Longleaf Partners Funds Annual Shareholder Presentation. April 16, 2013

Transcription

1 Longleaf Partners Funds Annual Shareholder Presentation April 16, 2013

2 Important Disclosure Information Average annual total returns for the Longleaf Partners Funds and their respective benchmarks for the one, five, ten year, and since inception periods ended March 31, 2013 are as follows: Longleaf Partners Fund, 15.22%, 4.87%, 7.55%, 11.17%; S&P 500 Index, 13.96%, 5.81%, 8.53%, 9.14%; Longleaf Partners Small-Cap Fund, 25.40%, 10.21%, 13.27%, 11.10%; Russell 2000 Index, 16.30%, 8.24%, 11.52%, 9.34%; Longleaf Partners International Fund, 16.53%, -0.21%, 8.97%, 8.58%; MSCI EAFE Index, 11.25%, -0.89%, 9.69%, 4.24%. Returns reflect reinvested capital gains and dividends but not the deduction of taxes an investor would pay on distributions or share redemptions. Past performance does not guarantee future results. Fund prices fluctuate and, when redeemed, shares may be worth more or less than original cost. Current performance may be lower or higher than the past performance quoted. Visit longleafpartners.com for performance data current to the most recent month-end. Before investing in any Longleaf Partners fund, you should carefully consider the Fund s investment objectives, risks, charges, and expenses. For a current Prospectus and Summary Prospectus, which contain this and other important information, visit longleafpartners.com. Please read the Prospectus and Summary Prospectus carefully before investing. Particular investment discussions are not a recommendation to buy or sell any security. It should not be assumed that investments subject to a 13D discussed herein resulted in a gain on disposition for Southeastern s clients with respect to that investment. Southeastern s filing may be one of many factors contributing to the price increase discussed.

3 Important Disclosure Information (Continued) The annual expense ratios for the Longleaf Partners, Small Cap, and International Funds are 0.91%, 0.91%, and 1.27% respectively. The Longleaf Partners Funds are subject to stock market risk, meaning stocks in the Funds may fluctuate in response to developments at individual companies or due to general market and economic conditions. Also, because the Funds generally invests in 15 to 25 companies, share value could fluctuate more than if a greater number of securities were held. Please read the prospectus for specific details regarding the Fund s risks. Regarding the Small-Cap Fund, smaller company stocks may be more volatile than those of larger companies. Regarding the International Fund, investing in non-u.s. securities may entail risk due to non-us economic and political developments as well as exposure to non-us currencies. These risks may be higher when investing in emerging markets. Funds Distributed by: Rafferty Capital Markets, LLC

4 Agenda Introduction Importance of Good Partners When Partners disappoint vs. most who don t Lee Harper Mason Hawkins Staley Cates Good Partners Good Investments Ken Siazon Good Partners Good Investments Scott Cobb Q&A Research Team

5 2012 Returns 30% 20% LLPF 16.5% S&P 16.0% LLSC 23.0% R2K 16.4% LLIN 21.2% EAFE 17.3% Inflation + 10% 10% 0% Partners vs. S&P 500 Small-Cap vs. Russell 2000 International vs. EAFE

6 YTD Returns (at 3/31/13) 15% 10% LLPF S&P 11.6% 10.6% LLSC 12.1% R2K 12.4% LLIN 7.2% EAFE 5% 5.1% Inflation + 10% 0% Partners vs. S&P 500 Small-Cap vs. Russell 2000 International vs. EAFE

7 Longleaf Board of Trustees Tenure Position Chad Carpenter 20 Years Trustee Mars Child 12 Years Trustee Dan Connell 16 Years Trustee Rex Deloach 10 Years Chair of Audit Committee Mason Hawkins, CFA 26 Years Co-Portfolio Manager Steve Melnyk 22 Years Trustee Barham Ray 21 Years Trustee Perry Steger 12 Years Chairman of the Board Cumulative Experience 139 Years External Trustees Collective Longleaf Ownership $21.4 Million

8 The Outsiders Value of $1 invested over 25 years $ Average of 8 Outsider Companies GE under Jack Welch S&P 500 Outsiders 100 S&P Years GE Source: The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success by William Thorndike 2012

9 Southeastern 13D History & Outcome % U.S. Holdings with Activist Filing since 12/31/1993 Total Holdings = 255 Investments Without 13D Filing 90% 13D Activism 10% Stock Higher Stock Unchanged Stock Lower # of Holdings Source: Southeastern Asset Management

10 Activism History Number of U.S. holdings and 13D filings at Southeastern over 20 years # of U.S. Based Holdings D filed with positive result 13D filed with neutral result 13D filed with unfavorable result U.S. Based Holding Source: Southeastern Asset Management

11 FedEx Ground Fiscal Year Ending May 31 In Millions of US Dollars Revenues Operating Income (OI) OI Margin Assets Pretax Return on Assets (ROA) 2012 $ 9,573 $ 1, % $ 6, % ,485 1, % 5, % ,439 1, % 4, % , % 3, % , % 2, % , % 3, % , % 3, % , % 2, % , % 2, % , % 1, % , % 1, % Source: Southeastern Asset Management FedEx represented 4.5% of the Longleaf Partners Fund and 4.7% of the Longleaf Partners Global Fund as of June 30, 2013

12 DIRECTV Latin America Fiscal Year Ending Dec 31 In Millions of US Dollars Revenues EBITDA EBITDA Margin 2012 $ 6,244 $ 1, % ,096 1, % ,597 1, % , % , % , % , % % % (85) (14.3%) (202) (29.7%) Source: Southeastern Asset Management DIRECTV represented 5.7% of the Longleaf Partners Fund and 5.5% of the Longleaf Partners Global Fund as of June 30, 2013

13 Loews Corp. Superior long-term stock price appreciation December 31, 1962 to December 31, 2012 Cumulative Percent Change (Log Scale) 100,000 10,000 1, Loews (annualized 15%) S&P 500 (annualized 6%) Loews represented 8.0% of the Longleaf Partners Fund and 5.3% of the Longleaf Partners Global Fund as of June 30, 2013 Source: Loews Investor Presentation March 2013

14 Loews Corp. Per Share Net Cash & Investments (at 12/31/12) $ 8.16 Public Subsidiaries (Market Prices at 4/12/13) CNA Financial 90% stake Diamond Offshore 50.4% stake Boardwalk Pipeline* 55% stake 9.45 L (NYSE) $42.62 Closing Price: 4/12/13 Total $ *Includes 22.9 mm Class B Units valued at the common stock price Loews represented 8.0% of the Longleaf Partners Fund and 5.3% of the Longleaf Partners Global Fund as of June 30, 2013 Source: Southeastern Asset Management; Company Reports; FactSet

15 Loews Corp. Share Repurchases Shares Outstanding In Millions, adjusted for all stock splits Over 200 million shares Repurchased since 12/31/ Loews represented 8.0% of the Longleaf Partners Fund and 5.3% of the Longleaf Partners Global Fund as of June 30, 2013 Source: Loews Corp Presentation

16 Asian Originated Investments (3/31/13) Company (Country) Nitori (Japan) Nidec (Japan) Henderson Land (Hong Kong) Cheung Kong (Hong Kong) Melco International (Macau) Genting (Malaysia) Fiat Industrial (Italy) Business Dominant furniture retailer in Japan 20% ROIC business, double digit OI margins Dominant maker of spindle motors for hard drives Specialist in brushless DC motor technology HK real estate developer with a 40% stake in the monopoly gas distributor in HK HK based global company through 50% holding in Hutchison Whampoa One of 6 gaming license holders in Macau with operations in the Philippines Monopoly Casino in Malaysia Duopoly casino in Singapore Casinos in the UK, Philippines, and the US Second largest North American AG machinery company through CNH People CEO AKIO NITORI 28% OWNER CEO SHIGENOBU NAGAMORI 15% OWNER CEO LEE SHAU KEE 63% OWNER CEO LI KA SHING 43% OWNER CEO LAWRENCE HO 49% OWNER CEO KT LIM 40% OWNER Chairman SERGIO MARCHIONNE 30% controlled by Agnelli family holding company Exor As of June 30, 2013, Nitori represented 3.5%, Nidec represent 0.8%, Henderson Land represented 0.9%, Cheung Kong represented 6.8%, Melco Int l represented 4.6%, Genting represented 4.3%, and Fiat Industrial represented 2.5% of the Longleaf Partners International Fund. Cheung Kong represented 6.3%, Genting represented 4.5%, Henderson Land represented 1.5% and Melco Int l represented 0.8% of the Longleaf Partners Global Fund. Cheung Kong represented 5.2% of the Longleaf Partners Fund. Investing in non-u.s. securities may entail risk due to non-us economic and political developments, different accounting standards, as well as exposure to non-us currencies. These risks may be higher when investing in emerging markets.

17 Limited Asian Gaming Market Supply Number of casino licenses by country and operator Country Licenses Operators Macau 6 Melco Crown / Las Vegas Sands 5500 table cap (2013) MGM / Wynn +3%/year SJM / Galaxy Singapore 2 Genting Las Vegas Sands Philippines 4 Melco Crown Belle JV Genting - Alliance Global JV Universal / Bloombury Malaysia 1 Genting China 0 0 Japan 0 0 As of June 30, 2013, Melco Int l represented 4.6% of the Longleaf Partners International Fund and 0.8% of the Longleaf Partners Global Fund. Genting represented 4.3% of the Longleaf International Fund and Genting represented 4.5%, of the Longleaf Partners Global Fund. Investing in non-u.s. securities may entail risk due to non-us economic and political developments, different accounting standards, as well as exposure to non-us currencies. These risks may be higher when investing in emerging markets. Stocks engaged in the gaming business are subject to risks including competitive pressures, changes in government regulation, economic conditions, and changes in consumer taste.

18 Macau Gaming Market Gross Gaming Revenue USD Billions $ YTD Investing in non-u.s. securities may entail risk due to non-us economic and political developments, different accounting standards, as well as exposure to non-us currencies. These risks may be higher when investing in emerging markets. Stocks engaged in the gaming business are subject to risks including competitive pressures, changes in government regulation, economic conditions, and changes in consumer taste.

19 Macau Gaming Market % of revenue and profit by customer segment 100% 80% 60% 69% 44% VIP Gaming 40% 20% 0% 31% Gross Gaming Revenues 56% Operating Profit Mass Tables and Slots Investing in non-u.s. securities may entail risk due to non-us economic and political developments, different accounting standards, as well as exposure to non-us currencies. These risks may be higher when investing in emerging markets. Stocks engaged in the gaming business are subject to risks including competitive pressures, changes in government regulation, economic conditions, and changes in consumer taste.