Liontrust

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Liontrust

  1. 1. Profiting from Outstanding UK CompaniesAnthony CrossProfessional Investors and Advisers only
  2. 2. A Process for Exploiting Opportunities in UK Equities Company Strengths that Competitors Struggle to Reproduce The hardest to replicate: Intellectual Distribution Repeat property channels business Other intangible strengths: Franchises Customer databases and Procedures Culture Brand and licences relationships and formats 2
  3. 3. Economic Advantage Assets – Example portfolio Distribution of Portfolio Stocks Across the Three Hardest to Replicate Economic Advantage AssetsAstraZeneca, Bango,BG, BP, Dialight,Domino Printing, Intellectual Property Craneware, EMIS,GlaxoSmithKline, Advanced Computer Software, FFastFill, Fidessa,ICAP, IDOX, Intertek, Bond International, Brainjuicer, Hargreaves Lansdown,Progressive Digital Media, Concurrent Technologies, Petrofac, NCC, Rightmove,Renishaw, Rotork, StatproRoyal Dutch Shell, RWS,Spirax Sarco, Unilever,Weir, Wilmington, Smart MeteringWood Group,World Careers Network Distribution Recurring Network Compass Income Brooks Macdonald Aegis, Aggreko, Carpetright, Diageo, Domino’s Pizza, Michael Page, Next Fifteen Communications, Paypoint, Savills, Tullet PrebonSource: Liontrust Fund Partners LLP. Liontrust Special Situations portfolio as at May 2012. Provided as an example only of the occurrence of Economic Advantage assets in stocks typically purchased across the 3portfolio range.
  4. 4. Measuring Returns in Competitive Companies 10 UK Equity Market: Cash Flow Returns on Capital 9 8 7 6 5 4 3 2 1 0 2011* 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Cash Flow Returns on Capital Cost of CapitalSource: Collins Stewart Quest ™ 29th November 2011. Cash flow returns on capital: post-tax, real economic return on total invested capital. Cost of capital: real weighted average cost of capital. UK equity 4market as defined by Collins Stewart’s Quest database, which currently covers 530 UK companies ex financials, with a current combined market cap of £2,025bn. * Estimated values. Estimates are not areliable indicator of actual performance.
  5. 5. Financial Advantage – Value Creators and Destroyers GlaxoSmithKline International Consolidated Airlines Group SA25 8 8 6 620 4 4 2 215 0 0 -2 -210 -4 -4 -6 -6 5 -8 -8 0 -10 -10 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011* 2012* 2011* 2012* 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2002 2011* 2000 2001 2003 2004 2005 2006 2007 2008 2009 2010 Cash flow returns on capital Cost of capitalSource: Collins Stewart Quest ™ as at December 2010. * Estimated forecast values. Estimates are not a reliable indicator of actual performance. Cash flow returns on capital: post-tax, real economic return on 5total invested capital. Cost of capital: real weighted average cost of capital.
  6. 6. Employee Motivation – the “Owner-Manager” Culture Why motivate? Academic and statistical evidence Less financial gearing and fewer acquisitions Smaller companies – directors’ ownership of at least 3% Monitoring equity ownership – signals and relevance to all companies 6
  7. 7. Stock Example – Rightmove UK focused company with an amazingly powerful distribution network and recurring income 54% share of the online property advertising market - nearest competitor 6% Benefiting from structural change in market place from newspapers to online Online – great user experience versus old property advertising High margins, great cashflow Financial Advantage Rightmove Share Price 1,800 1,600 Bought in Special 1,400 Situations Bought in UK 25.02.10 1,200 Growth 1,000 13.05.09 800 600 400 200 0 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Aug-08 Dec-08 Aug-09 Dec-09 Aug-10 Dec-10 Aug-11 Dec-11Source: Collins Stewart Quest ™. Cash flow returns on capital: post-tax, real economic return on total invested capital. Cost of capital: real weighted average cost of capital. *Estimated values. Estimates are not 7a reliable indicator of actual performance. Rightmove Share Price source : Bloomberg, data as at 23 May 2012.
  8. 8. Stock Example – Spirax Sarco International engineer with great intellectual property and distribution network Dominant position in products for creating and regulating steam in industrial plants. Steam is used for efficient heating and cooling Growth driven by industrialisation of emerging markets and environmental / process costs (efficient steam use) High repeat business and very strong customer relationships through local sales and engineering support Amazing long-term financial performance. Has increased dividend year in year out Financial Advantage Spirax Sarco Share Price15 2,500 2,000 Bought in UK Growth10 1,500 21.07.2009 1,000 5 500 0 0 2000 2001 2002 2003 2004 2005 2006 2008 2009 2010 2007 2011* Apr-12 Apr-08 Jul-08 Apr-09 Jul-09 Apr-10 Jul-10 Apr-11 Jul-11 Oct-08 Oct-09 Oct-10 Oct-11 Jan-09 Jan-10 Jan-11 Jan-12 Cash flow returns on capital Cost of CapitalSource: Collins Stewart Quest ™. Cash flow returns on capital: post-tax, real economic return on total invested capital. Cost of capital: real weighted average cost of capital. * Estimated values. Estimates are not 8a reliable indicator of actual performance. Spirax Sarco Share Price source: Bloomberg, data as at 23 May 2012.
  9. 9. Quartile Ranking Since Launch/ Fund 1 Year 3 Years 5 Years Inception Liontrust Special Situations Fund (Launched 10.11.2005) 1st 1st 1st 1st Liontrust UK Growth Fund (Fund manager inception 25.03.2009) 1st 1st 1st 1st Liontrust UK Smaller Companies Fund (Launched 08.01.1998) 1st 1st 1st 1stSource: Financial Express as at 31 May 2012, total return, bid-to-bid. Past performance is not a guide to future performance. 9
  10. 10. Awards and RatingsLiontrust UK Growth Fund 5 Crown Rated, Financial Express 5 Crown Rated, Financial ExpressLiontrust UK Smaller Companies Fund Morningstar OBSR Analyst Rating™ of Bronze Investment Week Fund Manager of the Year Awards 2011 – UK Growth Sector 5 Crown Rated, Financial ExpressLiontrust Special Situations Fund Morningstar OBSR Analyst Rating™ of Bronze On the Citywire Selection list What Investment Unit Trust Awards 2012 – Best UK Equity Growth Fund AA rated by Citywire for their risk-adjusted performance fromAnthony Cross & Julian Fosh 30.04.2009 to 30.04.2012Anthony Cross FE Alpha Manager 2012Anthony Cross Citywire Top 100 UK All Companies Fund Manager of the Year 2009Julian Fosh FE Alpha Manager 2012 10
  11. 11. Strictly private and confidential informationLiontrust UK Growth Fund, Liontrust UK Smaller Companies Fund, Liontrust Special Situations FundImportant notice: This presentation is the property of Liontrust Investment Partners LLP (‘LIP’), authorised and regulated by the Financial Services Authority, andis strictly confidential. It contains information intended only for the person to whom it is addressed or presented, and is intended for evaluation purposes only,with no licence to use the content or materials within. In receiving this presentation, the recipient acknowledges and agrees that: i) in the event the recipient doesnot wish to pursue this matter, this presentation will be returned as soon as possible; ii) the recipient will not copy, fax, reproduce, divulge or distribute thisconfidential presentation, in whole or in part, without the express written consent of LIP; iii) all of the information herein will be treated as confidential materialwith no less care than that afforded to the addressee’s own confidential material of the most sensitive nature; iv) information herein may constitute material non-public information, disclosure of which may be prohibited by law, and the legal responsibility for its use is borne solely by the recipient. This presentation in noway constitutes an offer to sell, nor a solicitation to purchase securities in any company or investment product.The value of units in a unit trust and the income generated from them can fall as well as rise and are not guaranteed; investors may not get back the amountoriginally subscribed. Investors should not purchase the Fund referred to in this document except on the basis of information contained the Fund’s Prospectus.We recommend that investors who are not professional investors should contact their professional adviser. Past performance is not a guide to futureperformance. Investment in the Fund carries the risk of potential total loss of capital. Some smaller companies may be less liquid than larger companies and theprice swings in smaller company funds may therefore be greater than in larger company funds. The issue of units may be subject to an initial charge, which willhave an impact on the realisable value of the investment, particularly in the short term. Equity investment should always be considered as long term.The source of the data is provided by the Fund’s administrator, unless otherwise noted. Source and copyright: Citywire. Anthony Cross and Julian Fosh are AArated by Citywire for risk-adjusted performance from 30.04.2009 to 30.04.2012. Citywire information is proprietary and confidential to Citywire FinancialPublishers Ltd (‘Citywire’), may not be copied and Citywire excludes any liability arising out of its use.©2012 Morningstar. All Rights Reserved. The information, data, analyses, and opinions contained herein (1) include the proprietary information of MorningstarOBSR, (2) may not be copied or redistributed, (3) do not constitute investment advice offered by Morningstar OBSR, (4) are provided solely for informationalpurposes and therefore are not an offer to buy or sell a security, and (5) are not warranted to be correct, complete, or accurate. Morningstar OBSR shall not beresponsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses, or opinions or their use. TheMorningstar OBSR Analyst Rating™ is subjective in nature and reflects Morningstar OBSR’s current expectations of future events/behaviour as they relate to aparticular fund. Because such events/behaviour may turn out to be different than expected, Morningstar OBSR does not guarantee that a fund will perform in linewith its Morningstar OBSR Analyst Rating. Likewise, the Morningstar OBSR Analyst Rating should not be seen as any sort of guarantee or assessment of thecreditworthiness of a fund or of its underlying securities and should not be used as the sole basis for making any investment decision.The Prospectus or Simplified Prospectus for Liontrust’s Fund’s are available direct from Liontrust or from our website, www.liontrust.co.uk. 11

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