Value invest

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March 2013 One Strategy – Two Funds: ValueInvest LUX Global ValueInvest LUX Japan

Transcript of Value invest

Page 1: Value invest

March 2013

One Strategy – Two Funds:

• ValueInvest LUX Global • ValueInvest LUX Japan

Page 2: Value invest

About Us

FoundationOwnership

Area of business

Investment approach

AUM company

Number of Employees

Available Products

� 1998 in Luxembourg� 13 banks and employees are majority shareholders

� Highly specialized investment management company� Exclusively engaged in equity investments� One investment approach for Global and Japan Equity

� Large Cap Value, Long only, Fully invested� Fundamental, Bottom up portfolio construction� Absolute return/risk oriented

� Approximately EUR 2.14 billion / USD 2.79 billion

� 15 employees servicing more than 30,000 clients and investors

� ValueInvest LUX SICAV� Investeringsforeningen ValueInvest Danmark� Segregated Institutional Accounts

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Our Mission

Caution is a virtue

…and so we must live with the return.

� To preserve and build our clients’ capital.

� To aim for high absolute returns in combination with low down-side risk.

� To achieve above-average returns requires patience and a long-term investment perspective.

� To share our knowledge and to provide full transparency to ourcustomers.

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Limited downside risk generates long term outperfor mance.

Historical Performance - GlobalValueInvest AM Global Composite returns in EURin %

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34.9

8.9

18.8

-13.3

18.7 18.522.1

16.8

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32.5

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44.8

-6.1

-12.5

-32.4

11.7

5.4

26.3

7.5

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-38.1

26.8

19.6

-2.5

13.8

6.32.4

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1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Feb 2013 Annualized

Comp Global MSCI World

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Limited downside risk generates long term outperfor mance.

Historical Performance - JapanValueInvest AM Japan composite returns in EUR

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in %

43.6

1.8 0.1

-8.6

12.1

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29.0

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-14.6

5.50.3

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9.6 8.4

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-4.8

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1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Feb 2013 Annualized

Comp Japan MSCI Japan

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� The market is inefficient in the short term – thus mispricing company stock.

Like the owl…

…observant and cautious…

Investment Philosophy

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� Low risk of permanent losses is achieved by purchasing quality companies at prices significantly below fair value.

� We are value investors investing in companies trading at a substantial discount to their intrinsic value.

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Investment Process

ValuationFilter

FundamentalAnalysis

PortfolioImplementation

Screening and idea generation~7,500 Fair Value Calculations(including ~ 1,300 for Japan)

based onValue Invest AM’s Fair Value Model

Business Analysis200-300 Global investment ideas

(including 60-80 in Japan) analysed for recurring income

Selection

Summary

Portfolios Global: 40-70 companiesJapan: 20-40 companies

Investment UniverseGlobal: ~ 20,000 companies ex financialsJapan: ~ 2,400 companies ex financials

Monitoring & Risk Management

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GICS® Sub-Industries (examples)

GICS® Sub-Industries (examples)

Risk premiums are assigned

AA A-1A-1 A-2A-2 A-3A-3 A-4A-4Household ProductsHousehold Products

BB B-1B-1 B-2B-2 B-3B-3BrewersBrewers

CC C-1C-1 C-2C-2Specialty ChemicalsSpecialty Chemicals

DD D-1D-1Motorcycle ManufacturersMotorcycle Manufacturers

EESemiconductorsSemiconductors

25%25% 50%50% 75%75% 100%100% 150%150%VIAM Risk Premium*

Net Debt < than EBITDA

* Relating to the 10-year government bond yield

5x5x 4x4x 3x3x 2x2x 1x1x

B) Quality check:

A) An industry risk evaluation is allocated to each individual company

Industry Risk & Company Rating

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Investment Process

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A. Understand business models and evaluate earnings stability

B. Refine Fair Value Calculation by adjusting for:

� Non-recurring operating income

� Number of outstanding shares according to issued stock options etc.

� Pension liabilities

C. Evaluate the company’s earnings growth expectation (max. 2 years)

Fundamental business analysis

Investment Process

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Fair ValueMarket Cap.

> EUR 10 bn

> EUR 1 bn

> EUR 500 m

> EUR 5 bn

> EUR 100 m

> EUR 250 m

% of Fair Value VIAM is looking to pay

Required Safety Margin

65%

55%

60%

50%

45%

40%

> EUR 50 m

< EUR 50 m

35%

30%70%

40%

35%

45%

50%

55%

60%

65%

Size and liquidity of companies are essential elemen tsof optimal portfolio construction.

Assigning margin of safety

Investment Process

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Portfolio construction: Bottom up

Risk management portfolio level

� Risk categories ≥ 67% of portfolio.

� Ensuring sufficient diversification.

Risk management company level

� Maximimum position weighting: 7,5% .� Monitoring of Fair Value, safety margin and debt criteria.

Portfolio Construction and Risk

AA BB CC

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The value of the stock selection process

Sector Performance (2003-2012)

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Portfolios always had a large exposure in Consumer Staples and Health Care (60-75%).

ValueInvest AM Global Composite accumulated a perfor mance of 151% from 2003 – 2012 .

0%

20%

40%

60%

80%

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120%

140%

160%

Source: ValueInvest Asset Management and Bloomberg Data

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7.0%

34.9%

31.5%

15.0%

11.6%

Global investment universe according to ValueInvest industry risk categories

A - very low riskB - low riskC - medium riskD - high riskE - very high risk

31.7%

51.3%

13.3%

3.4% 0.3%

ValueInvest LUX Global Fund accordingto ValueInvest industry risk categories

A - very low riskB - low riskC - medium riskD - high riskE - very high risk

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Dispersion of ValueInvest risk categories GLOBAL

Portfolio Characteristics

* Operating profit / (market capitalisation + net debt) Source: Bloomberg, ValueInvest; as of 28/02/2013.

Comparison of key figures: Screenings vs. ValueInvest LUX Global:

58% of all 6,991 companies ex financialsin the Global univers represent medium,high or very high risk (C, D und E).

83% of all portfolio holdings ofValueInvest LUX Global are groupedin the lowest risk categories(A und B).

Global Equities ValueInvestScreening LUX Global Conclusion

Dividend Yield 2.5% 3.3% � Higher dividend yieldEarnings Yield* 8.7% 9.5% � Higher earnings yieldNet debt / EBITDA 1.7 1.3 � Lower debt Price / ValueInvest Fair Value 59.0% 46.6% � Lower ValuationReturn potential 69.6% 114.6% � Higher return potentialGrowth estimate 14.7% 1.3% � Conservative growth

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Sector Allocation Country Allocation

Portfolio CharacteristicsValueInvest Lux Global as of 28.02.2013

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0%

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ValueInvest LUX Global A MSCI World

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60%

ContinentalEurope

Far East incl.Japan

UK Other USA + Canada

ValueInvest LUX Global A MSCI World

Company top 10Country Sector Industry Company Rating Weight

General Mills United States Consumer Staples Food Products A 5.3%Nestle Switzerland Consumer Staples Food Products A 5.2%Kimberly-Clark United States Consumer Staples Household Products A 5.1%GlaxoSmithKline United Kingdom Health Care Pharmaceuticals B 4.9%Pfizer United States Health Care Pharmaceuticals B 4.6%Ahold Netherlands Consumer Staples Food & Staples Retailing B 4.0%Microsoft United States Information Technology Software B 3.7%Roche Switzerland Health Care Pharmaceuticals B 3.6%Merck & Co United States Health Care Pharmaceuticals B 3.6%Staples United States Consumer Discretionary Specialty Retail C 3.4%

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Conclusion

ValueInvest LUX Global & ValueInvest LUX Japan are well equipped to earn solid long-term equity returns – with a low downside!

Our mission:Aiming for high absolute returns with low downside risks

� Diciplined value-driven investment process

� Long-term track record

� Low risk profile

� 100% transparency for investors

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Contacts

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ValueInvest Asset Management S.A.36, rue Marie-AdelaïdeL-2128 Luxembourg

Jacob VendelboDirector, Client RelationsTel +352 31 51 55 63GSM +352 621 31 51 63

mailto:[email protected]

Markus Wiering, CFADirector, Client RelationsTel +352 31 51 55 62GSM +352 621 31 51 62

mailto:[email protected]

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Appendix

� ValueInvest AM Global Composite� Historical Performance

� ValueInvest AM Japan Composite� Portfolio Characteristics Japan� Historical Performance

� Portfolio Management Team - Biographies

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ValueInvest AM Global Composite returns in EUR

Historical Performance

ValueInvest AMGlobal Composite

Global MSCI World Global MSCI World Global MSCI World Glo bal MSCI World

Accumulated return (%) 151.24 63.89 46.32 10.32 28.48 4.22 21.92 32.81

Annual return (%) 9.65 5.06 5.59 1.41 5.14 0.83 6.83 9.92

Value added (p.a.%) 4.59 4.18 4.31 -3.09

Standard deviation (p.a.%) 10.60 13.11 11.23 13.89 12.36 15.53 7.90 10.10

Sharpe ratio 0.58 0.12 0.19 -0.15 0.13 -0.17 0.42 0.64

Beta 0.68 0.69 0.69 0.59

Tracking error (p.a.%) 5.79 5.90 6.24 5.28

Information ratio 0.79 0.71 0.69 -0.59

Treynors measure (%) 9.06 1.56 3.03 -2.09 2.38 -2.67 5.65 6.42

Jensen`s alpha (%) 5.09 3.53 3.48 -0.45

* Returns are gross of PM and adm. fees * M SCI World with dividends reinvested * All numbers are in EUR and based on monthly data

(10 years)31.12.2002 - 31.12.2012 31.12.2005 - 31.12.2012

(7 years)31.12.2009 - 31.12.2012

(3 years)31.12.2007 - 31.12.2012

(5 years)

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260Global Composite

MSCI World

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MSCI World

Acc. Return 31.12.2002 - 31.12.2012 (10 years) Acc. Return 31.12.2007 - 31.12.2012 (5 years)

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Historical Performance

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Return Global 34.92% 8.91% 18.83% -13.33% 18.66% 18.53% 22.08% 16.75% -2.46% -20.46% 32.48% 15.00% -2.96% 9.25%

Return MSCI World 44.84% -6.13% -12.47% -32.43% 11.66% 5.38% 26.26% 7.55% -1.58% -38.09% 26.76% 19.63% -2.45% 13.81%

Value added (p.a) -9.92% 15.04% 31.30% 19.10% 7.00% 13.15% -4.18% 9.20% -0.88% 17.63% 5.72% -4.63% -0.51% -4.57%

Std. dev. Global (p.a.) 19.20% 13.41% 16.06% 13.83% 11.51% 7.35% 6.90% 7.61% 7.70% 15.11% 16.50% 6.80% 10.49% 5.40%

Std. dev. MSCI World (p.a.) 14.99% 17.97% 20.20% 21.80% 15.43% 5.30% 9.73% 8.61% 9.23% 19.59% 17.75% 10.42% 12.10% 7.04%

Sharpe ratio: Global 1.64 0.40 0.95 -1.22 1.32 2.04 2.69 1.74 -0.77 -1.59 1.76 1.69 -0.62 1.06

Sharpe ratio: MSCI World 2.76 -0.54 -0.79 -1.65 0.53 0.35 2.34 0.47 -0.55 -2.12 1.31 1.55 -0.49 1.47

Beta 0.27 0.63 0.63 0.52 0.59 1.16 0.59 0.71 0.62 0.65 0.89 0.46 0.66 0.58

Tracking error (p.a.) 19.68% 7.57% 10.31% 8.42% 7.46% 4.24% 4.02% 4.79% 5.41% 8.68% 4.77% 5.04% 7.20% 3.69%

Information ratio -0.50 1.99 3.04 2.27 0.94 3.10 -1.04 1.92 -0.16 2.03 1.20 -0.92 -0.07 -1.24

Treynors measure Global 115.42% 8.60% 24.37% -32.53% 25.87% 12.97% 31.53% 18.75% -9.61% -37.13% 32.44% 24.93% -9.86% 9.87%

Treynors measure MSCI World 41.34% -9.63% -15.97% -35.93% 8.16% 1.88% 22.76% 4.05% -5.08% -41.59% 23.26% 16.13% -5.95% 10.31%

Jensen`s alpha 20.17% 11.47% 25.38% 1.73% 10.38% 12.86% 5.17% 10.39% -2.81% 2.88% 8.21% 4.06% -2.56% -0.26%

• Returns are gross of portfolio management and adm inistration fees

• MSCI World with dividends reinvested

• All numbers in currency EUR and based on monthly data

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ValueInvest AM Global Composite returns in EUR

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3.7%

29.8%

28.1%

17.3%

21.1%

JAPAN investment universe according to ValueInvest industry risk categories

A - very low riskB - low riskC - medium riskD - high riskE - very high risk

12.8%

68.2%

12.1%

5.7% 1.2%

ValueInvest LUX JAPAN Fund accordingto ValueInvest industry risk categories

A - very low riskB - low riskC - medium riskD - high riskE - very high risk

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Dispersion of ValueInvest risk categories JAPAN

Portfolio Characteristics

* Operating profit / (market capitalisation + net debt) Source: Bloomberg, ValueInvest; as of 28/02/2013.

Comparison of key figures: Screenings vs. ValueInvest LUX Japan:

67% of all 1,453 companies ex financialsin the Japan univers represent medium,high or very high risk (C, D and E).

81% of all portfolio holdings ofValueInvest LUX Japan are groupedin the lowest risk categories(A and B).

Japan Equities ValueInvestScreening LUX Japan Conclusion

Dividend Yield 1.9% 2.4% � Higher dividend yieldEarnings Yield* 6.8% 12.0% � Higher earnings yieldNet debt / EBITDA 2.4 no debt � Lower debt Price / ValueInvest Fair Value 83.4% 46.7% � Lower ValuationReturn potential 19.9% 114.2% � Higher return potentialGrowth estimate 6.1% -0.4% � Conservative growth

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Sector Allocation

ValueInvest LUX Japan as of 28.02.2013

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Portfolio Characteristics

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ValueInvest LUX Japan A MSCI Japan

Company top 10Country Sector Industry Company Rating Weight

Asahi Group Japan Consumer Staples Beverages B 6.6%FamilyMart Japan Consumer Staples Food & Staples Retailing B 5.6%KDDI Corp Japan Telecommunication Services Wireless Telecommunication Services D 5.5%IT Holdings Japan Information Technology IT Services B-1 5.3%Konica Minolta Japan Information Technology Office Electronics C 5.0%Mitsubishi Tanabe Japan Health Care Pharmaceuticals B 4.9%House Foods Japan Consumer Staples Food Products A-1 4.9%Kirin Japan Consumer Staples Beverages B 4.9%Ono Pharmaceutical Japan Health Care Pharmaceuticals B 4.6%Kao Japan Consumer Staples Household Products A-1 4.6%

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ValueInvest AM Japan Composite returns in EUR

Historical Performance

ValueInvest AMJapan Composite

Japan MSCI Japan Japan MSCI Japan Japan MSCI Japan Japan M SCI Japan

Accumulated return (%) 113.50 28.59 22.23 -26.79 41.85 -11.01 34.07 16.20

Annual return (%) 7.88 2.55 2.91 -4.36 7.24 -2.31 10.27 5.13

Value added (p.a.%) 5.33 7.27 9.55 5.14

Standard deviation (p.a.%) 12.56 16.38 12.07 14.50 13.44 16.13 13.67 14.22

Sharpe ratio 0.51 0.06 0.12 -0.40 0.43 -0.24 0.64 0.26

Beta 0.57 0.56 0.58 0.68

Tracking error (p.a.%) 8.41 8.95 9.80 9.78

Information ratio 0.63 0.81 0.97 0.53

Treynors measure (%) 11.16 1.05 2.50 -5.86 9.97 -3.81 12.85 3.63

Jensen`s alpha (%) 5.78 4.71 7.93 6.29

* Returns are gross of PM and adm. fees * M SCI Japan with dividends reinvested * All numbers are in EUR and based on monthly data

31.12.2009 - 31.12.2012(3 years)

31.12.2007 - 31.12.2012(5 years)(10 years)

31.12.2002 - 31.12.2012 31.12.2005 - 31.12.2012(7 years)

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MSCI Japan60

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MSCI Japan

Acc. Return 31.12.2002 - 31.12.2012 (10 years) Acc. Return 31.12.2007 - 31.12.2012 (5 years)

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Historical Performance

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Return Japan 43.59% 1.77% 0.12% -8.57% 12.06% 20.84% 28.99% 0.88% -14.59% 5.50% 0.28% 25.11% 7.37% -0.19%

Return MSCI Japan 87.27% -22.33% -25.71% -24.33% 14.01% 6.43% 44.75% -4.83% -13.56% -26.08% 3.61% 23.56% -11.53% 6.30%

Value added (p.a) -43.68% 24.10% 25.83% 15.76% -1.95% 14.41% -15.76% 5.71% -1.03% 31.59% -3.33% 1.55% 18.90% -6.49%

Std. Dev. Japan (p.a.) 31.51% 22.23% 18.46% 9.74% 11.33% 17.53% 10.64% 6.51% 6.80% 9.73% 16.53% 13.19% 17.26% 9.89%

Std. Dev. MSCI Japan (p.a.) 18.80% 24.48% 19.21% 18.45% 23.28% 20.15% 14.62% 10.50% 8.17% 17.53% 18.96% 13.40% 18.31% 8.93%

Sharpe Ratio: Japan 1.34 0.01 -0.07 -1.03 0.93 1.10 2.58 -0.09 -2.37 0.41 -0.07 1.79 0.34 -0.17

Sharpe Ratio: MSCI Japan 4.62 -0.97 -1.42 -1.40 0.54 0.24 2.96 -0.60 -1.84 -1.57 0.11 1.65 -0.71 0.54

Beta 1.14 0.80 0.71 0.40 0.43 0.79 0.61 0.47 0.21 0.36 0.68 0.78 0.86 -0.11

Tracking error (p.a.) 24.21% 11.12% 12.98% 6.71% 5.79% 7.91% 6.10% 4.47% 6.90% 7.70% 10.75% 8.52% 7.61% 10.33%

Information Ratio -1.81 2.17 1.99 2.35 -0.34 1.82 -2.58 1.28 -0.15 4.10 -0.31 0.18 2.49 -0.63

Treynors measure Japan 36.82% 0.34% -1.93% -25.28% 24.85% 24.62% 45.11% -1.31% -76.01% 10.99% -1.78% 30.42% 6.86% 15.45%

Treynors measure MSCI Japan 85.75% -23.83% -27.21% -25.83% 12.51% 4.93% 43.25% -6.33% -15.06% -27.58% 2.11% 22.06% -13.03% 4.80%

Jensen`s alpha -55.91% 19.35% 18.02% -0.22% 5.24% 15.47% 1.13% 2.35% 12.90% 14.06% -2.66% 6.49% 17.01% -1.17%

• Returns are gross of portfolio management and adm inistration fees

• MSCI Japan with dividends reinvested

• All numbers in currency EUR and based on monthly data

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ValueInvest AM Japan Composite returns in EUR

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Jens HansenHead of Investments and Portfolio Manager

Jens Hansen joined ValueInvest in2001. He was born in 1964 andattended the Aarhus School ofBusiness where he gained a GraduateDiploma in Business Administrationwithin Finance and International Trade.Jens started his career with Spar NordBank in 1982 where he worked as ananalyst and trader of bonds, equitiesand derivatives. In 1994 he joinedNykredit Bank where he worked as abond trader. He manages a number offunds using a systematic bottom-upinvestment process.

Portfolio Management Team Biographies

Klaus Petersen, CFAPortfolio Manager

Klaus Petersen joined ValueInvest in2006. He was born in 1964 andattended the Copenhagen School ofEconomics where he gained aGraduate Diploma in BusinessAdministration (Financial and Manage-ment Accounting). He started his careerin 1984 as an administrator of pensionpools at Faellesbanken in Denmark.Between 1988 and 1996 he worked forvarious brokers as an equity salesanalyst. Klaus joined Codan Bank in1996, first as a senior sales analyst,and later as a senior portfolio managerbefore joining ATP in 1999, Denmark’slargest pension fund, as a seniorportfolio manager and later in the roleas team leader of the TMT team. Klausis a CFA charterholder.

Claus JuulPortfolio Manager

Claus Juul joined ValueInvest in 2004.He was born in 1970 and attendedAarhus School of Business where hegained a Masters degree in Economicsand Business Administration. He startedhis career in 1998 with Sydbank as anequity analyst before moving to SparNord Bank in 1999 in the same rolebefore becoming the vice president ofthe research department in 2001.

Denis Kostyukovich, CFAPortfolio Manager

Denis Kostyukovich joined ValueInvestin 2006. He was born in 1977 andattended Pepperdine University, Malibu,USA where he gained a BSc inFinance. He started his career in 1997as an analyst in risk and portfoliomanagement with AvtomobilniyBankiskiy Dom in Russia. Denis joinedCSFB in 2000 as an equity researchassociate before joining AVTOVAZGroup in 2001 as a financial analyst.Denis is a CFA charterholder.

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Page 25: Value invest

Caution is a virtue

…and so we must live with the return.

Disclaimer:Any information published in this presentation is meant exclusively as information and not as an offer or recommendation to buy or sell anyinvestment instrument.

Any economic transaction based on the information in this presentation is on the investor’s own risk and account. ValueInvest AssetManagement S.A. declines to accept any liability for damages caused by the use of the information in this presentation. Investors arerecommended to seek professional advice before investing in ValueInvest Asset Management’s products.

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