1Q13-BLM Midcap Growth Equity Flipbook


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  • Outperformed the benchmark average for the Quarter, 3 year, 5 year and since inception time periods.
  • Outperformed the benchmark average for the Quarter, 3 year, 5 year and since inception time periods.
  • Outperformed the benchmark average for the Quarter, 3 year, 5 year and since inception time periods.
  • 1Q13-BLM Midcap Growth Equity Flipbook

    1. 1. First Quarter 2013One Grand Central Place60 East 42ndStreet, 43rdFloorNew York, NY 10165
    2. 2. Organization & Resources
    3. 3.  Bennett Lawrence Management, LLC (BLM) is a 100% employee owned registeredinvestment advisor, focused solely on domestic growth stock investments dedicatedto building clients’ wealth through fundamental research with superior client service.Bennett Lawrence Management, LLC$562 million1– assets under managementTraditional Investment StrategiesAll Cap Growth EquityMidcap Growth EquitySmall Cap Growth Equity1. Preliminary as of March 31, 2013 (in US$).Firm OverviewLong / Short StrategiesAbsolute ReturnAll Cap Growth Equity(Domestic and Offshore)Small Cap Growth Equity
    4. 4. The Bennett Lawrence Investment TeamAverage Industry Experience22 YearsAverage Tenure at BLM10 YearsInvestment Professional Function Industry Experience CredentialsVan SchreiberChief Portfolio ManagerManaging Member48 yearsMBA, New York UniversityBS, Williams CollegeW. Alexander ElyPortfolio ManagerMember21 years BA, University of New HampshireDina PliotisConsumer AnalystMember25 yearsMBA, New York UniversityBS, Union CollegeNathan A. Mahrer, CFATechnology AnalystMember19 yearsMBA, George Washington UniversityBS, Colorado School of MinesJason P. GuptaHealth Care AnalystMember10 yearsMBA, The Wharton SchoolBA, University of MichiganAmy ZhangIndustrial, Energy &Basic Materials Analyst11 yearsMA, Dartmouth CollegeBA, Fudan University
    5. 5. Philosophy & ProcessAll Cap, Midcap and Small Cap Growth Equity
    6. 6. Investment PhilosophyEarnings growth drives stock prices.We believe that identifying major demand trends earlyand investing in competitively advantaged companiesbenefiting from these trends, will allow us to achieve ourobjective of long-term capital appreciation.
    7. 7. Investment ProcessGeneralEconomicOutlookIdentifyDynamicThemesInvest inCompetitivelyAdvantagedCompaniesManage Risk Develop expectationsfor economic growth,inflation, interest ratesand overall U.S.corporate profit growth Establish minimumearnings growth rate forportfolios Thematic investmentapproach that is fullyadaptable Identify at an early stage,major demands trendsthat are creating powerfulinvestment opportunities First Mover Advantage New Product Capability Leading Industry Position Strong Management Team Healthy Financial Condition Analyze stock, sector andportfolio exposure Comprehensive review ofbenchmark and factor risk
    8. 8. Portfolio ManagementSummary Growth Approximately 40 securities Sector exposure limited to high growth segments of the market Client-specific preferences reflected within portfolios Sector diversification, strict selection and sell disciplines, robust factorand comparative benchmark analysis Individual positions are thoroughly analyzed by at least two investmentprofessionals before being added to the universe Positions are generally trimmed if they appreciate to 6% of total portfolio Decline of 15% from cost triggers a position review Limited discovery potential Competitors disappoint Change in company fundamentalsInvestment Style Portfolio Structure Risk Management Company Selection Sell Discipline 
    9. 9. Risk ManagementFactor Analysis Comparative Benchmark Analysis Sophisticated software for factor analysis:– Momentum– Beta– Volatility– Growth Momentum is generally our largest factor risk:– Utilize Axioma risk model to:• Optimize entry points• Highlight extended positions• Identify correlated risks• Assist in navigating turns in the market Portfolio characteristics versus benchmark:– Valuation– Beta– Momentum– Quality (ROE) Benchmark performance attribution:– Top/bottom performing benchmark holdings(weighted & un-weighted)– Top/bottom performing industry/sector groups– Factor attribution related to benchmark performance Portfolio weightings versus benchmark:– Industry/sector comparison– Top weightings per sector
    10. 10. Why Bennett Lawrence? Firm:– Established in 1995– Senior management team, founders of BLM, in place over 15 years– Central investment philosophy utilized for over 25 years (strategy employed since 1987) Resources:– Over 20 years’ average experience among team of 6 seasoned investment professionals– Significant internal research capabilities:• Uncover unique, high growth investment opportunities by conducting our own primaryresearch• Field work, channel checks, surveys, industry conferences, one-on-one meetings, WallStreet analysts and industry experts– Robust risk management procedures Incentives:– Employee ownership allows for teamwork, accountability and succession– Investment team is compensated to make sound investment decisions for clients– Organization is focused solely on domestic growth stock investments
    11. 11. Product Update
    12. 12.  S&P 500 yield is greater than 10-year treasury yield Allocations to equities are at historic lows Massive amounts of liquidity Interest rates are at ultra low levels Decrease in Systematic Risk: Unemployment stabilizing Housing and autos are recovering China growth rates improving Europe stabilizingConstructive Outlook for Equity Markets
    13. 13. Equipment&MachinerySpecialty RetailBig Ticket ItemsSoftware as a ServiceExploration&ProductionBiotechnologyPharmaceuticalsHousing TechnologyInvestment Trends & ThemesLinking Exciting Growth Opportunities Energy & Efficiency Capital Spending  Health Care Housing & RelatedThe above information is preliminary as of 3/31/13 and based on the Midcap Growth Composite. Big Ticket & Specialty Retail
    14. 14. Cyclical Growth: Move from Preservation to AppreciationMassive amounts of Pent up Demand Corporations and Governments haveimproved balance sheets and are beginningto reinvest capital:- Pent up demand for replacement projects- Increased infrastructure spending- Rebounding industrial demandExamples:- Equipment and machinery Individuals are purchasing things they wantvs. things they need- Increased economic visibility and decreasedsystematic risk- Increase in consumer confidence and spending- Shift in consumer buying behavior:- 2008 to 2009: Staples- 2010 to 2011: Retail- 2012 to 2013: Big ticket itemsExamples:- New homes / home improvements- Cars, Boats, Motorcycles
    15. 15. Secular Growth: Innovation Creating Opportunity Software as a Service- Shift from users seeking data from the internet tocompanies using the internet to find data about itsusers- Cloud Computing: Increased need for storage,security, processing and manipulation of data- Companies seeking to monetize viewership- Continued increase in wireless users- Shift to smart devices (phones and tablets)resulting in a need for stronger network capabilities Biotechnology:- Investment in late stage companies providing aservice or a drug meeting a previously unmet ne- We seek companies with:- Massive markets- Proven data- Premier product(s) already introduced in themarket- Seeking to capitalize on peak revenues of premierproduct(s) of such companies- Decrease in systematic risk should compoundgrowth multiples
    16. 16. 1 year 3 year 5 year Since Inception*Return (%)BLM Midcap Grow th Composite (gross of fees) BLMMidcap Grow th Composite (net of fees) Russell Midcap Grow th IndexHistorical Performance vs. Russell Midcap Growth IndexMidcap Growth Composite11. Preliminary as of 3/31/13. Performance for periods greater than 1 year is annualized.*Inception 10/1/97.The information contained on this page is supplemental to the GIPS compliant compositecontained on the final pages of this presentation.
    17. 17. BLM Midcap Growth Composite vs. Russell Midcap Growth IndexSector weightings and top 10 holdingsSecurity Sector% NetAssets1United Rentals, Inc. Industrials 4.81Tenet Healthcare Corporation Health Care 4.34HCA Holdings, Inc. Health Care 4.03Manitowoc Company, Inc. Industrials 3.96Splunk, Inc. Information Technology 3.86Triumph Group, Inc. Industrials 3.69Dana Holding CorporationConsumerDiscretionary3.47Brunswick CorporationConsumerDiscretionary3.45Mohawk Industries, Inc.ConsumerDiscretionary3.33Oasis Petroleum Inc. Energy 2.98Total 37.92BLM Midcap Growth Composite1vs. Russell Midcap Growth IndexCashBLM Midcap 0.8%IndustrialsBLM Midcap 24.1%Russell Midcap 15.6%ConsumerDiscretionaryBLM Midcap 28.5%Russell Midcap 24.8%MaterialsBLM Midcap 2.0%Russell Midcap 6.2%HealthcareBLM Midcap 18.7%Russell Midcap 12.7%EnergyBLM Midcap 4.0%Russell Midcap 5.7%InformationTechnologyBLM Midcap 22.0%Russell Midcap 16.4%1. Preliminary as of 3/31/13.The information contained on this page is supplemental to the GIPS compliant compositecontained on the final pages of this presentation.Russell Midcap Growth Index sectors in which BLM had no weighting are not shown.
    18. 18. BLM Midcap Growth Composite vs. Russell Midcap Growth IndexPortfolio CharacteristicsBLM MidcapGrowth Composite1Russell MidcapGrowth IndexP/E 2013 (ex-neg)225.7x 18.6x2013/2012 EPS Growth Rate236.5% 9.2%2013 PEG Ratio 0.70 2.02Weighted Avg. Market Cap $7,293 MM $10,350 MMMedian Market Cap $5,547 MM $5,345 MM1. Preliminary as of 3/31/13. Inception 10/1/97.2. EPS Growth and P/E figures are weighted.3. Annualized.The information contained on this page is supplemental to the GIPS compliant compositecontained on the final pages of this presentation.BLM MidcapGrowth Composite(3-Year)1Russell MidcapGrowth IndexAlpha 1.88 -Beta 1.15 1.00R-Squared 0.92 1.00Sharpe Ratio30.72 0.68Standard Deviation324.94 20.81
    19. 19. BLM Midcap Growth CompositePeer Group RankingsSource: PSN EnterpriseBENNETT LAWRENCE MID CAP GROWTHQUARTILE RANKING BARPSN MID CAP GROWTHPERIODS ENDING MARCH 31, 2013-5051015202530RATEOFRETURN3/2012-3/2013 3/2010-3/2013 3/2008-3/2013 9/1997-3/2013HIGH (0.05) 20.29 20.62 13.51 13.98FIRST QUARTILE 13.67 16.25 9.88 9.90MEDIAN 11.11 14.37 8.34 8.97THIRD QUARTILE 8.69 12.71 6.73 6.89LOW (0.95) 2.44 8.91 3.50 5.70MEAN 11.12 14.48 8.36 8.72VALID COUNT 131 129 127 43Bennett Lawrence Mid Cap GrowthRussell Mid Cap Growth3/2012-3/2013 3/2010-3/2013 3/2008-3/2013 9/1997-3/2013VALUE RANK VALUE RANK VALUE RANK VALUE RANK7.79 82 17.94 11 7.95 54 8.82 5312.76 29 14.23 52 7.98 53 6.47 81
    20. 20. Appendix
    21. 21. Bennett Lawrence Midcap Growth Composite*Performance returns are preliminary as of March 31, 2013.• Returns are time weighted. The Midcap Growth Composite includes all fully discretionary accounts under management. Figures are not audited and are subject tochange. Individual investor results will vary.• Performance results are net of commissions paid on securities transactions and margin interest paid, and include dividends and interest earned.• Net returns reflect the deduction from the gross returns of an annual 1% management fee charged on a quarterly basis, which represents the highest advisory fee.Bennett Lawrence Management, LLC• The information provided in this report should not be considered a recommendation to purchase or sell any particular security. There is no assurance that any of theinvestments identified herein will remain in portfolios managed by Bennett Lawrence Management, LLC (BLM) or that information provided herein will remain thesame at the time you receive this report. The investments identified do not represent all of the investments purchased, sold or held by portfolios managed by BLM.It should not be assumed that investments were or will be profitable.• Portfolio characteristics are calculated by Bennett Lawrence Management, LLC, FactSet and PSN-Effron Enterprises, Inc.Russell Midcap Growth Index and the S&P 500 Index• The figures for the Russell Index and S&P 500 Index include dividends received and their reinvestment. The index returns do not, however, reflect any brokeragecommissions or management fees that might be incurred in actually investing in the securities representing these indexes. The Russell Investment Group is thesource and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. Indexreturns are calculated by the Frank Russell Company and Standard and Poor’s.• An investor cannot directly invest in an index.PSN Universe• The PSN universe is comprised of a group of composites/products with a similar investment objective. Performance is calculated by PSN. Performance is gross offees. Gross returns do not reflect the deduction of investment advisory fees. The deduction of such fees or other expenses will reduce a client’s return.DisclosuresPast performance is not a guarantee of future results.
    22. 22. N.A. - Information is not statistically meaningful due to an insufficient number of portfolios in the composite for the entire year.N.A.* - No sponsor accounts were present in the composite during the given year.* YTD 1997 performance is from October 1, 1997 through December 31, 1997.Composite Assets Annual Performance ReturnsYearEndTotal FirmAssets(millions)USD(millions)%SponsorNumberofAccountsCompositeGrossCompositeNetCompositeNet ofSponsor FeeRussellMidcapGrowthCompositeDispersion2011 503 206 1% 25 1.11% 0.10% -0.91% -1.65% 0.86%2010 558 44 2% 19 29.42% 28.20% 27.00% 26.38% 0.34%2009 782 55 15% 35 26.48% 25.28% 24.10% 46.29% 0.64%2008 832 49 14% 47 -42.72% -43.38% -44.04% -44.32% 0.90%2007 1,802 104 10% 53 24.67% 23.50% 22.33% 11.43% 1.11%2006 1,753 146 15% 74 4.75% 3.72% 2.69% 10.66% 1.23%2005 2,007 203 12% 65 8.46% 7.40% 6.35% 12.10% 1.14%2004 1,423 72 21% 24 22.48% 21.31% 20.16% 15.48% 1.37%2003 1,123 37 8% 13 35.69% 34.44% 33.19% 42.71% 1.73%2002 821 92 12% 12 -14.88% -15.76% -16.64% -27.41% 0.18%2001 1,175 132 7% 4 -15.23% -16.11% -17.00% -20.15% N.A.2000 1,542 8 0% 1 -3.95% -4.92% N.A.* -11.75% N.A.1999 1,652 8 0% 1 76.84% 75.29% N.A.* 51.29% N.A.1998 949 5 0% 1 13.31% 12.19% N.A.* 17.86% N.A.YTD 1997* 909 5 0% 1 -9.11% -9.36% N.A.* -2.75% N.A.Midcap Composite GIPS Compliant PresentationAnnual Disclosure
    23. 23. Midcap Composite contains fully discretionary midcap accounts and for comparison purposes is measured against the Russell Midcap Growth Index.Bennett Lawrence Management, LLC (BLM) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance withthe GIPS standards. BLM has been independently verified for the periods October 1, 1997 through December 31, 2007 by Ashland Partners & Company LLP.Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and proceduresare designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation. The MidcapComposite has been examined for the periods October 1, 1997 through December 31, 2007. The verification and performance examination reports are available upon request.BLM is an independent investment adviser registered under the Investment Advisers Act of 1940. The Midcap Composite was created March 2002. A list of composite descriptions isavailable upon request.Returns are based on fully discretionary accounts under management, including those accounts no longer with the firm. The U.S. Dollar is the currency used to express performance returns.Returns are net of commissions on securities transactions and margin interest paid, and includes dividends and interest earned. Gross returns are gross of management fees paid. Net returnsreflect the deduction from the gross returns of an annual 1% management fee charged on a quarterly basis, which represents the highest advisory fee. The management fee schedule for thestrategy is 1% on the first $5 million and 0.75% thereafter and is charged on a quarterly basis. Actual management fees incurred by clients may vary. Past performance is not indicative offuture results.Net of sponsor fee returns are calculated using an annual 1% sponsor fee, charged on a quarterly basis, which represents the highest sponsor fee provided. The sponsor fee is in addition to theadvisory fee. Sponsor fee accounts pay an all-inclusive fee to the sponsor based on a percentage of assets under management. Other than brokerage commissions, this fee may includeinvestment management, portfolio monitoring, consulting services, and in some cases, custodial services. Gross returns are supplemental for the periods that include sponsor accounts.Sponsor fee schedules are provided by independent wrap sponsors and are available upon request from the respective wrap sponsor.The annual composite dispersion presented is an asset-weighted standard deviation calculated for the accounts in the composite the entire year. Additional information regarding the policiesfor calculating and reporting returns is available upon request.The composite policy prior to January 1, 2011 required the temporary removal of any portfolio incurring a client initiated significant cash flow where there is a 50% or greater inflow or a10% or greater outflow of the portfolio assets. The significant cash inflow or outflow generated multiple transactions that would not fully represent the strategy. The temporary removal ofsuch an account to a non-discretionary composite occurred at the beginning of the calendar quarter in which the significant cash flow occurs and the account re-entered the composite at thebeginning of the calendar quarter following a full calendar quarter after the cash flow. The composite policy now requires the temporary removal of any portfolio incurring a client initiatedsignificant cash flow where there is a 25% or greater inflow or outflow of the portfolio assets. The significant cash inflow or outflow would generate multiple transactions that would not fullyrepresent the strategy. The temporary removal of such an account to a non-discretionary composite occurs at the beginning of the calendar quarter in which the significant cash flow occursand the account re-enters the composite at the beginning of the calendar quarter following, at minimum, 30 calendar days after the cash flow. Additional information regarding the treatmentof significant cash flows is available upon request.The figures for the Russell Midcap Growth Index include dividends received and their timely reinvestment. The Index returns do not however, reflect any brokerage commissions ormanagement fees that might be incurred in actually investing in the securities representing this index. The Index returns are calculated by the Frank Russell Company.At December 31, 2011, the three-year annualized ex-post standard deviation of the Midcap Composite’s gross returns and the Russell Midcap Growth Index are 1.82% and 1.82%,respectively.Midcap Composite GIPS Compliant PresentationAnnual Disclosure