Optimum Capital Management recently launched the Optimum Australian Equities Value Fund. Now open to investors.

1. Optimum Australian Equities Value Fund
Introduction and Launch
5th January
Prepared by Heinrich Jacobs
Managing Director & Chief Investment Officer

2. Disclaimer
Op#mum
Capital
Management
Pty
Ltd
ABN
60
154
164
020
(also
referred
to
in
this
presenta#on
as
“Op#mum
Capital
Management”,
“the
Trustee”,
“the
Manager”,
“us”,
“we”
and
“our”)
is
the
Trustee
and
Investment
Manager
of
the
Op#mum
Australian
Equi#es
Value
Fund
(“the
Fund”)
ABN
38
923
100
447.
The
Trustee
is
a
corporate
authorised
representa#ve
(No.
467287)
of
Lanterne
Strategic
Investors
Pty
Ltd
(ABN
49
098
472
587,
AFSL
238198).
This
presenta#on
is
not
a
recommenda#on
to
invest
in
the
Fund
and
may
not
include
all
of
the
informa#on
that
a
prospec#ve
investor
needs
to
make
an
investment
decision.
Op#mum
Capital
Management
does
not
take
into
account
the
individual
circumstances
of
any
prospec#ve
investor,
nor
does
it
give
any
advice
whatsoever
but
to
the
extent
that
it
does,
it
cons#tutes
only
general
advice
and
not
personal
advice.
Accordingly,
prospec#ve
investors
should
make
their
own
independent
enquiries
and
obtain
professional
legal,
financial,
tax
and
accoun#ng
advice
before
making
an
investment
decision.

3. Contents
Who
We
Are
What
We
Do
How
We
Are
Different
Overview
of
the
Fund
Our
Investment
Philosophy
Our
Investment
Strategy
Our
Investment
Process
Why
ROE
&
Good
Capital
Management
are
cri#cal
Example
of
a
model
poraolio
(compounding
businesses)
Example
of
a
poor
business
with
bad
economics
Conclusion
How
to
Invest

4. Who we are
• Op#mum
Capital
Management
is
independent
and
privately
owned
investment
management
firm
located
in
Melbourne,
Australia
• A
highly
experienced
team
(and
growing)
with
five
decades
of
banking,
markets,
and
diversified
industry
experience
• Specialist
exper#se
in
Risk
Management,
Financial
Analysis,
Business
Valua#ons,
Corporate
Strategy
Development,
Corporate
Governance

5. The Team
• Combined
12
years
financial
advisory,
investments,
business
management
and
leadership
experience
• Banking
&
Finance,
Technology,
and
Diversified
Industries
• Previous
management
posi#ons
at
ANZ
Bank,
Suncorp
Bank,
Tennis
Australia
&
Metcash
• Established
and
managed
a
number
of
businesses
at
ANZ
with
FUM
$100m
–
$1.5b
• Acquired
advanced
technical
and
fundamental
skills
and
exper#se
with
focus
on
equi#es,
investment
lending,
liquidity,
risk
management,
property,
transac#onal
banking,
and
balance
sheet
analysis
• Educa#on:
Master
of
Business
Administra#on
(MBA)
&
Post
Graduate
Cer#ficate
in
Management
(Dis#nc#on)
• 25
years
of
financial
markets
experience
• Currently
the
Principal/Director
of
Lanterne
Asset
Management
and
the
Chief
Opera#ng
Officer
for
Avenir
Capital
• Prior,
Director
at
Credit
Suisse
First
Boston
Australian
Equi#es
&
Bain
&
Company
in
London
• Peter’s
primary
role
is
focused
on
providing
risk
management,
governance,
and
compliance
oversight
for
our
Australian
Equi#es
Value
Fund
Heinrich Jacobs
Managing Director &
Chief Investment Officer
Peter Cozens
Non-Executive Director

6. The Team
• Experienced
CEO,
Lawyer,
and
former
Director
of
companies
including
Coles
Myer
Group,
GE
Capital,
Pacific
Diamond,
Retail
Franchise
Solu#ons,
Midas
Asia
Pacific,
and
the
DBYD
Group
• Exper#se
covers
business
management,
finance,
corporate
structuring,
strategic
planning,
due
diligence,
and
business
acquisi#ons
and
divestures
across
the
building,
finance,
franchise,
wholesale,
retail,
automo#ve,
mining,
and
u#li#es
sector
• Currently
the
CEO
of
the
Australian
Associa#on
of
Dial
Before
You
Dig
Services
• Currently
holds
several
board
posi#ons
including
the
Australian
Government
Solicitor
and
Torus
Group
• Educa#on
&
Memberships:
Bachelor
of
Laws
&
Bachelor
of
Commerce
(University
of
Melbourne);
Cer#fied
Prac#cing
Accountant
(CPA);
MAICD;
LIV
Sophie Valkan
Non-Executive Director

7. What We Do
• We
act
as
a
financial
fiduciary
for
our
clients
• Provide
investors
with
access
to
one
high
quality
investment
product
that
meets
a
broad
range
of
needs,
including
income
and
capital
growth
• We
manage
money
(equity
capital)
on
behalf
of
trustees
and
advisers
of
self-­‐managed
superannua#on
funds,
high
net
worth
individuals,
companies,
and
charitable
founda#ons
• We
seek
to
iden#fy
high
quality
companies
for
inclusion
in
the
fund
that
will
offer
good
long-­‐term
capital
growth
opportuni#es,
with
a
stable
and
reliable
income
stream
with
low
to
moderate
risk
• We
conduct
extensive
market
research,
stock
selec#on,
and
the
buying
and
selling
in
rela#on
to
the
securi#es
in
our
Investment
Fund
• Our
absolute
focus
is
to
protect
our
clients
capital
(and
ours)
and
ensure
all
investments
offer
a
margin
of
safety

8. How Are We Different?
Large Institutional Funds
Optimum Capital
Management
CON’S
• The size of asset base can limit the ability to move in
and out of the best investments
• Market Capitalisation-weighted strategies suffer from
an inherent bias towards “hot” segments of the market,
and often feature concentrated economic bets
• Market Cap weighted and tend to focus only on large
cap companies, missing valuable opportunities in the
mid-small cap space
• Can be expensive relative to size and management
have no skin in the game. Poor alignment of interests
• No skin in the game. Very poor alignment of interests
between management and investors
• Limited flexibility, bureaucracy, slow decision making
PRO’S
• We will have a smaller asset base giving us the ability to
move in and out of the best investment opportunities
• Our only bias is to invest in the very best companies that
we can buy at a discount to valuation, regardless of
economic trends, fads etc
• We have a Market Cap agnostic strategy. We will invest
across the spectrum; large, medium, small, and micro
cap
• Good value relative to size. Tight cost controls
• Excellent alignment of interests between management
and investors
• Very flexible, nibble, and flat structure

9. Overview Of The Fund
Investment(Strategy(and(Objec3ve( To(provide(investors(with(superior(long<term(absolute(returns(in(
the(form(of(capital(growth(and(income(from(a(por>olio(of(
shares(in(excep3onal(Australian(&(New(Zealand(companies(
listed(companies(on(the(ASX(that(we(can(buy(at(an(aErac3ve(
price(
Por>olio(Structure(&(Weigh3ngs( 15(–(30(Companies(
0%(<(100%(Equi3es(
0%(<(100%(Cash(
No(short(selling(
No(financial(leverage(
(
Benchmark( All(Ordinaries(Accumula3on(Index((XAOAI)(
Investor(Profile( Sophis3cated,(Professional(and(Wholesale(Investors.(A(limited(
number(of(retail(investors(via(a(personal(offer(
Risk(Profile( Medium(
Suggested(Investment(Period( Five(years(

10. Our Investment Philosophy
• We
are
a
disciplined
investor
seeking
out
investment
opportuni#es
in
companies
that
we
can
purchase
at
a
discount
to
our
assessment
of
the
fundamental
value
or
intrinsic
value
of
the
company
• High
convic#on
fund
with
a
concentrated
strategy
• “Margin
of
safety”
and
valua#on
is
at
the
heart
of
our
investment
philosophy
and
investment
selec#on
process
• Bonom-­‐up,
Fundamental
Analysis

11. Our Investment Strategy
• Thorough' understanding' of' bo1om' up'
fundamental'analysis'and'value'opportunity'
'
Op8mum'Capital'Management'
Core'Competency'
Proven'Track'Record'
Ac8ve'
Capital'Alloca8on'
Exper8se'
Disciplined'&'Repeatable'
Investment'Process'
Strong'Risk'Management'
Culture/Systems'
Focused'on'business'
fundamentals'&'valua8on'
Fundamental*Value*
Based*Approach*
Focus*on*Catalysts*
Seeking*Compelling*
Opportuni;es*
• Seek'companies'with'short'term'imperfec8ons'in'
fundamentals'
• Pursue' special' situa8ons' and' transforma8onal'
events' such' as' corporate' takeovers' that' drive'
shareholder'value'
• Mispriced'assets'with'temporary'flaws'caused'by'
general'market'condi8ons,'sen8ment,'strategy,'or'
other'company'specific'issue.'

12. Our Investment Process
Our$investment$process$starts$by$selec3ng$of$the$2,200$$
ASX$ Listed$ Companies$ the$ 700$ companies$ that$ made$ a$
profit$in$the$past$12$months.$ASX Listed
Companies
• $2,200$companies$
Quantitative
Screen
• $Financial$Modeling$Phase$
• $Ranking$Process$(Financial$Strength$|$Profitability$&$
Growth)$$
• $Investable$Universe$~$700$issues$
Qualitative
Screen
• $Idea$Genera3on$
• $Strong$Business$Models$
• $Durable$Compe33ve$Advantages$
• $Management$Team$
• $Investee$Universe$~$90$W$150$companies$
Portfolio
Construction
• $15$–$30$companies$selected$for$investment$
From$the$700$companies$we$individually$rank$companies$
using$a$range$of$metrics$to$shortWlist$down$to$90$–$150$
companies.$Metrics$include:$
W PEG$
W OCF$&$FCF$yield$
W Cash,$Debt,$and$Growth$rate$levels$
The$final$stage$is$a$qualita3ve$screen$and$“deep$dive”$
into$the$quality$of$the$management$team,$and$assess$
the$strength$of$the$companies$business$model$and$if$it$
has$any$durable$compe33ve$advantages$that$allow$for$
sustainable$ growth$ over$ the$ investment$ cycle.$ From$
the$ 90$ –$ 150$ companies$ we$ select$ the$ final$ 15$ –$ 30$
companies$to$make$up$the$investment$por`olio.$

13. Why ROE & Good Capital Management Are Critical (example)
!
!
Year!
Business!
!
Beginning!
Equity!($)!
!
!
Return!on!
Equity!(%)!
!
!
Earnings!($)!
!
!
Payout!
Ra7o!%!
!
!
Dividends!
($)!
!
!
Ending!
Equity!($)!
Market!
!
P/E!Ra7o!
!
!
Share!
Price!($)!
0" 10" 2.50"
1" 1.00" 25" 0.25" 0" 0" 1.25" 10" 3.10"
2" 1.25" 25" 0.31" 0" 0" 1.56" 10" 3.90"
3" 1.56" 25" 0.39" 0" 0" 1.95" 10" 4.80"
4" 1.95" 25" 0.48" 0" 0" 2.43" 10" 6.00"
5" 2.43" 25" 0.60" 0" 0" 3.03" 10" 7.50"
Annual!
Rate!of!
Return!
!
25%!
If you buy and sell shares in a company on the same P/E ratio, and assuming the company does not
pay a dividend and it is able to generate a high rate of return on equity, then all things being equal the
earnings and the share price will grow at the same rate as the ROE which in this case is 25%
Consider this

14. Example of a Model Portfolio (Compounders)
Company( ASX(
Code(
ROE(
(%)(
Forecast(
Dividend(
Yield((%)(
Ini?al(Rate(
of(Return(
(%)(
Total(
Returns((10(
year(Avg(%)(
Market(
Cap((m)(
Compe??ve(Advantage(
ANZ$Bank$ ANZ$ 16$ 8.5$ 8.10$ 10.5$ 88,847$ Oligopoly$
Ainsworth$
Game$
Technology$
AGI$ 26$ 5$ 7.80$ 10$ 780$ Knowledge/Experience$
CSL$ CSL$ 41$ 1.5$ 3.5$ 26$ 41,464$ Patents/reputaPon$
Seek$ SEK$ 19$ 2.5$ 3$ 25$ 6,000$ Network$effect$
Breville$Group$ BRG$ 23$ 5.5$ 5.5$ 17$ 870$ Brand/ReputaPon/Design$
Woolworths$ WOW$ 24$ 7$ 6.5$ 11.5$ 38,690$ Low$cost/brand/logisPcs/
geographic$monopoly$
Carsales$ CRZ$ 51$ 5.2$ 3.7$ 22$ 2,524$ Network$effect$
Iproperty$ IPP$ 6$ X$ 1.1$ 90$ 352$ Network$effect$
Resmed$ RMD$ 20$ 1.7$ 3.8$ 16$ 9,685$ Patent/reputaPon$
Flight$Centre$ FLT$ 24$ 7$ 8.20$ 11.5$ 3,300$ Footprint/reputaPon$
McMillian$
Shakespeare$
MMS$ 25$ 7.5$ 7$ 26$ 826$ Switching$costs$
TOTAL(
AVERAGE(
25%(( 4.7%( 5.3( 24%(

15. A Business With Poor Economics (example)
2000#
#
$2.9b&&&&&&&&&&Equity&
2010#
#
$5.8b&&&&######Equity&
$3.1b&&&&&&&&&&Debt& $5.6b&&&&&&&&&&Debt&
$517m&&&&&&&&Profit& $116m&&&&&&&&Profit&
ROE&&&&&&&&&&&&&18%& ROE&&&&&&&&&&&&&2%&
Note
the
addi#onal
$2.9b
in
equity
you
have
contributed
and
the
addi#onal
$2.5b
in
debt
to
keep
this
business
going.
Return
on
Equity
less
than
what
you
can
get
in
a
term
deposit.

16. Conclusion
• Alignment
of
interests
between
investors
and
members
of
the
investment
team
• Focus
on
a
single
fund,
one
product,
one
set
of
fees
• Investment
focus
on
companies
that
provide
a
reliable
and
increasing
income
stream
with
tax
awareness
benefits
(franked
dividends)
• Experienced
management
team
and
board
of
directors
with
“diversified”
experience
• Repeatable
and
reliable
investment
process
• Flexible
investment
mandate
(market
capitalisa#on
agnos#c;
can
be
fully
invested
or
hold
cash
depending
on
market
risk
and
valua#ons)
• Tight
cost
controls
• We
invest
our
own
capital
alongside
investors
• Our
size
gives
us
a
compe##ve
advantage.
We
can
move
quickly
and
are
not
subject
to
internal
bureaucracy
and
slow
decisions
making

17. How To Invest
• The
next
step
is
to
read
the
Informa#on
Memorandum
(IM)
and
then
complete
the
Applica#on
Form
anached
to
the
IM.
• Applica#on
forms
and
monies
are
to
be
submined
to
Apex
Fund
Services
and
details
can
be
found
in
the
Applica#on
Form.
• If
you
require
a
copy
of
the
IM
please
email
Heinrich
Jacobs
(Chief
Investment
Officer)
at
info@op#mum-­‐capital.com.au
• Visit
our
website
at
www.op#mum-­‐capital.com.au
Thank
you