Скачать презентацию Managed risk investing Joe Jugovic CFA President Скачать презентацию Managed risk investing Joe Jugovic CFA President

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Managed risk investing Joe Jugovic, CFA President Managed risk investing Joe Jugovic, CFA President

QV Investors History • Founded in 1996 on the principles of Quality & Value QV Investors History • Founded in 1996 on the principles of Quality & Value • Employee-owned, independent investment counsel • Repeatable, proven value-based processes • All employees of QV are personally invested in the funds they manage

Equity investing Investment philosophy We buy a portfolio of enduring businesses run by capable, Equity investing Investment philosophy We buy a portfolio of enduring businesses run by capable, committed, and candid people. We select equities on good value, that is the price we pay for a company’s assets and their return on equity. We hold our good business positions for an indefinite period. Our goal is to provide consistent growth with below average risk

Equity investing Company analysis & security selection Management Share ownership, years of leadership, succession Equity investing Company analysis & security selection Management Share ownership, years of leadership, succession planning, compensation, board & operational team, corporate governance. Financial record Demonstrated record of growth in equity, earnings, sales and cash flow or demonstrated management of asset base. Franchise & outlook Innovation, service, product or resource development. Competitive position. Business outlook. Balance sheet strength Equity financed balance sheet versus debt. Sensible allocation of capital. Valuation P/E’s, P/CF’s, P/B’s and NAV’s below market. Reasonable relative to ROE’s and ROIC’s above market. Assessment of downside risk. Dividends & capital allocation Free cash flow to increase dividends. Culture of dividends. Sensible capital allocation. Portfolio enhancement New selections enhance portfolio characteristics, quality, diversification and growth.

Equity investing Buy discipline – Canadian equity example – Canadian utilities Book Value per Equity investing Buy discipline – Canadian equity example – Canadian utilities Book Value per Share 30 Return on Equity (%) Dividends / Share 20 1. 6 18 25 16 14 15 1. 2 12 20 1. 4 1. 0 10 0. 8 8 10 0. 6 6 0. 4 4 5 0. 2 2 0. 0 0 0 97 98 99 00 01 02 03 04 05 06 07 08 09 10 19 19 19 20 20 20 20 20 20 97 98 99 00 01 02 03 04 05 06 07 08 09 10 19 19 19 20 20 20 Consistent long-term appreciation in firm value with a commitment to shareholders Source: CPMS

Equity investing Buy discipline – Canadian equity example – Canadian utilities 10. 0 x Equity investing Buy discipline – Canadian equity example – Canadian utilities 10. 0 x $9. 00 CFPS 9. 0 x $8. 00 8. 0 x Price $7. 00 CFPS 7. 0 x $6. 00 6. 0 x $5. 00 5. 0 x $4. 00 4. 0 x Dec-99 Dec-00 Source: Capital IQ Dec-01 Dec-02 Dec-03 P/CF Dec-05 Dec-04 (LHS) CFPS (RHS) Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 $3. 00 Dec-11

Equity investing Buy discipline – Canadian equity example – Canadian Utilities $100 K + Equity investing Buy discipline – Canadian equity example – Canadian Utilities $100 K + Dividends + Capital Gains = $390 K Cumulative Dividends from 100 K Investment Dividend/share $0. 90 $0. 94 $0. 98 $1. 02 $1. 06 $1. 10 $1. 40 $1. 25 $1. 33 $1. 41 $1. 51 $1. 61 Source: Capital IQ

Equity investing Buy discipline – Canadian small cap equity example – Leon’s Furniture Ltd. Equity investing Buy discipline – Canadian small cap equity example – Leon’s Furniture Ltd. 25 7 6 Dividends / Share Return on Equity (%) Book Value per Share 20 5 0. 6 0. 5 0. 4 15 4 3 0. 3 10 0. 2 5 0. 1 1 0 19 9 19 7 9 19 8 9 20 9 0 20 0 0 20 1 0 20 2 0 20 3 0 20 4 05 20 0 20 6 0 20 7 0 20 8 0 20 9 10 19 9 19 7 9 19 8 9 20 9 0 20 0 0 20 1 0 20 2 0 20 3 04 20 0 20 5 0 20 6 0 20 7 0 20 8 0 20 9 10 0 0 19 9 19 7 9 19 8 9 20 9 00 20 1 0 20 2 0 20 3 04 20 0 20 5 0 20 6 07 20 0 20 8 0 20 9 1 20 0 11 2 Consistent long-term appreciation in firm value with a commitment to shareholders Source: CPMS

Equity investing Buy discipline – Canadian small cap equity example – Leon’s Furniture Ltd. Equity investing Buy discipline – Canadian small cap equity example – Leon’s Furniture Ltd. 0. 92 - 24. 55 0. 79 - 21. 74 EPS 0. 66 - Price 18. 94 EPS 0. 53 - 16. 14 0. 40 - 13. 34 0. 27 - 10. 54 0. 14 - 7. 74 0. 01 - 4. 94 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Source: CPMS

Equity investing Buy discipline – Canadian small cap equity example – Leon’s Furniture Ltd. Equity investing Buy discipline – Canadian small cap equity example – Leon’s Furniture Ltd. $100 K + Dividends + Capital Gains = $285 K Cumulative Dividends from 100 K Investment Dividend/share $0. 10 $0. 25 $0. 13 $0. 19 $0. 20 $0. 38 $0. 28 $0. 38 $0. 48 $0. 32 Source: Capital IQ

Equity investing Sales discipline Failure of our buying tests or attractive alternative: • Management Equity investing Sales discipline Failure of our buying tests or attractive alternative: • Management turnover / material change in firm direction • Breakdown in profit/ cash flow consistency • Erosion of competitive position / negative future outlook • Increasing financial leverage • Excessive valuation / dividend failure

Equity investing Company analysis & security selection – Canadian equity Sale candidate – Canadian Equity investing Company analysis & security selection – Canadian equity Sale candidate – Canadian Oil Sands Trust – P/B 7. 0 x Price to Book 6. 0 x 5. 0 x 4. 0 x 3. 0 x 2. 0 x 1. 0 x 0. 0 x 1997 Source: Capital IQ 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Equity investing Company analysis & security selection – Canadian equity Sale candidate – Research Equity investing Company analysis & security selection – Canadian equity Sale candidate – Research In Motion P/B 50. 0 x Price to Book 45. 0 x 40. 0 x 35. 0 x 30. 0 x 25. 0 x 20. 0 x 15. 0 x 10. 0 x 5. 0 x 0. 0 x 1997 Source: Capital IQ 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Equity investing Risk management philosophy Risk is the permanent loss of our clients’ capital. Equity investing Risk management philosophy Risk is the permanent loss of our clients’ capital. We manage the valuation, growth, balance sheet, and diversification risks of the portfolio. Our process keeps us consistent over time

Equity risk management Canadian small cap equity Price to earnings QV Cdn Small Cap Equity risk management Canadian small cap equity Price to earnings QV Cdn Small Cap Equities Source: Capital IQ 4 -year average ROE BMO Small Cap Index

Equity risk management Canadian small cap equity Debt to equity QV Cdn Small Cap Equity risk management Canadian small cap equity Debt to equity QV Cdn Small Cap Equities Source: Capital IQ Dividend yield BMO Small Cap Index

Equity risk management Sector allocation – all cap Cdn. Equity As of March 31, Equity risk management Sector allocation – all cap Cdn. Equity As of March 31, 2012 Diversification measures Industry • 25% maximum Portfolio Positioning • 25 holdings • 1% minimum - limit • 6% maximum - limit

Equity risk management Top 10 holdings – all cap Cdn. Equity As of March Equity risk management Top 10 holdings – all cap Cdn. Equity As of March 31, 2012

Performance review All Cap Cdn. Equity Annualized returns as at March 31, 2012 20% Performance review All Cap Cdn. Equity Annualized returns as at March 31, 2012 20% All Cap Cdn. Equity Annualized returns as at March 31, 2012 10% 0% -10% 3 Mos 6 Mos 1 Year All Cap Cdn Equity 2 Year S&P/TSX Composite 3 Year Inception

Equity risk management Sector allocation – CI Can Am Fund As of March 31, Equity risk management Sector allocation – CI Can Am Fund As of March 31, 2012 Diversification measures Industry • 25% maximum Portfolio Positioning • 29 holdings • 1% minimum - limit • 6% maximum - limit ^ S&P Citigroup EMI 50: 50% S&P Citigroup EMI (CDA); 50% S&P Citigroup EMI (US)

Equity risk management Top 10 holdings – CI Can Am Fund As of March Equity risk management Top 10 holdings – CI Can Am Fund As of March 31, 2012

CI Can-Am Small Cap Corporate Class YTD 1 Year CI Can-Am Small Cap Corporate CI Can-Am Small Cap Corporate Class YTD 1 Year CI Can-Am Small Cap Corporate Class 7. 2% 0. 1% 8. 1% 3. 9% 10. 8% 2 1 3 1 1 Quartile At March 31, 2012 3 Year 5 Year 10 Year

Current environment & outlook Current environment & outlook

What’s next? • Artificially low rates = artificial growth = high volatility • Government What’s next? • Artificially low rates = artificial growth = high volatility • Government austerity = slow growth/private sector healing • Dividend yields = support in tough markets…to a degree • Value & strong balance sheets = positive risk management

“There is no such thing as a free lunch” “There is no such thing as a free lunch”

Equities better valued Source: John Aitkens, TD Securities, March 2012 Equities better valued Source: John Aitkens, TD Securities, March 2012

Diversification will matter Source: RBC Capital Markets, Haver Analytics Diversification will matter Source: RBC Capital Markets, Haver Analytics

Economics vs. company analysis After-tax profit margin from current production, 1948 -2010 Source: Ed Economics vs. company analysis After-tax profit margin from current production, 1948 -2010 Source: Ed Yardeni, www. yardeni. com The Gloom, Boom & Doom Report, October 2010

Equities…the lost decade Source: Barry Bannister, Stifel Nicolaus Equities…the lost decade Source: Barry Bannister, Stifel Nicolaus

Psychology Net Sales for Canadian Mutual Funds 30 25 20 15 10 Bond Funds Psychology Net Sales for Canadian Mutual Funds 30 25 20 15 10 Bond Funds 5 Equity Funds - Money Market Funds (5) (10) (15) (20) Source: IFIC & BMO

Bonds the favored asset class “For the first time in at least 12 years, Bonds the favored asset class “For the first time in at least 12 years, reports the 2012 Milliman Pension Funding Study, a canvass of corporate America’s 100 largest defined benefit plans, pension managers have ear-marked more funds for fixed income (41. 4%) than equities (38. 1%). Just five years ago, stocks got twice the allocation of bonds (60. 3% vs. 29. 3%)…” – GRANT’S Interest Rate Observer, Vol. 30, No. 7, April 6, 2012

Opportunity – dividends matter Source: RBC Capital Markets Quantitative Research Opportunity – dividends matter Source: RBC Capital Markets Quantitative Research

Power of dividends: dividends + asset Canadian equity example – Astral Media Inc. Cumulative Power of dividends: dividends + asset Canadian equity example – Astral Media Inc. Cumulative Dividend Income Share Value $100 K + Dividends + Capital Gains = $400 K$40, 000 $475, 000 $425, 000 Cumulative Dividends from 100 K Investment $35, 000 $30, 000 $375, 000 $20, 000 $9, 434 $325, 000 $275, 000 $225, 000 $5, 094 $1, 698 $20, 000 $15, 000 $10, 000 $5, 000 $0 $175, 000 -$10, 000 $125, 000 $75, 000 $25, 000 -$15, 000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD -$20, 000 Dividend/share $0. 23 $0. 15 $0. 08 $0. 20 $0. 30 $0. 40 $0. 50 $0. 75 Source: Capital IQ

Conclusion • Strong companies provide more stability • Great businesses provide growing income • Conclusion • Strong companies provide more stability • Great businesses provide growing income • Risk management protects capital

Thank you Commissions, trailing commissions, management fees and expenses all may be associated with Thank you Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise indicated and except for returns for periods less than one year, the indicated rates of return are the historical annual compounded total returns including changes in security value. All performance data assume reinvestment of all distributions or dividends and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. ®CI Investments and the CI Investments design are registered trademarks of CI Investments Inc.