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US Equities Saint-Honoré US Value & Yield Christophe Foliot Deputy Director - International Equities
Investment process
Investment team Valérie GUELFI -  Fund Manager International Equities Valérie Guelfi has joined Christophe Foliot in the N...
Our approach: Value & Yield  <ul><li>Value:  selecting stocks within the US Large Caps universe that are undervalued by th...
Our approach: Value & Yield (2) <ul><li>At least 50% invested in visible Yield value stocks. </li></ul>50 – 100% : Visible...
Quantitative Screening One size fits not all approach: use of specific ratios which best fit each sector. Stock picking: A...
Quantitative screening <ul><li>Weekly screening with ratios adapted to fit each sectors specificities:  </li></ul><ul><ul>...
Qualitative analysis  <ul><li>1.   FUNDAMENTAL ANALYSIS.  </li></ul><ul><ul><li>Business model, strategy, market share. </...
Portfolio follow up <ul><li>4. PORTFOLIO MONITORING.   </li></ul><ul><ul><li>Sector diversification. </li></ul></ul><ul><u...
Performance of Saint-Honoré US Value & Yield Saint-Honoré US Value & Yield =  746 M€ Performance since inception EDMOND DE...
Macroeconomic outlook
US economy & earnings growth <ul><li>Better visibility going forward </li></ul>EDMOND DE ROTHSCHILD ASSET MANAGEMENT |  EQ...
Fiscal stimulus will continue to support the economy, Investment spending should begin to take off. <ul><li>Leader in infr...
Inventories still at low levels, households consumption showing resilience <ul><li>Luxury shopping malls in the US.  Major...
Strong balance sheets at corporates could trigger an uptake in M&A activity Forest Laboratories :   Amgen:  <ul><li>Pharma...
Portfolio
Our strategy for 2010:  Continuing our shift to more visible growth stocks  <ul><ul><li>Gradual profit taking on Deep Valu...
Portfolio breakdown (as of 12/04/2010) <ul><li>Balanced approach between sectors </li></ul>Source: Edmond de Rothschild As...
Top ten positions in portfolio (as of 12/04/2010) Source: Edmond de Rothschild Asset Management EDMOND DE ROTHSCHILD ASSET...
Avertissement /  Legal information <ul><li>Les données chiffrées, commentaires et analyses figurant dans cette présentatio...
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Saint honoré us value & yield citiwire april presentation

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Saint honoré us value & yield citiwire april presentation

  1. 1. US Equities Saint-Honoré US Value & Yield Christophe Foliot Deputy Director - International Equities
  2. 2. Investment process
  3. 3. Investment team Valérie GUELFI - Fund Manager International Equities Valérie Guelfi has joined Christophe Foliot in the North American Equities team in March 2007. began her career at Fidelity in Canada in 2004 as customer representative in the pension fund department. She then joined KPMG in 2005 as auditor in the Financial Services division. Jacques-Aurélien Marcireau - Analyst, International Equities Jacques-Aurélien Marcireau is a graduate of l’Institut d’Etudes Politiques de Lille and holds a Master’s degree in Economics & Financial Analysis from Lille 2 University. He joined Edmond de Rothschild Asset Management in March 2009 as analyst on U.S and international equities . Adeline SALAT-BAROUX - Senior Fund Manager International Equities A graduate of the Institut d’Informatique d’Entreprise in Paris and certified by the French financial analysts association, SFAF, she began her career at BNP Paribas Asset Management in 1995 as an international bond fund manager and then an equity fund manager from 2000. Adeline joined the international equity team at Edmond de Rothschild Asset Management in September 2007 to manage Premiumsphere, investing in luxury — a sector she managed at BNP PAM. Christophe FOLIOT - Deputy Director - International Equities Christophe Foliot joined Edmond de Rothschild Asset Management in September 2003. He began his career in 1994 at Knight-Ridder Inc. in New York, before joining Banques Vernes in 1995 as a buy-side analyst. In 1999, Christophe moved to BNP Paribas Asset Management, first as an analyst before heading North American fundamental equity management. Christophe holds both the CFA and SFAF (French equivalent) diplomas. He also holds an MBA from the City University of New York (Baruch College EDMOND DE ROTHSCHILD ASSET MANAGEMENT | EQUITIES MANAGEMENT
  4. 4. Our approach: Value & Yield <ul><li>Value: selecting stocks within the US Large Caps universe that are undervalued by the market or that offer strong turnaround potential (deep value). </li></ul>At least 70% of portfolio Stocks trading at a discount compared to their sector or to the market: « Relative Value » Max 30% of portfolio: Recovery stocks selected for their intrinsic value: « Deep Value » 30% Max Deep Value At least 70% Relative Value EDMOND DE ROTHSCHILD ASSET MANAGEMENT | EQUITIES MANAGEMENT
  5. 5. Our approach: Value & Yield (2) <ul><li>At least 50% invested in visible Yield value stocks. </li></ul>50 – 100% : Visible Yield 0 - 50 % : Cyclicals 0 – 30 %: Deep Value Additional constraints: Relative Value Fixed: 50 % visible yield* Variable: 50 % yield / cyclicals * Cash can be considered as visible yield <ul><li>Sectorial diversification. </li></ul><ul><li>Market Cap > 1 bn$ at the time the stock is added to portfolio, with sufficient liquidity to allow position to be liquidated within 3 trading days without weighting on the daily volume. </li></ul>EDMOND DE ROTHSCHILD ASSET MANAGEMENT | EQUITIES MANAGEMENT
  6. 6. Quantitative Screening One size fits not all approach: use of specific ratios which best fit each sector. Stock picking: At least 70% « value » stocks Investment process Qualitative Analysis Business model, competitive environment, balance sheet, management meetings… Stock picking: 30% max « deep value » stocks. Qualitative Analysis Stocks facing financial risk are excluded from analysis , business model, competitive environment, credit analysis, balance sheet, management meetings… Price-to-book screening Only stocks trading below or at book value are retained in the investment universe. Portfolio: 40- 60 stocks 2 2 1 1 INVESTMENT UNIVERSE Deep Value stocks Value stocks EDMOND DE ROTHSCHILD ASSET MANAGEMENT | EQUITIES MANAGEMENT
  7. 7. Quantitative screening <ul><li>Weekly screening with ratios adapted to fit each sectors specificities: </li></ul><ul><ul><li>Screening: U.S 1000 largest stocks by market capitalization. </li></ul></ul><ul><ul><li>Vast criteria panel: Market Cap, Price to book, Price-to earnings, Return on Equity, Momentum, Ebit Margins, Net debt to shareholders equity, interest coverage… </li></ul></ul><ul><ul><li>Selected & weighted according to sector and market conditions. </li></ul></ul><ul><ul><li>Helps taking on board new investment ideas. </li></ul></ul><ul><ul><li>Allow for a weekly monitoring of portfolio stocks ranking among their respective sectors... </li></ul></ul>EDMOND DE ROTHSCHILD ASSET MANAGEMENT | EQUITIES MANAGEMENT
  8. 8. Qualitative analysis <ul><li>1. FUNDAMENTAL ANALYSIS. </li></ul><ul><ul><li>Business model, strategy, market share. </li></ul></ul><ul><ul><li>Market characteristics: size, trends, competitors. </li></ul></ul><ul><ul><li>Financial data and assets value (production capacity, brands, real estate assets, liquid assets, etc.). </li></ul></ul><ul><ul><li>Sum of the parts. </li></ul></ul><ul><ul><li>Free Cash-Flows’ generation. </li></ul></ul><ul><li>2. COMPANY VISITS. </li></ul><ul><ul><li>Quality of management. </li></ul></ul><ul><li>3. ASSESSMENT OF TURNAROUND POTENTIAL. </li></ul><ul><ul><li>Cyclical / Structural. </li></ul></ul><ul><ul><li>Management change, financial operation, etc. </li></ul></ul><ul><ul><li>Stock exchange status change. </li></ul></ul>2009: more than 300 meeting with companies’s management EDMOND DE ROTHSCHILD ASSET MANAGEMENT | EQUITIES MANAGEMENT
  9. 9. Portfolio follow up <ul><li>4. PORTFOLIO MONITORING. </li></ul><ul><ul><li>Sector diversification. </li></ul></ul><ul><ul><li>Weightings allowed to each stock in portfolio: 3% max. for deep value stocks ; 5% max. for relative value stocks. </li></ul></ul><ul><ul><li>At least 50% of defensive stocks. </li></ul></ul><ul><ul><li>Weekly quantitative screening. </li></ul></ul><ul><ul><li>Detailed stocks report & follow up for top positions in portfolio. </li></ul></ul>EDMOND DE ROTHSCHILD ASSET MANAGEMENT | EQUITIES MANAGEMENT
  10. 10. Performance of Saint-Honoré US Value & Yield Saint-Honoré US Value & Yield = 746 M€ Performance since inception EDMOND DE ROTHSCHILD ASSET MANAGEMENT | EQUITIES MANAGEMENT Past performance is not a reliable indicator of future performance. Performance is calculated on the basis of cumulated returns. Performance since inception data is reserved for professional clients only as identified by the AMF regulation. Non-professional investors should not take this information into account.
  11. 11. Macroeconomic outlook
  12. 12. US economy & earnings growth <ul><li>Better visibility going forward </li></ul>EDMOND DE ROTHSCHILD ASSET MANAGEMENT | EQUITIES MANAGEMENT
  13. 13. Fiscal stimulus will continue to support the economy, Investment spending should begin to take off. <ul><li>Leader in infrastructure equipments: water, electricity and alternative energies. </li></ul><ul><li>Trading at a 30% discount compared to its sector (industrials). </li></ul><ul><li>Leader in equipments & services for the semi-conductor industry. </li></ul><ul><li>Valuation does not take into account capacity expansion & modernization needs in the industry. </li></ul>Nominal Gross private non-residential capital Investment ( % GDP ) in the US % of GDP Year 6,5% of GDP, lowest level since 1970’s. General Electric: Applied Materials: EDMOND DE ROTHSCHILD ASSET MANAGEMENT | EQUITIES MANAGEMENT So far, around 35% of the 700bn$ fiscal stimulus has been paid out.
  14. 14. Inventories still at low levels, households consumption showing resilience <ul><li>Luxury shopping malls in the US. Major restructuring & sales picking up since the beginning of 2010 should lead to sharp margins improvement. </li></ul><ul><li>Trading at 0,5x sales, below commercial property value. </li></ul>Restocking should take place in the next quarters (in bn$) Sales Inventories (RHS) Source: census bureau <ul><li>Transportation company specialized in logistic & supply chain management. </li></ul><ul><li>Profits went down more than 60% in 2009 and should rebound strongly in Q2 2010 as the economy is recovering. </li></ul>Saks: Ryder: EDMOND DE ROTHSCHILD ASSET MANAGEMENT | EQUITIES MANAGEMENT
  15. 15. Strong balance sheets at corporates could trigger an uptake in M&A activity Forest Laboratories : Amgen: <ul><li>Pharmaceutical laboratory benefiting from a portfolio of products in advanced development phases, not yet recognized by market. </li></ul><ul><li>Valuation: cash represents 1/3 of market cap, high yields. </li></ul><ul><li>Leader in biotechnology, company has developped therapies for anemia, inflammation & cancers. </li></ul><ul><li>Trading at only 11,7x 2010 PE. </li></ul>EDMOND DE ROTHSCHILD ASSET MANAGEMENT | EQUITIES MANAGEMENT Healthcare should benefit from the next M&A cycle while providing hedge against more restrictive monetary policies
  16. 16. Portfolio
  17. 17. Our strategy for 2010: Continuing our shift to more visible growth stocks <ul><ul><li>Gradual profit taking on Deep Value stocks like Starwood Hotels, Office Max, Hartford Financial… </li></ul></ul><ul><ul><li>Gradual return to higher visibility stocks like AT&T, Procter & Gamble, Bank of New York, FPL, Chevron </li></ul></ul><ul><ul><li>Reinvestment of our cash on weakness </li></ul></ul>Thematic Allocation EDMOND DE ROTHSCHILD ASSET MANAGEMENT | EQUITIES MANAGEMENT Visible yield Deep Value Cash Cyclicals JANUARY 09 DECEMBER 09 March 10 Visible Yield Deep Value Cash Cyclicals
  18. 18. Portfolio breakdown (as of 12/04/2010) <ul><li>Balanced approach between sectors </li></ul>Source: Edmond de Rothschild Asset Management EDMOND DE ROTHSCHILD ASSET MANAGEMENT | EQUITIES MANAGEMENT
  19. 19. Top ten positions in portfolio (as of 12/04/2010) Source: Edmond de Rothschild Asset Management EDMOND DE ROTHSCHILD ASSET MANAGEMENT | EQUITIES MANAGEMENT 1,8% MICROSOFT 10 1,9% AMGEN 9 1,9% BANK OF NEW YORK MELLON CORP 8 2, 1% PROCTER & GAMBLE CO/THE 7 2,2% PLAINS EXPLORATION & PRODUCT 6 2,4% JOHNSON & JOHNSON 5 2,8% CHEVRON CORP 4 27,1% TOTAL Name % in PTF 1 GENERAL ELECTRIC CO 4,7% 2 AT&T INC 4,5% 3 BANK OF AMERICA CORP 2,8%
  20. 20. Avertissement / Legal information <ul><li>Les données chiffrées, commentaires et analyses figurant dans cette présentation reflètent le sentiment du Groupe Edmond de Rothschild et de ses filiales sur les marchés, leur évolution, leur réglementation et leur fiscalité, compte tenu de son expertise, des analyses économiques et des informations possédées à ce jour. Ils ne sauraient toutefois constituer un quelconque engagement ou garantie du Groupe Edmond de Rothschild ou de ses filiales. </li></ul><ul><li>En aucun cas, la responsabilité du Groupe Edmond de Rothschild ne saurait être engagée par une décision d’investissement, de désinvestissement ou de conservation prise sur la base desdits commentaires et analyses. </li></ul><ul><li>Il appartient à chaque investisseur de se procurer les différents descriptifs réglementaires de chaque OPCVM ou autre produit financier avant tout investissement, pour analyser son risque et forger sa propre opinion indépendamment du Groupe Edmond de Rothschild, en s’entourant au besoin, de l’avis de tous les conseils spécialisés dans ces questions afin de s’assurer notamment de l’adéquation de cet investissement à sa situation financière. </li></ul><ul><li>Les performances et les volatilités passées ne préjugent pas des performances et des volatilités futures et ne sont pas constantes dans le temps. </li></ul><ul><li>Les notices d’information ou prospectus visées par l’Autorité des Marchés Financiers sont disponibles sur simple demande et sur notre site Internet (www.edram.fr). </li></ul><ul><li>The data, comments and analyses in this bulletin reflect the opinion of the Edmond de Rothschild Group with respect to the markets and their trends, regulation and tax issues, on the basis of its own expertise, economic analyses and information currently known to it. However, they shall not under any circumstances be construed as comprising any sort of undertaking or guarantee whatsoever on the part of the Group. </li></ul><ul><li>In no event shall the Edmond de Rothschild Group assume responsibility for any decision to invest, to disinvest or to maintain a position on the basis of these comments or analyses. </li></ul><ul><li>It is the responsibility of each and every investor to obtain the various regulatory prospectuses for each fund or financial product prior to making any investment and to analyse the risk incurred and establish his or her own opinion, independent of the Edmond de Rothschild Group, and where necessary, to take specialist advice regarding such questions, and especially in order to determine the relevance of such investment to his or her own financial situation. </li></ul><ul><li>Past performance and volatility is no guide to the future. The value of investments may fall and rise and performance is not constant over time. </li></ul><ul><li>The prospectuses of the funds mentioned are available upon request and may be found on our websites (www.edram.fr). </li></ul>EDMOND DE ROTHSCHILD ASSET MANAGEMENT | EQUITIES MANAGEMENT

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