Lansdowne Partners Limited Authorised and regulated in the UK by the Financial Services Authority. Registered as an investment adviser with the US Securities and Exchange Commission Lansdowne Partners Limited is the General Partner of Lansdowne Partners Limited Partnership Presentation to Guanghua School of Management Financial Market Workshop 2007 Peter Davies May 2007
Current thoughts on China and other investment thoughts
Introduction to Lansdowne Europe UK Macro Emerging Markets AUM: $5.8bn Launched: 1998 AUM: $6bn Launched: 2001 AUM: $2.8bn Launched: 2004 AUM: $663m Launched: 2005 AUM: $679m Launched: 2006 Global Financials Total Assets: $16bn Number of Employees: 91 External Limited Partner: Morgan Stanley (19%)
Lansdowne UK Equity Fund AUM : $6.0bn Inception : August 2001 Performance (annualised) : 21.42% Volatility (Annualised) : 8.54% Beta since Inception : 0.13 Eurohedge UK Fund of the Year: 2004, 2005, 2006
Evolution of Asset Management Industry Investment Bank Debt Market 20 years ago Now Borrower Bank Shareholders Borrower Banks Insurance Companies Pension Funds Hedge Funds Clients (Incl Banks, Ins Co’s, P/Funds) Shareholders Shareholders Policy Holders Dependents Risk globalised and fragmented
Evolution of Asset Management – Equities Index ($4 tn) Growth Business No Capacity Constraint Very Low Fee No Human Investment Involvement Highly Automated Index Benchmark ($30+ tn) Shrinking Business Some Capacity Constraint Expensive Significant Human Investment Involvement Struggle to retain Investment Talent Culture Absolute Return ($2.5 - $3 tn) Growth Business Capacity Constraint by Strategy High Fee High Intellectual Property Content Attracts best Investment Talent Culture
Source: Absolute Return, Alpha, Morgan Stanley estimates Institutionalisation of Hedge Funds
Investment Approach Aim to use scale and expertise to gain competitive edge throughout process INPUTS ANALYSIS POSITIONS Company Meetings Published Data Sell-side Independent Research Observation ANALYSIS
Independent Research Example – Buy to Let At what level of interest rate would you expect house prices to fall 10%? No impact A slight impact A very strong impact Base: All buy-to-let investors (140) Source: Circle Research Impact of interest rate rises Mean score: 7.8 11% 44% 43%
Position Structure – Alignment of Research and Capital Risk Probability Change in share price over holding period Unhedgeable risk Hedgeable risk
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