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Finding Companies That will Serve The Largest Concentration of Consumer Base in History
1. Finding Companies Serving
Largest Concentration
of Consumers In History
David Gong, JD, MBA
Senior Portfolio Manager
Questions?
To contact us or to request complete list of composite
definitions and GIPS® compliant presentations
Please email joeo@stanleylaman.com or call 610-993-9100
2. SLG International Opportunities Portfolio
Capability to transact in 45 countries
Suitable for Institutional and High Net Worth Investors
Acquires High Growth; Low Debt; Basic Service Companies
Executes trades on local exchanges
Diversified Holdings: 90+ Positions - 35 Different Countries
AD-STAR screening finds great companies before Institutional Investors
Outperformed emerging market benchmark since inception
2
3. Portfolio Managers
David Gong, JD, MBA
30 year experience in global asset management
Former Emerging Markets Manager for Hong Kong office of Rowe-Price Fleming
Former Head of Emerging Markets and Asian Equities for Ardsley Growth Fund
Former Attorney for the U.S. Securities and Exchange Commission
M.B.A. from Stanford University’s Graduate School of Business
J.D. from the University of California, Davis
B.A. from the University of California, Berkeley
Bradford Stanley, CFA
10 years investment experience
B.S. Computer Science, Carnegie Mellon University
Developer of AD-STAR System
CFA Charterholder
PSN Top Gun Manager
Mark Painter, CFA
10 years investment experience
B.S. in Business Administration, Carnegie Mellon University
CFA Charterholder
PSN Top Gun Manager
Lead Manager SEL - American Realty Capital Interval Fund & ARC Dividend & Value Fund
3
4. Emerging Market Headlines
“Emerging Markets Bloodbath Today…Political risk is rising in Thailand, Turkey, and
Argentina” – Emerging Money
“U.S. tapering will make emerging markets decline worse” – Value Walk
“Emerging-market equity funds see worst outflow streak in 11 years” – MarketWatch
“Turkish Lira, Emerging-Market Currencies Continue to Slump” – Wall Street Journal
“Rupee at record low, rupiah slides as capital outflows bite” – Business Recorder
“Ukraine Protests and Riots News: Tens of Thousands Face-Off With Violence Reported in
Crimea” – Christian Post
“Crimea Votes to Secede From Ukraine as Russian Troops Keep Watch” – The New York Times
“History Did Not End, The Emerging Markets Story Did” – Seeking Alpha
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5. What the Headlines Do Not Say
86% of the World’s Population - 6.07 Billion People
Generally younger populations
Thousands of companies
55 Countries, some with stronger legal & accounting standards than the U.S.
Consumer companies growing rapidly
Trading for single digit P/E Multiples
5
6. The Consumer Class
GDP per cap reaching $4000-5,000 triggering an acceleration in domestic
private consumption
"That's a level at which people can really make consumer purchases ... middle
class in my mind should able to afford a washing machine and go out and buy a
motorbike" - David Cowan, Citigroup Africa Economist
Goods in demand include the whole spectrum from the basics such as food
staples, housing, education, healthcare, travel, transportation, financial
services, personal electronics including mobile phones
China shifting the engine of growth from exports and investment to
consumption
Consumer spending has been the key to recent economic growth in Africa,
Asia and Latin America
China’s Automobile Market: 1983 to the present
Infant formula in China
Mobile phones in Indonesia
Air coolers in India
Casinos in Asia
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7. Emerging Market Opportunities: The Global Middle Class
China, India and other emerging economies creating a vast new population
of consumers
In Asia 525 million people in the middle class
Today, China has around 150 million people earning between $10-100 USD
per day
500 million Chinese to enter the global middle class over the next decade
India’s global middle class of 50 million people to grow steadily over the next
decade reaching 200 million by 2020
500 million people may join the middle class in Indonesia, Malaysia, the
Philippines, Thailand, and Vietnam alone over the next five years
Africa's global middle class close to 150 million
Between 2000 and 2009, 50 million added to the middle class in Latin
America and the Caribbean—bringing the total from around 115 million
people to over 165 million
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8. How We Got Here
Prior to 2004 - Traditional Separate Account Manager
AD-STAR implemented to remove reliance on sell side research
Bottoms-up system for finding excellent companies before the crowd
Every listed & traded security in the world passes through screen
Operational excellence will be shown in the numbers
Evaluates over 600 financial ratios
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10. What We Learned
With AD-STAR - Domestic portfolio performance increased exponentially
Screens found fast growing companies, but were unable to access due to
being on foreign exchanges
Tech-like Growth in Basic Service Companies
Securities available for single digit multiples – 8X – built in fear discount of
emerging markets
Little or no foreign ownership in some of the screened companies
Institutions eventually find these companies and push prices
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11. Qualitative Overlay
Qualitative Review After Passing AD-STAR:
Competitors/Competitive Advantages
Market Potential/Market Share
Product Mix
Business Model
Governance
Risk
11
12. Company Attributes
* Data as of 03/19/14
Portfolio Statistic IOP
SLG High
Growth
SLG U.S.
Blend
IOP
Rank
Market Cap (US $) 793 M 4.30 B 9.03 B 1
Insider Ownership 53.1% 4.1% 1.0% 1
Dividend Yield 3.03% 1.38% 2.85% 1
Revenue Growth (5-year) 30.7% 18.9% 6.6% 1
Profit Growth (5-year) 67.7% 26.2% 15.2% 1
Price to Earnings Ratio 9.15 16.01 13.36 1
Debt to Capital 17.44 14.41 41.08 2
Beta 0.83 1.1 0.97 1
Capex Spending (% of profits) 22.2% 32.8% 34.3% 1
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13. Company Profiles
• Company Symphony
• Industry Household Appliances
• Country India
• Market Cap $232 Million (64% Insider Ownership)
• 5-yr Sales Growth 51.5%
• 5-yr Profit Growth 147.3%
• Dividend Yield 2.95%
• P/E (Est.) 8.43
• Description Manufactures a wide range of air coolers. The Company's products include
evaporative air coolers, air conditioners, and water heaters. Symphony has a 50
per cent market share in the branded air cooler market in India.
13
14. Company Profiles
• Company Eurocash Group
• Industry Food Retail
• Country Poland
• Market Cap $2.32 Billion (45% Insider Ownership)
• 5-yr Sales Growth 29.5%
• 5-yr Profit Growth 35.6%
• Dividend Yield 2.19%
• P/E (Est.) 9.24
• Description Operates cash and carry stores in Poland. The stores retail food, drinks, alcohol,
tobacco, and household and personal hygiene products. The Company also
franchises the ABC Neighborhood Shops grocery stores.
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15. Company Profiles
• Company Future Bright Holdings
• Industry Restaurants
• Country Macau
• Market Cap $97 Million (46% Insider Ownership)
• 5-yr Sales Growth 30.9%
• 5-yr Profit Growth 87.8%
• Dividend Yield 2.79%
• P/E (Est.) 4.20
• Description Engages in the sales of food and beverage in Macau and mainland China. It also
provides logistic support services such as food sourcing and food process facilities.
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16. Company Profiles
• Company Bajaj Finance
• Industry Consumer Finance
• Country India
• Market Cap $1.06 Billion (66% Insider Ownership)
• 5-yr Sales Growth 39.8%
• 5-yr Profit Growth 98.5%
• Dividend Yield 1.69%
• P/E (Est.) 7.34
• Description Diversified non-banking financial company, engaged primarily in the business of
financing. The Company focuses on Consumer Finance and Small Business loans.
Consumer finance includes auto loans, consumer durables, personal loan cross
sell, salaried loans, and co-branded credit cards.
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17. Company Profiles
• Company Asian Property Development
• Industry Real Estate Development
• Country Thailand
• Market Cap $816 Million (53% Insider Ownership)
• 5-yr Sales Growth 16.29%
• 5-yr Profit Growth 15.6%
• Dividend Yield 5.88%
• P/E (Est.) 7.13
• Description Develops residential property projects in the Bangkok area. APD focuses on the
development and sales of residential projects, including single detached houses,
townhouses and condominiums.
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18. SLG Int’l Opportunities Portfolio Performance
18
-8.00%
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
2012 2013 2014
SLG International
Opportunities Portfolio
Emerging Market Index
ETF (EEM)
2012 2013 2014
SLG International Opportunities
Portfolio
8.00% 3.10% 3.73%
Emerging Market Index ETF (EEM) 4.93% -3.97% -5.54%
• 2012 Period measured 2/1/2012 through 12/31/2012
• 2014 data as of 2/28/2014
• Portfolio returns measured net of fees. Benchmark returns measured with reinvested distributions
• A complete list of composite definitions and GIPS® compliant presentations are available upon request