SIA Funds: de Value Investing a Strategic Value

Strategic Value Investing
Ownership Approach
January 2019

© 2019 SIA Group – www.s-i-a.ch 3 / 53
. Investment Philosophy
. Our Investment Process
. Portfolio construction
. Expected returns and owner’s reporting
. Appendix 1: our funds
. Appendix 2: On Fund Selection: Some Thoughts From the Other Side
Key message: if approached as a business owner, equities can be a high return, low risk
investment.
Presentation plan

The essence of investing
. We are investors in business, want to make money by making our capital bear fruit
. Difference between investing and speculating
. Investing: Acceptably profitable income streams
. Speculating: Assets that will go up
. Both can be highly profitable
. We only do the first

We call it Strategic Value Investing
So basically we buy good companies at inexpensive prices or extremely cheap
companies. Bad businesses are usually toxic at almost any price.
• We don’t look for “shares that will go up”
• We neither “play the markets” nor look for “catalysts” or in any way put our
investors’ money in the hands of future price movements
• We never “chase” the markets. We use markets’ prices as opportunities to buy or
sell. We never act on a view on what the markets will do, because we don’t know
WE BUY BUSINESSES, NOT SHARES

And a Business Owner Approach
We force ourselves to think as owners
"It happens, however, that the energies and skill of the professional investor and speculator are mainly occupied
otherwise. For most of these persons are, in fact, largely concerned, not with making superior long-term forecasts
of the probable yield of an investment over its whole life, but with foreseeing changes in the conventional basis of
valuation a short time ahead of the general public.
They are concerned, not with what an investment is really worth to a man who buys it for "keeps", but with what
the market will value it at, under the influence of mass psychology, three months or a year hence."
JM Keynes, The general theory of employment, interest, and money, 1936

Quoted Equity affords many more opportunities than Private Equity
. Quoted Equity facilitates enormously diversification across sectors, sizes, and geographies. By definition all
quoted stocks are available for investment, only limited in practice by investor’s size. Transactions costs (for a
long-term investor) are negligible.
. On the other hand, Private Equity is very limited in its targets by geography, size, and availability. Transactions
costs are extremely high.
. In addition, Public Equity offers excellent liquidity, which is very important when planning long-term.

But liquidity implies short-term volatility
. Private Equity is sometimes seen as “less volatile” than Quoted Equity, and therefore as having a better
risk/reward profile
. But volatility is not the same as risk, and Quoted Equity is actually less risky than Private Equity, often with better
long-term returns when risk adjusted
. It is essential to understand the difference between “profits” and capital appreciation
“Making money while the market drops”

Volatility is either irrelevant, or a source of opportunity
. Long-term equivalence
between business
profitability and share
performance
. The lady with her dog
. Volatility is a function of
time horizon
. Private Equity funds and
Public Equity funds
Investors must keep similar time horizons

Volatility actually presents opportunity for Quoted Equity
California Resources Corporation, share price since inception
. Data for LTIF Classic:0
20
40
60
80
100
120
Source: Bloomberg
2015 2016 2017 2018
Initial price: 81.00
Current price: 34.57 (As of May 16th, 2018)
Share performance: -57.08% (annualized -21.45%)
Investment performance: 120% (annualized +25.04%)
Initial investment
Average cost: 15.7
Large purchases

0 5 10 15 20 25 30 35 40 45 50
2016
2012
2008
2004
2000
1996
1992
1988
1984
1980
1976
1972
1968
1964
1960
Dividends S&P 500 in USD
Expon. (Dividends S&P 500 in USD) The Vietnam war starts
 Egypt, Jordan, Syria, and Libya invade Israel
 Soviet tanks invade Czechoslovakia
 On Yom Kippur day, several Arab countries invade Israel. Oil embargo is declared. Oil goes from $18 to $42 in two weeks.
 Nixon resigns. US GDP decreases more than 4%. The S&P drops more than 25%.
 The Iranian revolution starts
 Bretton Woods monetary system breaks down. Nixon takes dollar off gold standard
 France nationalizes banks, large companies
 JFK is assassinated
 Cuban missile crisis
 The Soviet Union invades Afghanistan
 “Savings and Loan” crisis: 1,600 banks go bankrupt
 Total collapse of the financial system
 October 19: the stock market plunges 508 points
 Pro-democracy demonstrations in Tiananmen Square are violently crushed
 Iraqi troops invade Kuwait and threaten Saudi Arabia
 The “tequila crisis” blows up
 The Asian crisis explodes
 Russia defaults both in its domestic and foreign debt
 The Nasdaq bubble pops
 Terrorists destroy the World Trade Center
 Euro collapse?
Source:Standard&Poors/Bloomberg
 Brexit, Italian Referendum
US-Election
 Open war in Yugoslavia. EMS breaks down
Public Equity is actually immune to macro issues

But the volatility can be deadly for the naïve investor
Below all the noise, shares are real assets
-3
23
-12
19 13 9
-13
20 8
-11
0
11 16
-17 -30
32 19
-12
1 12
26
-10
15 17
1
26
15
2
12
27
-7
26
4 7
-2
34
20
31
27
20
-10
-13
-23
26
9
3
14
4
-38
23
13
-0
13
30
11
-1
10
-1'000
-800
-600
-400
-200
0
200
400
600
1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016
USD
S&P 500 YoY notional gain/loss in USD
(indexed to USD 100 = 1 share as of 31.12.1959)
S&P 500 YoY notional gain/loss in USD
S&P 500 Dividend per share in USD
S&P 500 Index
YoY performance in %

investment.
Presentation plan

Global, diversified & opportunistic concentration
If approached as a business owner, equities are a high return, low risk investment
Global Equity Fund based on the principles of Strategic Value Investing
Not indexed, with a
high active share
Fundamental
approach to buy
companies, not
shares
Target to be 100%
invested all the
time
Sector weights are
not preset, they will
vary according to
market opportunities

We are never short of ideas
We draw our investment ideas from a general universe of global companies (bottom up).
The opportunities presented by the market will vary over time, providing entry and exit points
General universe
Copper-related
companies
Oil-related
companies
Salmon
farmers
Longer time
horizon than
buyside
Fallen Growth
Angels
Service
Companies
Sausages
Skin Producers

Quantitative & Non Structured Screenings
Structured screening…
• Bloomberg screening based on low-average valuations
combined with and returns (ROE or ROCE), including
filters (debt, size, liquidity, historical growth, valuation
extremes, return extremes, increasing marginal
returns)
• For valuation PER, EV/EBIT, and P/BV are our
preferred metrics and for quality ROCE, ROE and
ROCE/WACC, ROE/COE
… combined with non-structured ideas
• Sell-side screenings are useful (Selected lists,
Morningstar, Quant screenings, Small Cap. teams
etc…)
• Conferences and Company calls
• Expert calls (GLG)
• Unstructured ideas from the day to day business
• We run a watch list with some 100 names trying to
keep it updated

investment.
Presentation plan

Reckitt Benckiser Group, UK, in GBP
Long-term growth of EPS: 7.0%
Long-term growth of DPS: 17.4%
Total return: 1’324.4%
Annualized total return: 12.8%
McDonald‘s Corp, USA, in USD
Long-term growth of EPS: 9.9%
Long-term growth of DPS: 15.5%
Total return: 1’593.0%
Annualized total return: 13.7%
0
200
400
600
800
1'000
1'200
1'400
-0.5
0
0.5
1
1.5
2
2.5
3
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014e
(FY 1990 - 2012)
%
GBP
RECKITT BENCKISER GROUP PLC
Earnings per share (GBP) Dividend per share (GBP) Cum.Total return net (r. scale)
0
200
400
600
800
1'000
1'200
1'400
1'600
1'800
2'000
0
1
2
3
4
5
6
7
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014e
(FY 1990 - 2012)
%
USD
MCDONALD'S CORP
Earnings per share (USD) Dividend per share (USD) Cum.Total return net (r. scale)
Source: Bloomberg
We start with low risk stocks

We then consider risk (not volatility!)
Time
Viscofán
Expectedreturn(%)

Expectedreturn(%)
Time
Air Liquide

Time
Wienerberger
Expectedreturn(%)

Time
California Resources
Expectedreturn(%)

After determining the “risk-free rate of return”, we determine the necessary spreads for all other levels of risk
. Category 1: “risk-free stock”: 10%
. Category 2: solid, non-cyclical companies: 12%
. Category 3: solid, cyclical companies: 14%
. Category 4: special situations: 16%
These are entry returns. If the return decreases noticeably, because of share price appreciation or long-term business
deterioration, the stock becomes a candidate for a sale.
SIA Risk Category 1 2 3 4
(1 = low Risk; 4 = high Risk)
Portfolio construction: establishing spreads

Portfolio Construction: Company Categories
An adequate mix of categories helps us keep a balanced portfolio
Category 1
“Risk-free stocks”
Category 2
Solid, non-cyclical
companies
Category 3
Solid, cyclical
companies
Category 4
Special situations
Companies with the least fundamental risk,
stable growth, stable returns
Ex: Reckitt-
Benckiser Group
Viscofán
They present some fundamental risk, but
generally unrelated to the business cycle
Ex: ISS DC
Deutsche Post AG
Fundamental risks related to the general
business cycle, or to the cycle of the specific
industry
Ex: Pandora SA
Wienerberger
Even though they present a fair amount of
fundamental risk, we have a view that is
contrary to the mainstream
Ex: Premier Oil
CRC

10
12
14
16
18
20
22
24
26
28
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18
Viscofan SA Trailing 12M PE
0.00
1.00
2.00
3.00
4.00
10
20
40
80
[31-12-2007 - 24-08-2018]
Viscofan SA EPS (right-hand side) Viscofan SA Price (left-hand side)
• Entry date 1: 07/2011 @ 27
• Exit date 1: 1/2013 @ 34
• CAGR 1: 39.4%
• Entry date 2: 12/2016 @ 45 EUR/share
• Exit date 2: 07/2018 @ 60 EUR/share
• CAGR 2: 20.8%
Fallen angel: Viscofan

4
9
14
19
24
29
34
Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
Bakkafrost P/F Trailing 12M PE
5.00
15.00
25.00
35.00
30
60
120
240
480
Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
[31-12-2010 - 24-08-2018]
Bakkafrost P/F EPS (right-hand side) Bakkafrost P/F Price (left-hand side)
• Entry date: 11/2011 @ 37 EUR/share
• Exit date: 02/2018 @ 393 EUR/share
• CAGR: 56.1%
Regime change: Bakkafrost

4
9
14
19
24
29
34
MTU Aero Engines AG Trailing 12M PE
2.50
4.50
6.50
12
24
48
96
192
[31-12-2007 - 24-08-2018]
MTU Aero Engines AG EPS (right-hand side) MTU Aero Engines AG Price (left-hand side)
When profits are seen as too far away: MTU Aero Engines
• Exit date: 07/2018 @ 179 EUR/share
• CAGR: 25.3%

Cyclical as structural: Wienerberger
4
8
16
32
64
128
256
512
Wienerberger AG Trailing 12M PE
-4.00
-2.00
0.00
2.00
4
8
16
32
64
[31-12-2007 - 24-08-2018]
Wienerberger AG EPS (right-hand side) Wienerberger AG Price (left-hand side)
• Still in portfolio
• CAGR: 18.1%

investment.
Presentation plan

Table with category 1, 2, 3, 4, with their expected returns,
as well as the total of the portfolio of the LTIF Classic
(as of 31st December 2018)
Portfolio composition, by SIA sector classification & countries for the LTIF Classic (as of 31st December 2018)
Source: SIA Group / Bloomberg
We expect double digit returns for the future
Category Equity E(r)
1 28.3% 10.6%
2 30.5% 12.7%
3 28.8% 20.8%
4 12.4% 36.3%
Overall 100.0% 17.4%

. Our investment philosophy has proven itself with many investors over many years
. We possess the requisite analytical skill, both strategic and financial
. We provide a thoroughly transparent, owner-oriented reporting and information
. Our medium size allows us to both have enough resources and total concentration on a
number of clients
. We can exploit relatively small opportunities
. We have a track record to back our claims:
SIA is well placed to obtain these returns
MSCI AC World Net TR Index LTIF Classic
EUR USD EUR USD
Value at 14th January 2002 86.8 77.6 100.0 89.4
Value at 31st December 2018 183.1 209.7 348.2 398.0
Cumulative return (%) 111.0% 170.4% 248.2% 345.1%
Annualized return (%) 4.5% 6.0% 7.6% 9.2%

Reporting LTIF Classic as of 31.12.2018 (aggregated data in EUR)
Update typical fundamental reporting sheet
31.12.2016 397.5 19.9%
31.12.2017 408.8 2.9%
31.12.2018 348.2 -14.8%
MSCI World MSCI World MSCI World
EPS yield Div. Yield P/B
2018 27.5 14.9 6.7% 15.6 6.4% 2018 8.9 2.6% 2.7% 2018 215.2 5% 1.9 2.1
2019e 31.4 12% 11.1 9.0% 14.3 7.0% 2019e 9.9 11% 2.8% 2.8% 2019e 219.2 2% 1.6 2.1
2020e 35.7 14% 9.8 10.2% 13.0 7.7% 2020e 10.7 8% 3.1% 3.0% 2020e 238.9 9% 1.5 1.9
Date NAV %
Year EPS % Year BPS % P/BP/E
EPS
yield
Year DPS % Div. Yield
MSCI
World P/E
5
9
13
17
21
25
29
33
37
41
2018 2019e 2020e
EUR
LTIF Classic
Earnings per share
6
8
10
12
2018 2019e 2020e
EUR
LTIF Classic
Dividendpershare
100
150
200
250
300
2018 2019e 2020e
EUR
LTIF Classic
Book Value per share

. Target of double digit returns
. Extremely low fundamental risk: “don’t lose money”
. Owner approach to investing: long-term, focus on profit growth and not share price movements
. Balanced portfolio across risk levels
Summary
SIA adds value by taking a long-term approach, applying strategic analysis and discriminating
opportunities from value traps

investment.
Presentation plan

Long-term performance of the LTIF Classic fund
LTIF Classic, MSCI AC World Index, S&P 500 Index, incl. annualized returns
25
50
100
200
400
Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18
(14-01-2002 - 31-12-2018)
LTIF Classic EUR
MSCI All Country World Net Total Return Index EUR
S&P 500 Net Total Return Index EUR
+248.2% total / +7.7% p.a.
+111.0% total / +4.6% p.a.
+118.3% total / +4.8% p.a.

. Daily liquidity, cut-off time previous day at 4:00 pm CET
. Performance fees are assessed and paid quarterly, subject to High Water Marks and Hurdle Rates
Long Term Investment Fund (SIA) structure
Compartments LTIF Classic Series LTIF Stability A Cap Series
Investment style Long-only Long - Short
Management fee 1.5% pa 0.9% pa
Performance fee 15% (HWM and Hurdle Rate) 15% (HWM)
Currency EUR CHF USD GBP EUR EUR CHF USD
ISIN number LU0244071956 LU0301246772 LU0301247077 LU0750886714 LU1449969846 LU1128810261 LU1589813515 LU1132799310
Telekurs valor 2'432'569 3'101'817 3'101'820 18'032'305 33'180'015 25'840'496 36'183'892 25'906'913
Bloomberg ticker LTIFCLA LX LTIFCLC LX LTIFCLU LX LTIFCLS LX LTIFCLD LX LTISTAE LX LTISTAC LX LTISTAU LX
Distribution reinvested reinvested reinvested reinvested distributed reinvested reinvested reinvested
Compartments LTIF Natural Resources LTIF Socially Responsible Investing
Investment style Long-only, with a SRI filter
Management fee 0.9% pa
Performance fee 15% (HWM and Hurdle Rate)
Currency EUR CHF USD GBP EUR USD EUR
ISIN number LU0244072335 LU0301246939 LU0301247234 LU0457696077 LU1790109257 LU1790109331 LU1790109414
Telekurs valor 2'432'575 3'101'836 3'101'839 10'638'983 40'678'982 40'678'984 40'678'985
Bloomberg ticker LTIFGEV LX LTIFGEC LX LTIFGEU LX LTIFGEG LX LTIFSRI LX LTIFSRU LX LTIFSRD LX
Distribution reinvested reinvested reinvested reinvested reinvested reinvested distributed
1.5% pa
15% (HWM)

investment.
Presentation plan

On Fund Selection: Some Thoughts From the Other Side
Not everything that can be counted counts, and not everything that counts can be counted.
William Bruce Cameron, “Informal Sociology: A Casual Introduction to Sociological Thinking” (Also attributed to Albert Einstein)
. The intrinsic difficulty of fund selection
. Problems with modern solutions
. A fundamental approach

The intrinsic difficulty of fund selection
. Permanent, not easily replicable assets are the essence of corporate profitability
(walls & moats)
. Proprietary technology (AIM…)
. Patents (Pharma…)
. Manufacturing cumulative learning (Car industry…)
. Brands (Hermès…)
. Network effects (Facebook…)
. …
. But funds have no permanence, walls or moats; at most an “investment policy”

. Low quality quantitative information
. Essence of the problem: extremely high variance, need for long-term data, unstable underlying
phenomenon and management

. The quest for a “repeatable process”… that cannot be copied
. Quant? “The worst 10-year performance of a back-test is…”
. Judgement? Persistence?
. Why would choosing fund managers be easy than choosing stocks?
. Remember: benchmark-oriented investing is a second-degree (or third) activity

Problems with modern solutions
. The move to passive
. Improving on passive: smart moves
. When smartness makes you not passive any longer…
. TAA vs Stock Picking

One solution has been the move to passive
Started in the US...
Now worldwide

Smart beta seems to “square the circle”

But what is passive anyway?
. When smartness makes you not passive any longer…

From stock picking to asset allocation
. TTA vs Stock Picking
. Stocks too complex to analyze
. Funds not reliable
. Funds of funds too expensive
. Allocate money to markets and asset classes
. Remember: investing is a 2nd or 3rd degree activity
. At its core, future economic performance

A fundamental approach
. Three options:
. Buy the economy
. Buy shares
. Buy companies

One can buy the whole economy

One can buy shares
. Buy shares: short-term, market skills
0%
20%
40%
60%
80%
100%
120%
1946
1948
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
NSE, annualized turnover
Source: New York Stock
Exchange

Volatility is either irrelevant, or a source of opportunity
. Long-term equivalence
between business
profitability and share
performance
. The lady with her dog
. Volatility is a function of
time horizon
. Private Equity funds and
Public Equity funds
Radical option: forget financial markets and buy companies (real assets)

Problems with modern solutions
. Strategic Investing as a first-level activity: intrinsic business profitability
. Strategic Investing as a second-level activity: non-computer-readable value:
. Fallen angels
. Cyclical as structural
. Regime change
. Too long-term
. Remember: investing is a 2nd or 3rd degree activity
. At its core, future economic performance

Conclusions
. From investor to owner (“real” assets)
. Opportunity for “time horizon arbitrage” (the opposite of liquidity premium)
. Need to reassess goals: what is the investor’s real risk?
. Is benchmarking part of the problem?
. Need to establish trust
. Opportunity for fund selectors

Long Term Investment Fund
. 15, avenue J.F. Kennedy
. L-1855 Luxembourg
. Grand Duchy of Luxembourg
SIA Funds AG
. Alpenblickstrasse 25
. 8853 Lachen
. Switzerland
. Tel: +41 55 617 28 70
. Fax: +41 55 617 28 71
. website: www.s-i-a.ch
. e-mail: info@s-i-a.ch
Contacts

LTIF (SIA) Classic, Stability A Cap, SRI and Natural Resources
. Performance up to 31.05.06 is that of the BVI-based LTIF, of which the LTIF Luxembourg is an identical successor. Previous
performance is audited by Ernst & Young. Past performance is neither a guarantee nor a reliable indicator of future results.
Performance data does not include the commissions and fees charged at the time of subscribing for or redeeming shares. This
information has been furnished to you upon request and solely for your information and may not be reproduced or redistributed
to any other person. It is not intended as an offer or solicitation with respect to the purchase or sale of shares of the Sicav. Neither
the Central Administration Agent nor the Investment Manager assume any liability in the case of incorrectly reported or
incomplete information. Please be aware that investment funds involve investment risks, including the possible loss of the
principal amount invested. For a detailed description of the risks in relation to each share in the investment fund, please see the
latest version of the prospectus, simplified prospectus, annual and semi-annual reports, which may solely be relied upon as the
basis for investment decisions; these documents are available on www.s-i-a.ch or from the Central Administration Agent
FundPartner Solutions (Europe) SA, 15A, avenue J.F. Kennedy, L - 1855 Luxembourg. LTIF Classic, Stability A Cap and Natural
Resources (previously Global Energy Value) were approved for distribution in and from Switzerland by the Swiss Financial Market
Supervisory Authority (FINMA) according to Art. 19 al. 1 of the Collective Investment Schemes Act, paying agent is Banque Pictet &
Cie SA, Route des Acacias 60, 1211 Geneva 73, Switzerland. Legal representative in Switzerland is FundPartner Solutions (Suisse)
SA, Route des Acacias 60, 1211 Geneva 73, Switzerland; notified to the Austrian Finanzmarktaufsicht according to §36 of the
Investment Funds Act; authorised in France by the Autorité des Marchés Financiers (AMF) pursuant to Art. 411-58 of the AMF
General Regulation; authorised by the German Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) according to §132 of the
Investment Act; authorised in Italy by the Bank of Italy and the CONSOB according to Article 42 of Legislative Decree no. 58 of 24
February 1998; registered in the register of foreign collective investment schemes commercialized in Spain by the Comisión
Nacional del Mercado de Valores (CNMV) pursuant to Art. 15 of the Law on Collective Investment Vehicles; recognised in the
United Kingdom by the Financial Services Authority (FSA) as a recognised scheme within the meaning of Section 264 of the
Financial Services and Markets Act 2000.
Disclaimer

SIA Funds: de Value Investing a Strategic Value

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