One Hospital Plan closed and one Model Account is not included
7 MANAGER OF MANAGERS PROGRAMS
Attucks Asset Management
Public School Teachers Pension & Retirement Plan of Chicago
Seattle City Employees’ Retirement System
New York State Insurance Fund
Capital Prospects, LLC
FIS Funds Management
California Public Employee Retirement System
City of Baltimore Employees Retirement System
New York City Employees Retirement System
New York City Police Department
New York City Teachers Retirement System
Municipal Employee Annuity & Benefit Fund of Chicago
Leading Edge Investment Advisors, LLC
Northern Trust Global Advisors / Northern Trust Co. of CT
State Retirement and Pension of Maryland
Progress Investment Management
Ford Motor Company
Gray & Company
City of Pontiac, MI
DIRECT
Blue Cross Blue Shield of Michigan
Chicago Transit Authority
City of Atlanta Firefighters Pension Fund
Illinois State Board of Investment
Memphis Light Gas & Water Retirement & Pension
PepsiCo, Inc.
State Universities Retirement System of Illinois
Veterans of Foreign Wars
Dillard University
Retirement Plan for CTA Employees
Cook County Employees’ Annuity & Benefit Fund
Employees Retirement System of Texas
Teachers’ Retirement System of the State of Illinois
Shelby County, Tennessee, Retirement System
SUB-ADVISORY
Summit Alliance
Global Bridge, Inc.
Aston Funds’ Aston Herndon LCV Fund
Delaware Investments’ Optimum LCV Fund
Scotia Asset Management
Principal Financial Group
Herndon Capital Management, LLC – REPRESENTATIVE CLIENT LIST
Clients listed above have provided permission to use their names on a representative client list. Performance was not a criteria for inclusion on the provided client list.
Randell Cain Jr., CFA
Principal
Drake Craig, CFA
Principal
Kenneth Holley, CFA
Principal
Mellissa Craig
Chief Administrative Officer
Ken Grimes
Director of Research
Jason Recio, CFA
Senior Investment Analyst
Romerro Williams
Investment Analyst
Jazmin Williams
Investment Analyst
James Nelson, CFA
Senior Investment Analyst
Annette Marshall
Chief Compliance Officer
Diane Bromfield
Senior Equity Trader
Adrian Chastain
Equity Trader
Todd Campbell
Compliance Officer
Arlene Pine, CFA
Director of Marketing & Client Services
Marc Sydnor
SVP, Marketing & Client Services
Walter Lindsay, Jr.
SVP, Marketing & Client Services
Dawn Swift
Marketing & Client Services Coordinator
Anthony Pinkston
Marketing & Client Services Associate
Shannon Barnes
Director of Operations
Christine Wizzard
Sr. Operations Analyst
Lorraine Betts
Operations Analyst
Williette Shanu-Wilson
Operations Analyst
Rachel Roffman
Operations Analyst
Kara Rainey
Operations Analyst
Alexandria Jenkins
Jr. Operations Analyst
Tonya Lynch
Accountant
Colette Ray
Contract Specialist
Shawn Ayton
Network Manager
Executive Committee
Herndon Capital Management, LLC’s Organizational Chart
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Kenneth Holley, CFA
Principal / CIO / Portfolio Manager
International Equity Strategy
Randell Cain Jr., CFA
Principal / Portfolio Manager
Value Equity Strategy
Drake Craig, CFA
Principal / Portfolio Manager
Growth Equity Strategy
James Nelson, CFA
Senior Investment Analyst
Sector Assignments:
Financials
Consumer Staples
Jazmin Williams
Investment Analyst
Sector Assignments:
Energy
Industrials
Romerro Williams
Investment Analyst
Sector Assignments:
Materials
Healthcare
Utilities
Herndon Capital Management, LLC
INVESTMENT MANAGEMENT TEAM
Kenneth Grimes
Director of Research
Sector Assignments:
Telecommunications
Jason Recio, CFA
Senior Investment Analyst
Sector Assignments:
Consumer Discretionary
Technology
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O U R I N V E S T M E N T P R O D U C T S
Our institutional products allow us to construct portfolios that take advantage of the broadest opportunities in
domestic and international equity markets.
Large Cap Core International Equity
Large Cap US Growth Equity
Large Cap US Value Equity
Large Cap US Core Equity
Mid Cap US Value Equity
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O U R I N V E S T M E N T P R O C E S S
Large Cap US Value Equity Investment Philosophy & Strategy
committed to excellence
“To everything there is a season…” (Ecclesiastes 3:1). True value is defined by companies that
trade at a discount to what their fundamentals merit. Identifying sound companies out of favor
with investors due to temporary conditions has historically proven to be a successful strategy as
their true value is ultimately recognized in the marketplace. We call these companies value
creating opportunities.
Our process identifies stocks based upon relative value versus the other stocks in our Russell
1000 universe. We combine fundamental analysis in a valuation-oriented framework with risk
assessment. We do not want to own stocks merely because they appear “cheap”. We screen
our value candidates for performance-based characteristics to avoid “value traps”. The stocks we
own tend to have low valuation metrics, but they also have sound fundamental characteristics,
hopefully leading to outperformance as their value is recognized in the market.
12 STOCK SELECTION
Step 1: Identify Value Creating Opportunities
Screen for stocks with 30% or more upside based on
relative fundamental (5 year average ROE) variance
from relative valuation (relative P/E and/or relative
P/CF).
Russell 1000 Index
Value Creating Opportunities
O U R I N V E S T M E N T P R O C E S S
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Step 2: Qualify for Potential Inclusion
• Market capitalization $1 billion and above
• S & P Quality Ranking of “C” or better
Value Creating Opportunities
Qualified Companies
O U R I N V E S T M E N T P R O C E S S
STOCK SELECTION
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Ranked Companies
Step 3: Rank
Rank fundamental competitiveness versus overall portfolio:
• ROE/ROA/ROC
• Earnings Purity
• Cash Flow to Earnings
• Long Term Debt/Capitalization
• Dividend Analysis
- Yield
- Payout
- Growth
• Valuation
- Price to Earnings
- Price to Sales
- Price to Book
- Price to Cash Flow
• Earnings Growth
• Net Profit Margins
• S&P Quality Rankings
Qualified Companies
O U R I N V E S T M E N T P R O C E S S
STOCK SELECTION
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O U R I N V E S T M E N T P R O C E S S
STOCK SELECTION
Step 5: Purchase 1% initial position
Strengths?
Weaknesses?
Opportunities?
Threats?
Step 4: Fundamental Analysis - Analyze ranked companies on 4 dimensions to answer 4 questions.
Strategy
Operation Finance
Management
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Calculate Percentage of Value Creating Opportunities in Russell 1000
Calculate Percentage of Value Creating Opportunities Grouped by Sector
Sector Percentage of Value Creating Opportunities Compared to Russell 1000 Percentage
Relative Sector Percentage of Value Creating Opportunities Compared to Russell 1000 Value Sector
Adjust Portfolio Sectors to Reflect Current Allocation of Value Creating Opportunities
O U R I N V E S T M E N T P R O C E S S
SECTOR ALLOCATION
17 SELL DISCIPLINE
Weekly Sector Adjustments
No Longer a Value Creating Opportunity
Weakest Performer Among Value Creating Opportunities
Profit Taking
Erosion of Fundamentals (identified both fundamentally and quantitatively)
Conviction Check at 25% decline from cost
O U R I N V E S T M E N T P R O C E S S
18 Risk Management
PORTFOLIO PARAMETERS
Sector diversification rules: Min/Max Sector weight +\-10% of index weight
Security diversification rules: Maximum weight 5% portfolio
Fully invested: Maximum cash position 5%
40-70 securities
Top 10 positions earned not purchased
O U R I N V E S T M E N T P R O C E S S
19 Large Cap US Value Equity Characteristics as of 09/30/11
Portfolio Russell 1000 Value
Price/Earnings Ratio (TTM) 10.1x 11.0x
S&P Quality Ranking A- B+
Dividend Yield 3.6% 2.6%
Weighted Average Market Cap $56.3 billion $65.4 billion
Average Market Cap $46.2 billion $12.4 billion
Median Market Cap $15.4 billion $4.1 billion
Average Return on Equity 43.0% 23.3%
Earnings Growth 11% 9%
LT Debt/Capitalization 33% 39%
Number of Securities 47 653
PORTFOLIO FUNDAMENTAL CHARACTERISTICS
Security Weight
TJX Companies 4.06%
Exxon Mobil Corp 3.65%
Copa Holdings 3.50%
Herbalife 3.13%
Coach 2.79%
Waters 2.76%
Apple Inc 2.72%
Microsoft 2.68%
Altria 2.66%
Windstream 2.65%
Total 30.60%
TOP TEN LARGEST HOLDINGS
Please see APPENDIX for GIPS presentation
The Large Cap Value Equity Characteristics are shown as supplemental information only and complements
the Large Cap Value Composite presentation which is located in the Appendix.
Portfolio
Batting Average 78.00%
Upside Capture Ratio 119.27%
Downside Capture Ratio 82.19%
Tracking Error 5.64
Information Ratio 1.08
R-squared 0.92
Beta (versus R1000 Value) 0.96
PORTFOLIO PERFORMANCE CHARACTERISTICS
65.91%Annualized Since Inception Turnover
O U R I N V E S T M E N T R E S U L T S
20 Large Cap US Value Equity Characteristics as of 09/30/11
*Relative to the Russell 1000 Value
Sector Allocation*
The Large Cap Value Equity Characteristics are shown as supplemental information only and complements
the Large Cap Value Composite presentation which is located in the Appendix.
O U R I N V E S T M E N T R E S U L T S
Utilities
Telecommunications
Technology
Materials
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
-10.0% -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0%
21 Large Cap US Value Equity Investment History as of 09/30/11
See APPENDIX for performance disclosures.
*Since Inception Annualized 06/30/02
O U R I N V E S T M E N T R E S U L T S
Past performance is not indicative of future results.
-20.00%
-10.00%
0.00%
10.00%
QTD YTD 1 YEAR 3 YEAR 5 YEAR INCEPTION*
Gross -14.92% -6.32% 4.53% 7.21% 4.54% 9.47%
Net -15.00% -6.58% 4.15% 6.82% 4.16% 9.13%
Russell 1000 Value -16.20% -11.24% -1.89% -1.52% -3.53% 3.38%
Gross Net Russell 1000 Value
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GROSS PERFORMANCE Shown as supplemental information only.
See APPENDIX for fully compliant performance disclosures.
Past performance is not indicative of future results.
23 Large Cap US Value Equity Investment History
See APPENDIX for fully compliant performance disclosures.
For one on one presentations only.
GROSS PERFORM ANCE
YR P R OD UC T QI QII QIII QIV YT D
2002 US VALUE -16.59 7.39 -10.43
RUSSELL 1000 VALUE -18.77 9.22 -11.28
2003 US VALUE -3.68 14.92 2.81 15.34 31.26
RUSSELL 1000 VALUE -4.86 17.27 2.06 14.19 30.03
2004 US VALUE 7.42 0.44 6.18 12.60 29.00
RUSSELL 1000 VALUE 3.02 0.88 1.54 10.38 16.49
2005 US VALUE 2.13 5.14 6.33 1.28 15.64
RUSSELL 1000 VALUE 0.09 1.67 3.88 1.27 7.05
2006 US VALUE 2.86 1.29 1.25 9.21 15.20
RUSSELL 1000 VALUE 5.93 0.59 6.22 8.00 22.25
2007 US VALUE 1.61 9.81 0.03 -1.19 10.28
RUSSELL 1000 VALUE 1.24 4.93 -0.24 -5.80 -0.17
2008 US VALUE -5.86 2.19 -12.56 -19.07 -31.93
RUSSELL 1000 VALUE -8.72 -5.31 -6.11 -22.17 -36.85
2009 US VALUE -10.91 20.40 22.65 3.62 36.33
RUSSELL 1000 VALUE -16.77 16.69 18.24 4.22 19.69
2010 US VALUE 7.21 -11.88 13.03 11.60 19.23
RUSSELL 1000 VALUE 6.78 -11.15 10.13 10.54 15.51
2011 US VALUE 7.72 2.28 -14.92 -6.32
RUSSELL 1000 VALUE 6.46 -0.50 -16.20 -11.24
Since Inception Annualized*: US VALUE 9.47
RUSSELL 1000 VALUE 3.38
Past performance is not indicative of future results.
*Since Inception Annualized 06/30/02
O U R I N V E S T M E N T R E S U L T S
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Shown as supplemental information only.
See APPENDIX for fully compliant performance disclosures.
GROSS PERFORMANCE
Past performance is not indicative of future results.
O U R I N V E S T M E N T R E S U L T S
HCM Large Cap Value Excess Returns over R1000V Index (quarterly, as of 09/30/11)
HCM LCV outperforms in 29 out of 37 quarterly time periods since inception. (78% of the time)
The average out-performance margin per quarter = 1.43%
-7%
0%
7%
Q3 0
2Q
4 0
2Q
1 0
3Q
2 0
3Q
3 0
3Q
4 0
3Q
1 0
4Q
2 0
4Q
3 0
4Q
4 0
4Q
1 0
5Q
2 0
5Q
3 0
5Q
4 0
5Q
1 0
6Q
2 0
6Q
3 0
6Q
4 0
6Q
1 0
7Q
2 0
7Q
3 0
7Q
4 0
7Q
1 0
8Q
2 0
8Q
3 0
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4 0
8Q
1 0
9Q
2 0
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9Q
4 0
9Q
1 1
0Q
2 1
0Q
3 1
0Q
4 1
0Q
1 1
1Q
2 1
1Q
3 1
1
QUARTERLY RETURNS SINCE INCEPTION(as of 09/30/11) HCM LCV Minus R1000V
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Shown as supplemental information only.
See APPENDIX for fully compliant performance disclosures.
GROSS PERFORMANCE
Past performance is not indicative of future results.
O U R I N V E S T M E N T R E S U L T S
HCM LCV outperforms in 29 out of 34 rolling 1 year time periods. (85% of the time)
The average out-performance margin = 6.13%
HCM Large Cap Value Excess Returns over R1000V Index (quarterly, as of 09/30/11)
-10%-5%0%5%
10%15%20%
Q2 0
3Q
3 0
3Q
4 0
3Q
1 0
4Q
2 0
4Q
3 0
4Q
4 0
4Q
1 0
5Q
2 0
5Q
3 0
5Q
4 0
5Q
1 0
6Q
2 0
6Q
3 0
6Q
4 0
6Q
1 0
7Q
2 0
7Q
3 0
7Q
4 0
7Q
1 0
8Q
2 0
8Q
3 0
8Q
4 0
8Q
1 0
9Q
2 0
9Q
3 0
9Q
4 0
9Q
1 1
0Q
2 1
0Q
3 1
0Q
4 1
0Q
1 1
1Q
2 1
1Q
3 1
1
ROLLING 1 YEAR TRAILING RETURNS (as of 09/30/11) HCM LCV Minus R1000V
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Shown as supplemental information only.
See APPENDIX for fully compliant performance disclosures.
GROSS PERFORMANCE
Past performance is not indicative of future results.
O U R I N V E S T M E N T R E S U L T S
HCM Large Cap Value Excess Returns over R1000V Index (quarterly, as of 09/30/11)
HCM LCV outperforms in 26 out of 26 rolling 3 year time periods. (100% of the time)
The average out-performance margin = 6.10%
-10%-5%0%5%
10%15%20%
Q2 0
5
Q3 0
5
Q4 0
5
Q1 0
6
Q2 0
6
Q3 0
6
Q4 0
6
Q1 0
7
Q2 0
7
Q3 0
7
Q4 0
7
Q1 0
8
Q2 0
8
Q3 0
8
Q4 0
8
Q1 0
9
Q2 0
9
Q3 0
9
Q4 0
9
Q1 1
0
Q2 1
0
Q3 1
0
Q4 1
0
Q1 1
1
Q2 1
1
Q3 1
1
ROLLING 3 YEAR TRAILING RETURNS (as of 09/30/11) HCM LCV Minus R1000V
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Shown as supplemental information only.
See APPENDIX for fully compliant performance disclosures.
GROSS PERFORMANCE
Past performance is not indicative of future results.
O U R I N V E S T M E N T R E S U L T S
HCM Large Cap Value Excess Returns over R1000V Index (quarterly, as of 09/30/11)
HCM LCV outperforms in 18 out of 18 rolling 5 year time periods. (100% of the time)
The average out-performance margin = 5.90%
0%
5%
10%
Q2 0
7
Q3 0
7
Q4 0
7
Q1 0
8
Q2 0
8
Q3 0
8
Q4 0
8
Q1 0
9
Q2 0
9
Q3 0
9
Q4 0
9
Q1 1
0
Q2 1
0
Q3 1
0
Q4 1
0
Q1 1
1
Q2 1
1
Q3 1
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ROLLING 5 YEAR TRAILING RETURNS (as of 09/30/11) HCM LCV Minus R1000V
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GROSS PERFORMANCE Shown as supplemental information only.
See APPENDIX for fully compliant performance disclosures.
Past performance is not indicative of future results.
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GROSS PERFORMANCE Shown as supplemental information only.
See APPENDIX for fully compliant performance disclosures.
Past performance is not indicative of future results.
30
GROSS PERFORMANCE Shown as supplemental information only.
See APPENDIX for fully compliant performance disclosures.
Past performance is not indicative of future results.
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C L I E N T C O V E R A G E
Each client has a 5-tier coverage
Client Service Representative
- Day-to-day contact
- Ad hoc requests
- Client meetings
Equity Trader
-Trading: Domestic / International Securities
including Foreign Currency
- Oversee integrity of Trade Order Management System
- Commission Management
Chief Compliance Officer
- Checks compliance with investment guidelines
- Creates restriction rules in order management system
- provides compliance attestations as requested
Portfolio Manager
- Portfolio Investment Selection
- Portfolio Risk Management
- Client Meetings
CLIENT
Operations Analyst
- Standard / Custom reporting
- Trade settlement
- Reconciliation with custodian
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Standard Monthly Reporting
Holdings Report
Purchase and Sales Report
Income and Expenses Report
Performance Report
Standard Quarterly Reporting
Standard Monthly Reports
Commentary
Custom Reporting (client specified)
Proxy Reports
Commission Reports
Organizational Updates
We utilize Axys®, Advent’s industry-leading reporting and accounting solution
which allows us to generate numerous customized reports for clients and interested parties
R E P O R T I N G C A P A B I L I T Y
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Trading Moxy Trading Platform
– interfaces with brokers – Interfaces with Axys
Compliance – a pre-trade, trade and post-trade compliance solution – Compliance Department enters restrictions (stock, sector,
country, cash) – Any attempts to buy restricted securities will not be allowed.
Compliance
Chief Compliance Officer (CCO) rule mandated by SEC
Compliance Department and Third Party Compliance Consultant
Compliance Department and Consultant ensures compliance in a number of areas: Books and Records
Personal Securities Transactions
Trading
Soft Dollars
Marketing / Advertisements
Auditing
3-tier Auditing of Firm
Internal audit by Compliance Department and Consultant (SEC Mock Inspections)
Parent Level - ALFG and entities audited by Dixon Hughes
External – Ashland Partners (firm verification)
B U S I N E S S M A N A G E M E N T
Proxy Voting Glass, Lewis & Co. (Glass Lewis)
– Votes proxies – Maintain records of proxy voting (access via web) – HCM adopted Glass Lewis policy – Client-supplied guidelines overrides those on file with Glass
Lewis Internal Proxy Policy Committee
― Meets to review Glass Lewis Proxy Policy
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Utilize backup procedures of ALFG
Leapfrog – external IT Consultant
Monitors network
Provides tech support
Disaster recovery partner
3-tier back-up system
Daily backup – tapes stored offsite monthly
Network is backed up to a network
Synchronize to a disaster recovery platform (located in Suwannee, GA) every 2 hours.
Laptops
Each employee has a company issued laptop to access resources via a VPN connection.
D I S A S T E R R E C O V E R Y
OUR MANAGEMENT TEAM
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KENNETH R. HOLLEY, CFA Chief Investment Officer/ 25 years experience
Principal / Portfolio Manager
Ken oversees the firm's investment activities: setting policy and directing the activities of the investment staff. He is the portfolio
manager responsible for Herndon Capital Management, LLC’s Large Cap Core International Equity product and one of the three
portfolio managers responsible for managing our Large Cap US Core Equity product.
Before coming to Herndon Capital Management, LLC, Ken spent more than 8 years at Morgan Stanley Asset Management. In
his first four years there he managed a domestic intermediate fixed-income portfolio. For the last four years at Morgan Stanley
he was the co-manager of an international equity portfolio. In addition, he served on Morgan Stanley's Asset Allocation
Committee which determined MSAM's investment policies and positions in the various asset classes. Prior to that Ken spent
almost three years at the African Development Bank in Abidjan, Cote d'Ivoire as the Senior Finance Officer where he developed
and implemented the investment philosophy and trading strategies for the Bank's portfolios in U.S. dollars, Canadian dollars,
French francs, Deutsche marks and Japanese yen. Before the ADB he managed the portfolios at Ward & Associates Asset
Management, a fixed-income asset management firm serving public and private pension plans. Ken began his career in finance
as a fixed-income salesman at Salomon Brothers in 1986.
Ken’s education includes a Bachelor of Science in Engineering from the University of Pennsylvania and an M.B.A. from the
Wharton School. He also earned the Chartered Financial Analyst designation in 1995.
OUR MANAGEMENT TEAM
DRAKE CRAIG, CFA Principal / Portfolio Manager 22 years experience
Drake Craig is the portfolio manager responsible for managing Herndon Capital Management, LLC‘s Large Cap US Growth Equity
product. Drake is also one of the three portfolio managers responsible for managing our Large Cap US Core Equity product.
Prior to joining the company, he spent 7 years at NCM Capital Management Group in Durham, N.C. rising from senior equity
analyst to Senior Vice President and Director of Equities where he oversaw a 9-member equity investment team that managed over
$5 billion in equity assets. Drake managed one of the firm's largest products, a $1.5 billion broad growth portfolio which included a
subadvisory relationship with the Calvert Group. Prior to that he was an equity analyst at Edward Jones & Co. responsible for
making stock recommendations in consumer oriented sectors.
Drake received a Bachelor of Arts in Business Administration from Morehouse College in 1989, the Chartered Financial Analyst
designation in 1997 and an Executive MBA from the Kenan Flagler School of Business at the University of North Carolina.
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OUR MANAGEMENT TEAM
RANDELL A. CAIN, JR., CFA Principal / Portfolio Manager 20 years experience
Randell (“Randy”) Cain is the portfolio manager responsible for managing Herndon Capital Management, LLC’s Large Cap US
Value Equity and Mid Cap US Value product. Randy is also one of the three portfolio managers responsible for managing the
Large Cap US Core Equity product.
Prior to joining Herndon Capital Management, LLC, Randy spent 5 years at NCM Capital managing nearly $200 million in large
cap core equities while also analyzing the Financial, Basic Material, Energy, and Utility sectors. In addition, in his last 2 years,
he managed a $200 million large cap value portfolio that outperformed the benchmark. Randy’s experience includes equity
and fixed income analysis at TradeStreet Investment Associates (a former subsidiary of Bank of America) and Putnam
Investments as well as a one year fellowship with JP Morgan to gain experience in international investing.
Randy received an MBA from Harvard Business School in 1994, a Bachelor of Industrial Engineering degree from the Georgia
Institute of Technology in 1991, and an Interdisciplinary Bachelor of Science degree from Morehouse College in 1991. He also
earned the Chartered Financial Analyst designation in 1997.
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OUR MANAGEMENT TEAM
MELLISSA D. CRAIG Chief Administrative Officer 15 years experience
Mellissa is our Chief Administrative Officer. Her responsibilities include ensuring that the company’s overall mission is
executed. She manages the day-to-day operations of the firm and monitors the effectiveness and efficiency of the firm’s main
departments: Marketing & Client Services, Research, Compliance & Trading and Operations. She confers directly with
organization’s department heads to plan objectives, develop organizational policies and coordinate functions.
Prior to joining Herndon Capital Management, LLC, Mellissa spent 6 years at NCM Capital Management Group, Inc. rising from
Marketing Assistant to Vice President of Client Services and Marketing. She was responsible for servicing numerous
institutional accounts as well as new business development.
Mellissa received a Bachelor of Business Administration degree (magna cum laude) with an emphasis in marketing from North
Carolina Central University in 1995.
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KEN GRIMES Director of Research 14 years experience
Ken Grimes is our Director of Research and is responsible for covering the Telecommunications sector.
Ken has more than 14 years of experience in the investment and finance field. Prior to joining Herndon Capital Management, Ken
was Senior Vice President and Director of Research at Piedmont Investment Advisors. Ken also served as Director, Investment
Management at EARNEST Partners, LLC in Atlanta, GA where he was a member of the equity investment team that managed
approximately $15 billion in domestic and international equities. Additionally, Ken was an investment banker at Merrill Lynch & Co.
in their Telecommunications and Technology Investment Banking Group and also spent his early professional life as an engineer
and business development executive in the wireless telecommunications industry.
Ken graduated in 1989 magna cum laude from Morehouse College, where he received his Bachelor of Science in Physics and was
elected to the Phi Beta Kappa honor society. Ken completed his MS in Electrical Engineering from Boston University in 1992 and
his MBA from Harvard Business School in 1997.
RESEARCH TEAM
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JAMES N. NELSON, III, CFA Senior Investment Analyst 13 years experience
James Nelson is our Senior Investment Analyst responsible for covering the Financial and Consumer Staples sectors.
Prior to joining Herndon Capital Management, James was a Partner at McHugh Associates Inc. While at McHugh, he co-managed
a $1.5 billion large cap equity strategy and acted as a Senior Equity Analyst analyzing stocks in the Consumer, Financial, Health
Care, and IT sectors. In addition to his co-management and research responsibilities, he acted as the lead Portfolio Manager for
high net-worth and institutional clients with combined assets over $100 million. Prior to McHugh, James held analytical positions at
Cooke & Bieler, the Ewing Marion Kauffman Foundation, and Towers Perrin.
James earned a MBA from The Wharton School at the University of Pennsylvania and a Bachelor of Arts in Economics from The
College of Arts & Sciences at the University of Pennsylvania. He also earned the Chartered Financial Analyst designation in 2004.
RESEARCH TEAM
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JASON RECIO, CFA Senior Investment Analyst 12 years experience
Jason Recio is our Senior Investment Analyst responsible for covering the Information Technology and Consumer Discretionary
sectors.
Jason brings more than a decade of equity experience to Herndon Capital Management, LLC where he presently covers the
Information Technology and Consumer Discretionary sectors. Jason has covered both U.S. and international companies in multiple
sectors, including Consumer Discretionary, Consumer Staples, and Materials. Jason has honed his professional experience at a
couple of area firms, including Invesco and Atlanta Capital, where he analyzed companies across the market cap spectrum in both
the Growth and Value styles.
Jason completed an undergraduate degree in Accounting & Finance at Emory University, graduating with High Distinction and Beta
Gamma Sigma. He earned the CFA designation in 2003 and is a member of the CFA Institute, Atlanta Society of Financial Analysts
and Georgia Securities Association.
RESEARCH TEAM
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ROMERRO WILLIAMS Investment Analyst 4 years experience
Romerro Williams is our investment analyst responsible for coverage of our holdings in the Healthcare, Materials, and Utility
sectors.
His current areas of focus include providing and maintaining research on our holdings in the Specialty and Large Cap
Pharmaceutical Industries, Precious Metal and Mining companies, Telephony service providers, as well as our holdings in the
Industrial Chemical space.
Romerro graduated cum laude from Morehouse College in 2007. He received a Bachelor of Arts in Business Administration with
double concentrations in Finance and Marketing, and a minor in Economics. Romerro is currently in pursuit of his CFA designation,
and is a candidate for the level two CFA exam.
RESEARCH TEAM
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JAZMIN WILLIAMS Investment Analyst 3 years experience
Jazmin Williams is our investment analyst who is responsible for covering our holdings in the Energy and Industrials sectors.
Prior to joining Herndon Capital Management, Jazmin was a marketing intern with the Georgia Department of Economic
Development and a program assistant in the Spelman College Communications Department. Jazmin also volunteered as a co-site
coordinator, leadership team member and mentor with Raising Expectations, a non-profit youth development organization serving
children in the 4th through 12th grade.
Jazmin graduated in 2008 cum laude from Spelman College, where she received her Bachelor of Arts in Economics. She is
currently a candidate for the level one exam of the CFA program.
RESEARCH TEAM
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ARLENE B. PINE, CFA Director of Marketing & Client Services 14 years experience
As the Director of Marketing and Client Service for Herndon Capital Management, LLC, Arlene is charged with executing the
long-term strategic growth efforts of the firm. Her responsibilities include consultant relations, marketing and client service.
Ms. Pine joined HCM in 2011 after gaining fourteen years of industry experience. She spent almost seven years working as a
consultant with two of the largest investment consulting firms in the country advising corporate defined benefit and defined
contribution plan sponsors on investment manager research and selection, performance evaluation, asset allocation and
investment policy development. Prior to that Arlene began her career on the investment management side of the business
where she gained seven years client service experience as a Portfolio Associate providing investment support to large
institutional clients including, private and public plan sponsors, endowments and foundations.
Arlene holds the Charted Financial Analyst designation. She is a member of the CFA Society and the CFA Society of Atlanta.
She earned her Bachelor of Business Administration in Finance from Georgia State University.
MARKETING & CLIENT SERVICES
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MARC O. SYDNOR Senior Vice President, Marketing & Client Services 18 years experience
Marc is our Senior Vice President of Marketing & Client Services and brings his experience in the financial and asset
management industry to effectively meet our current and future client requirements. Having worked on the product / portfolio
side for many years he brings a tremendous amount of product knowledge to this position.
Prior to joining Herndon Capital Management, LLC Marc was a Senior Economist and Equity Portfolio Manager at MDL Capital
Management, where he created the MDL Economic Matrix, an economic forecasting product. His tenure also includes serving
as Investment Manager Search Consultant for Gray & Company. Sydnor began his career as a Broker for Oppenheimer &
Company.
Marc holds a Bachelor of Arts in Economics from the University of Delaware. Marc also holds the Series 65 registration.
MARKETING & CLIENT SERVICES
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WALTER L. LINDSAY, JR. Senior Vice President, Marketing & Client Services 29 years experience
Walter brings 29 years of experience in the Investment Management Industry. Prior to joining Herndon Capital Management, LLC, Walter
was at Madison Square Investors where he served as Director of Institutional Sales. In this role, he was head of Public Funds Sales
covering all regions. Prior to Madison Square, Walter was SVP at Hartford Investment Management Company where he was responsible
for coverage of Public, Corporate Endowments and Foundations. Before joining Hartford, Walter was a Managing Director of Public Funds
for Trusco Capital Management. He managed a Sales and Client Service team that focused on Public Pension Funds. Prior to Trusco,
Walter spent 17 years at Fidelity Investments as a SVP managing existing Public Fund Clients and worked closely with the Investment
team to develop Institutional Products.
Walter earned his Bachelor of Science in Business Administration from Northeastern University. He has the FINRA registrations: Series 7,
52, 53 and 63.
MARKETING & CLIENT SERVICES
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COMPLIANCE
ANNETTE MARSHALL Chief Compliance Officer 22 years experience
Annette Marshall is responsible for our firm’s compliance program. Prior to joining Herndon Capital Management, LLC, Annette
spent 2 years as an Investment Adviser Compliance Consultant to institutional investment advisers as well as some retail
investment advisors with Barge Consulting LLC Prior to that, Annette was Head of Trading at Peachtree Asset Management for
5 years. Before Peachtree, she spent 3 years at NCM Capital Management Group, Inc. as one of a 3-member trading team.
Annette began her career in the investment management industry in 1989 at Edward Jones in operations and later transferred
to their Corporate Bond Trading Desk as an assistant Trader.
Annette received her Bachelor of Science degree in Business Administration from the University of Missouri – St. Louis in
1990. She is a member of the National Society of Compliance Professionals. She holds the FINRA Series 7, 63, and 65
registrations and maintains the CSCP (Certified Securities Compliance Professionals) designation.
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TRADING
DIANE BROMFIELD Senior Equity Trader 24 years experience
Diane is our Equity Trader and is responsible for all aspects of the trading environment which includes domestic, international, and
currency trades. She maintains our commission purposes; reconciles our holdings between our OMS and Accounting systems; and
explores and keeps up-to-date on any new trading/technology ideas.
Prior to joining Herndon Capital Management, LLC., Diane was an Equity Trader with INVESCO Capital Management. Her extensive
career there began in 1987 under the firm name Citicorp Investment Management, then Chancellor Capital Management and more
recently INVESCO. While there she held positions of Equity Trader with a concentration in blind principal bid trading as well as agency
trading; Trade Operations Manager responsible for trade settlement/Operations/OMS administration; and Chancellor Business
Administrator responsible for new/closed accounts.
Diane received an MBA from St. John’s University, and a Bachelor of Science degree in Finance also from St. John’s University
graduating summa cum laude. She holds the FINRA Series 7 registration.
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SHANNON D. BARNES Director of Operations 24 years experience
Shannon is our Director of Operations. Her operational functions include overseeing a department responsible for client
reporting, portfolio accounting, account reconciliations and trade settlement.
Prior to joining Herndon Capital Management, LLC, Shannon was a Financial Service Representative at SunTrust Bank. Prior
to that she spent 9 years at Peachtree Asset Management rising from Portfolio Associate/Operations Coordinator to Assistant
Vice President. Shannon began her career in the financial industry at SunTrust Bank as a Marketing Assistant and later
transferred to Corporate Banking before moving on to SunTrust’s investment division, Trusco Capital Management.
Shannon received a Bachelor of Science degree in Business Education from the University of Southern Mississippi.
OPERATIONS
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