Portfolio managers Dennis Wassung, CFA, and Craig Goryl, CFA, discuss Cabot Wealth Management's investment themes, including biotechnology and genomics, cloud computing and frontier markets. Presented on September 26, 2014.

1. WELCOME TO CABOT’S
25TH ANNUAL INVESTMENT & WEALTH MANAGEMENT CONFERENCE
Your interests and goals always come first.

2. Curing Cancer,
In The Clouds
& The Final Frontier
PRESENTED BY:
DENNIS WASSUNG, CFA®, PORTFOLIO MANAGER
CRAIG GORYL, CFA®, PORTFOLIO MANAGER

3. Curing Cancer
Genomics & Biotechnology
Dennis Wassung, CFA®
Portfolio Manager
Cabot Wealth Management, Inc.
216 Essex Street
Salem, Massachusetts 01970
800-888-6468
eCabot.com

4. Genomics
What is it?
Genomics – The study of organisms’ hereditary information. An
organism’s genome is its complete set of DNA.
DNA – The chemical compound containing instructions for developing
and directing all the body’s activities. An identical copy is in each cell.
DNA Sequencing – The process of determining the exact order of the
chemical bases that make up DNA, about 6.2 billion in total for a human.
The map of a person’s DNA can tell us a lot about them, from their
eye color to their likelihood of developing cancer. Scientists
understand parts of the map, but most of it is still a mystery.

5. Genomics
Why is this important?
Predictive Medicine – Based on my DNA, what are my chances of
developing a particular disease?
Testing & Diagnostics – What disease is this? Is it an aggressive form in
need of treatment, or is it better to wait?
Therapeutics – What causes this disease, and what drugs will cure it?
At the heart of genomics is the promise of personalized medicine. Because
of differences in DNA, treatments do not work the same for everyone.
Someday our current practice - prescribing the same drug for everyone who
has a given disease - will seem archaic. This is truly a revolution in
healthcare.

6. Why We Need Better, Targeted Drugs

7. Lower Cost Per Genome Drives Adoption

8. Next-Generation Sequencing (NGS)
Source: Illumina, Inc.

9. Oncology Market Evolving
Source: Illumina, Inc. & U.S. Department of Energy Office of Science

10. Evolving Biotechnology & Biopharma
Landscape
Source: Quintiles Transnational, Inc.

11. Market Evolution Toward The Patient
Source: Quintiles Transnational, Inc.

12. Where Are We Headed?
Source: Illumina, Inc.

13. Investment Opportunities
 Gene Sequencing – Equipment & Technology
solutions to rapidly and cost-effectively sequence
DNA
 Biotechnology – New Drug Development &
Commercialization, Genetically-targeted drugs
 Testing & Diagnostics – Testing for & diagnosing
specific genetically defined diseases and condition.
 Bioinformatics & Data Analytics – Analyzing the
massive amounts of data created and gleaning critical
information from gene sequencing

14. In The Clouds…
Cloud Computing – A Major Transition

15. Cloud Computing Benefits

16. $410 Billion Worldwide Software Market

17. Enterprise Software Market Evolution
Source: Veeva Systems, Inc.

18. Moving To The Cloud Saves Money
Source: IDC Research Cloud Software Analysis, Sep 2012; Veeva Systems

19. Industry-Specific Cloud Platforms
Sources: Demandware,
Euromonitor, Gartner,
eMarketer Global eCommerce

20. Investment Opportunities
 Cloud Software (aka “Software-as-a-Service” or SaaS) –
Enterprise Software “lease” business model gaining wide
adoption – CRM, Marketing, HCM, ERP – Lots of attention
from the Big Guys (Acquisitions)
 Cloud Infrastructure – Internet and data center infrastructure
needed to enable the “Cloud” in all of its forms
 Industry Cloud Software Applications – Companies are
developing and gaining traction with industry-specific cloud
platforms – life sciences, financial services, eCommerce, etc.
 Cybersecurity technology – Software and hardware solutions
to protect consumers and companies, whose personal or
business data reside in the cloud

21. Frontier Markets-
Next to
Emerge
CRAIG GORYL, CFA
PORTFOLIO MANAGER
CABOT WEALTH MANAGEMENT

22. What are Frontier Markets?
Frontier Markets are less developed than Emerging Markets. We
view the investment universe in classes.
In order of market maturity (with examples):
1. United States*
2. Developed Markets (Germany, Canada, Japan)
3. Emerging Markets (Brazil, China, Russia, Mexico)
4. Frontier Markets (Kuwait, Nigeria, Argentina, Pakistan)
In terms of development, Frontier Markets are like Emerging
Markets 20 years ago. But they are catching up at a faster rate.
*US is a Developed Market- a special case as our home country and the most advanced

23. What are Frontier Markets?
Source: Wall Street Journal

24. What are Frontier Markets?
Frontier markets hold 35% of the world’s population, produce 16%
of its economic output, and represent 4% of global market value
Source: Everest Capital

25. Why Frontier Markets?
1) ATTRACTIVE DEMOGRAPHICS
Growing working age population,
the prime time for fertility and
economic productivity
30
20
10
0
% of Pop. Over 65 today
Kuwait Nigeria US Japan
20
10
0
-10
% Growth of Working Age Pop,
2015-2020
Kuwait Nigeria US Japan
Low “elderly dependency ratio,”
the resource transfer from
young to old

26. Why Frontier Markets?
2) “LEAPFROGGING”
Skipping generations of
technologies saves time,
money and resources.
Examples: photography,
M-Pesa
Access to modern
political and economic
theory through an
increasingly global
education system
% of Mobile Phone Users Regularly Making or
Receiving Payments on their Phone
68%
50%
29%
24%
13%
11%
Source: Franklin Templeton

27. Why Frontier Markets?
3) RESOURCE RICH
Frontier markets contain about
40% of the world’s natural
resource reserves and nearly
26% of gas reserves
They have an opportunity to
avoid the “resource curse,”
where corruption and inequality
follow abundant natural
resources (Russia, Mexico,
South Africa)
Source: Everest Capital

28. Why Frontier Markets?
4) GROWING FAST 5)REASONABLY PRICED 6) GOOD QUALITY
Growth: Valuation: Quality:
Est. Sales
Est. EPS
Return
Growth
Growth
Price/
Est. Price/
Price/
Dividend
on
Rate '13-15
Rate '13-16
Earnings
Earnings
Book
Yield
Equity
Operating
Profit
Margin
Debt/
Equity
Debt/
Assets
United States 5% 12% 18.1 16.8 2.7 1.9% 15.0 14.0 104.8 23.9
Developed Int'l 2% 15% 17.6 15.1 1.6 3.3% 10.6 9.6 180.6 24.5
Emerging Mkts 4% 8% 13.4 12.2 1.5 2.7% 10.9 10.9 109.3 22.4
Frontier 28% 25% 12.0 11.2 1.8 3.7% 15.4 18.7 88.3 16.7
Green represents the most attractive metric. Red is least attractive.
Data: Bloomberg 9/19/14

29. Risky? Less Than You Think
LOW DEPENDENCE ON
FOREIGN CAPITAL
Frontier economies are self-sustaining.
Infrastructure
investment is fed by citizen
savings, not hot foreign money.
LOW CORRELATION TO
OTHER MARKETS
These markets and economies
respond to military coups,
typhoons, oil discoveries etc.,
not broad global macro events.
Each country has idiosyncratic
drivers.
Single country volatility is high,
but low correlations mean lower
collective volatility- see the
chart.
Source: Wall Street Journal

30. Other Risks?
BALANCE
The main benchmark (MSCI
Frontier Markets Index) is not
well balanced.
Kuwait and Nigeria comprise
almost half the index. Banks
and other financial companies
dominate.
Solution: Frontier markets
should be part of a diversified
portfolio
LIQUIDITY
Market access, company size,
and share availability are
barriers.
Most Frontier companies trade
less than $3mil in value per day,
raising the cost of entry and
exit.
Solution: US-traded funds like
FM & TFMAX are liquid but don’t
solve the underlying issue

31. Return Comparison (2-year)

32. Thank you

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