European Value Strategy. For financial advisor or consultant use only not for general public distribution

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1 European Value Strategy For financial advisor or consultant use only not for general public distribution

2 About Mensarius Independent Asset Management Boutique founded in late 2007 Licensed by FINMA in Switzerland & registered investment adviser with the SEC Small and agile organization. Team of 12 employees with 6 in the investment team Assets under management: EUR 1.5 billion ( ) Value based investment philosophy with a clear focus on capital preservation designed by Founder & Portfolio Manager Tom Stubbe Olsen Time-tested and robust investment process that, through several business cycles, has produced superior risk adjusted investment returns over a period of 20 years 2

3 Performance and Statistics: European Value Composite Period ending: 31 December Years Since 31/12/2007* European Value Annualised Return (Gross) in EUR MSCI Europe Annualised Return (TR Net) in EUR Excess Annualised Return Standard Deviation European Value Standard Deviation MSCI Europe Tracking Error Volatility Upside Capture Downside Capture Batting Average Information Ratio Sharpe Ratio European Value Sharpe Ratio MSCI Europe Sortino Ratio European Value Sortino Ratio MSCI Europe Beta Source : Mensarius / MSCI Inc. *Calculations based on monthly data. European Value track record refers to gross of fees performance of the European Value composite for the period 31/12/2007 to 31/12/2017. Please note that past performance is no indication of future performance. 3

4 Our Investment Philosophy

5 Our Investment Philosophy We believe successful investing is about managing risk not avoiding it. The key to sustainable, long-term investment returns should be based on a structured and systematic approach to investing The equity market is a pendulum that forever swings between unsustainable optimism (being expensive) and unjustified pessimism (being cheap), but we believe the long-term stock price of a listed company WILL follow the development in the company's earnings We invest with the mindset as if we were buying the whole company. Understanding the underlying fundamentals is the key to assessing the real risk in the investments we make The two core elements of our value investment approach are intrinsic value and margin of safety 5

6 Value Investing To us, value means buying something that is worth more than the price we pay The intrinsic value of a company consists of three elements: 1. Asset Value 2. Earning Power Value 3. Value of Growth Knowing your own limitation is an important factor in investing. By basing investments only on observable facts and by staying humble about future elements, keeps us from risking too much on a view of the future that may well turn out to be wrong To secure our investment return even further and to avoid overpaying, we look for a significant margin of safety to our investment cases 6

7 Our Investment Objective Our aim is to preserve capital and invest in the most attractive relationship between risk and return available We aim for our strategy to provide a long term attractive positive absolute return and at the same time an excess return of approximately 300 bps annualized over a full business cycle with a lower standard deviation relative to the reference index The investments that we make generally fall into one of three categories: 1. Companies with a high return on invested capital bought at attractive valuation versus its own history 2. Quality cyclical companies with a competitive edge close to the trough of the cycle 3. Companies undertaking restructuring measures that will increase the earning power of their assets in the future. 7

8 Our Investment Process

9 Investment Process: Idea Generation Idea Generation Analysis Valuation Case Presentation Portfolio Construction Portfolio Management Markets screened for liquidity factors determining our investment universe Monthly screens provided by Risk Manager, stocks ranked based on the Mensarius scoring system Companies selected by Portfolio Managers on measures e.g. profitability, financial debt and price ratios Sector analysts do a preliminary margin of safety valuation on these companies Monthly idea generation meetings within the investment team Decision on the companies qualifying for further analysis taken by the PM s Sound business model in attractive point of business cycle Good profitablitity Modest finanical debt Low price ratios 9

10 Investment Process: Analysis Idea Generation Analysis Valuation Case Presentation Portfolio Construction Portfolio Management History and proven business model qualifies the company for further analysis 7 Step Due Diligence Process: Check list for evaluating the companies Based on history and business model of the company, the normalized level of profitability is determined through our 7-Step Due Diligence process 10

11 Investment Process: Valuation Idea Generation Analysis Valuation Case Presentation Portfolio Construction Portfolio Management Valuation done based on three elements of value by using our financial model We calculate the earning power by using our Valuation Framework, then we can derive the company s Intrinsic Value (IV) 11

12 Investment Process: Case Presentation Idea Generation Analysis Valuation Case Presentation Portfolio Construction Portfolio Management Case library with investment ideas Research and decision making process well-documented in a structural and consistent way Following a close bilateral discussion between Analyst and Portfolio Managers, the Analyst performs a final case presentation for the Portfolio Managers and Investment Product Specialist 12

13 Investment Process: Portfolio Construction Idea Generation Analysis Valuation Case Presentation Portfolio Construction Portfolio Management Long term investment horizon Low portfolio turnover Highly selective portfolio with roughly 35 to 50 European listed companies Each company has a meaningful impact on the portfolio with an initial weight of approximately 2% Not constrained by country, sector, size or tracking error limits Performance can differ significantly from the reference index 13

14 Investment Process: Portfolio Management Idea Generation Analysis Valuation Case Presentation Portfolio Construction Portfolio Management A disciplined selling approach is as critical to our success as the investment process. A company is sold when: Stock price approaches our estimated intrinsic value The investment s weight in the portfolio becomes excessive New information leads us to believe characteristics and fundamentals for the company have deteriorated A more attractive investment idea is found 14

15 Investment Process: Portfolio Management Idea Generation Analysis Valuation Case Presentation Portfolio Construction Portfolio Management Risk Management & Control Embedded control of the investment risk in our appraisal of the intrinsic value and strict buy dicipline of margin of safety PM s and Risk Manager monitor the portfolio and the responsible Sector Analyst monitor the investments Ongoing dialogue between PM and Sector Analysts supported by daily margin of safety report covering all portfolio holdings Portfolio risk managed through tailor made risk reporting system suppported by the Risk Manager Monthly risk and portfolio review meetings with the investment team chaired by the Risk Manager Embedded ongoing pre-trade compliance within trading system 15

16 Our Investment Team

17 Experienced investment team of six people Analysis Portfolio Management Cédric Jacque 10 Years Experience Consumer Discretionary Consumer Staples Michael Roost 13 Years Experience Industrials Automobiles Materials Tom Stubbe Olsen Portfolio Manager 32 Years Experience Cédric Jacque Portfolio Manager 10 Years Experience Brian O Brien 7 Years Experience Financials Technology Telecom Matteo Nichil 8 Years Experience Healthcare Energy Paolo Rizzini Risk Manager 19 Years Experience Vacant Generalist 17

18 Composite Performance & Current Positioning

19 Composite performance Annualised 5 years rolling relative performance 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% Data in EUR for the European Value composite. Performance is gross of fees and covers the period from 31/12/2007 to 31/12/2017. Please note that past performance is no indication of future performance. 19

20 Capture Ratios 3 Years & Since Inception Data in EUR for the European Value composite. Performance is gross of fees and covers the period from 31/12/2007 to 31/12/2017. Please note that past performance is no indication of future performance. 20

21 SI Monthly relative performance grouped in various benchmark intersections % % 1.04% 0.98% 1.00% 0.80% % 0.40% % % % -0.20% BM < - 3,0% - 3,0% < BM < -1,0% - 1,0% < BM < 1,0% 1,0% < BM < 3,0% BM > 3,0% Number of outperforming months Number of underperforming months Average value added -0.41% -0.40% -0.60% Data in EUR for the European Value composite. Performance is gross of fees and covers the period from 31/12/2007 to 31/12/2017. Please note that past performance is no indication of future performance. 21

22 Performance Attribution 3 Years Sector Asset Allocation Stock Selection Total Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Materials Telecommunications Services Utilities Real Estate Cash TOTAL TOTAL ANNUALIZED Data in EUR for a representative portfolio in European Value composite and expressed in basis points. Each of the three effects has been annualized. Source: Mensarius AG internal systems. Covers the period from 31/12/2014 to 31/12/

23 Performance attribution Since Inception Sector Asset Allocation Stock Selection Total Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Materials Telecommunications Services Utilities Real Estate Cash TOTAL TOTAL ANNUALIZED Data in EUR for a representative portfolio in European Value composite and expressed in basis points. Each of the three effects has been annualized. Source: Mensarius AG internal systems. Covers the period from 31/12/2007 to 31/12/

24 European Value Composite Annual Performance Since Inception vs. MSCI Europe 50.00% Composite return in EUR MSCI Europe return in EUR Excess return 40.00% 30.00% 20.00% Annualised Return 10.00% 0.00% % % % % % Composite return in EUR % 45.39% 24.39% -7.48% 23.80% 16.78% 7.18% 15.66% 5.94% 12.09% MSCI Europe return in EUR % 31.59% 11.10% -8.08% 17.29% 19.82% 6.84% 8.22% 2.58% 10.25% Excess return -0.70% 13.80% 13.30% 0.60% 6.50% -3.04% 0.34% 7.44% 3.36% 1.84% Data in EUR for the European Value composite. Performance is gross of fees and covers the period from 31/12/2007 to 31/12/2017. Please note that past performance is no indication of future performance. 24

25 Top 10 Holdings: European Value COMPANY CURRENT WEIGHT SAP 3.6% Novo Nordisk 3.3% Nilfisk Holding 3.2% Royal Dutch Shell 3.1% Pets at Home 3.1% LVMH Moet Hennessy Louis Vuitton 3.0% Hunting 2.9% AP Moeller Maersk 2.9% Ericsson 2.9% Schoeller Bleckmann 2.9% TOTAL 30.9% Data as of: 31 December 2017 Note: Holdings are listed in descending order as a percentage of total assets. Source: Mensarius AG 25

26 Sector Breakdown: European Value SECTOR CURRENT WEIGHT INDEX WEIGHT Consumer Discretionary 21.0% 10.6% Industrials 20.6% 13.6% Energy 13.9% 7.3% Information Technology 12.0% 5.0% Financials 5.8% 11.8% Health Care 5.8% 20.9% Consumer Staples 3.9% 13.7% Materials 2.5% 8.3% Real Estate 1.5% 1.4% Telecommunication Services 0.0% 3.8% Utilities 0.0% 3.6% Cash 13.0% 0.0% TOTAL 100.0% 100.0% Data as of: 31 December 2017 Note: Holdings are listed in descending order as a percentage of total assets. Source: Mensarius AG 26

27 Country Breakdown: European Value COUNTRY CURRENT WEIGHT INDEX WEIGHT United Kingdom 18.9% 27.8% Denmark 13.7% 2.9% Switzerland 11.0% 12.9% Germany 8.6% 15.4% Sweden 8.3% 4.2% Netherlands 7.9% 5.7% Italy 5.9% 3.4% France 4.8% 17.0% Austria 2.8% 0.4% Finland 2.0% 1.5% Spain 1.9% 5.1% Norway 1.2% 1.0% Belgium 0.0% 1.7% Ireland 0.0% 0.8% Portugal 0.0% 0.2% Cash 13.0% 0.0% TOTAL 100.0% 100.0% Data as of: 31 December 2017 Note: Holdings are listed in descending order as a percentage of total assets. Source: Mensarius AG 27

28 Appendix

29 UPDATE Organization Chart Board of Directors (Non-Executive) RISK MANAGEMENT Tom Stubbe Olsen CEO Peter Torndal COO Ulrik Frederiksen Business Development & Client Relations INVESTMENTS Portfolio Managers Investment Analysts OPERATIONS Administration Middle Office IT (Outsourced) Accounting COMPLIANCE CLIENT RELATIONS Business Development Product Specialist Client Relations Sales (Outsourced) 29

30 Biography Tom Stubbe Olsen Founder and Portfolio Manager Responsibilities: Portfolio Management, Investment Strategy, Analysis of Financials Investment experience: 32 years Tom Stubbe Olsen is the Founder and Portfolio Manager at Mensarius. He designed the firm s investment strategy and he has established himself as one of the leading value investors in Europe. His responsibilities include the overall responsibility of the firms portfolios and investment strategy and is supported by Portfolio Manager Cédric Jacque. Prior to forming Mensarius in 2007, Tom was the Head of Value Funds at Nordea Investment Fund S.A. He joined Nordea in 1993 as Senior Portfolio Manager of the Far Eastern Value Fund which he managed for six years. In 1998 Tom became fund manager of the European Value Fund and has built one of the longest track records in European Equities. Before his time at Nordea, Tom began his career in 1986 at Sparinvest, where he worked as Research Analyst and Portfolio Manager on Far Eastern, European and North American funds for seven years. He earned his Master of Science degree in Economics and Business Administration from the Copenhagen Business School in

31 Biography Cédric Jacque, CFA Partner and Portfolio Manager Responsibilities: Portfolio Management, Analysis of Consumer Discretionary, Consumer Staples and Energy Investment experience: 10 years Cédric Jacque joined Mensarius in September 2011 as Research Analyst. He was promoted to Senior Research Analyst in 2013 and to Portfolio Manager in Cédric became Partner in the firm in His responsibilities include Portfolio Management of the firm s portfolios together with Portfolio Manager Tom Stubbe Olsen as well as in-depth analysis of consumer discretionary, consumer staples and energy companies and sectors, building investment cases and valuation models, identifying investment opportunities within the sectors. Cédric held the position of Senior Auditor at KPMG Luxembourg from 2008 to Cédric is a CFA charter holder and earned his Master of Science degree in Finance from the University of Nancy II in

32 Biography Michael Roost Senior Sector Analyst Responsibilities: Analysis of Industrial, Automobile and Material companies Investment experience: 13 years Michael Roost joined Mensarius in 2014 as Senior Sector Analyst. His responsibilities include in-depth analysis of Industrial, Automobile and Material companies and sectors, building investment cases and valuation models, identifying investment opportunities within the sectors and keeping the Portfolio Managers abreast with developments in the companies and sectors. Prior to joining Mensarius, Michael worked for seven years as equity research analyst with Bank am Bellevue covering Industrial companies. From 2005 till 2007 he held various positions at Morgan Stanley and UBS Investment Bank (Zurich) where he was responsible for the implementation of discretionary accounts and collateral management. Michael earned his Bachelor of Commerce degree in Business Finance & Economics from the University of Kwazulu-Natal in

33 Biography Brian O Brien, CFA Sector Analyst Responsibilities: Various companies Investment experience: 7 years Brian O Brien joined Mensarius in 2017 as Research Analyst. In 2018, he was promoted to Sector Analyst. His responsibilities include in-depth analysis of Financials, Technology & Telecom sectors, building investment cases and valuation models, identifying investment opportunities within his sectors and keeping the Portfolio Managers abreast with developments in the companies and sectors. Prior to joining Mensarius, Brian worked as a Corporate Credit Analyst at Credit Suisse in Zürich, covering the European High Yield debt market and as Investment Analyst at P. Schoenfeld Asset Management and as a Junior Analyst at Fitch Rating, covering investment grade and high yield companies in the European Telecom, Media and Technology sector. Brian is a CFA charter holder and earned his Master of Science degree in Investment Analysis at the University of Stirling in 2010, and a Bachelor Degree in Laws from the Leeds Beckett University In

34 Biography Matteo Nichil Sector Analyst Responsibilities: Various companies Investment experience: 8 years Matteo Nichil joined Mensarius in 2017 as Research Analyst. In 2018, he was promoted to Sector Analyst. His responsibilities include in-depth analysis of Healthcare & Energy sectors, building investment cases and valuation models, identifying investment opportunities within his sectors and keeping the Portfolio Managers abreast with developments in the companies and sectors. Prior to joining Mensarius, Matteo served as a Private Equity Investment Executive at Stirling Square Capital Partners in London, where he focused on originating and executing transactions in several European geographies and across multiple industries, including aerospace and defense, chemicals and business services. Prior to Stirling Square, Matteo worked as an Associate in the EMEA M&A team at Bank of America Merrill Lynch in London where he worked on buy-side and sell-side transactions across numerous industries. Matteo earned his Master of Science in Mathematical Trading & Finance from Cass Business School in 2010 and his Bachelor of Science in Economics & Finance at the Università Bocconi in

35 Biography Paolo Rizzini Risk Manager Responsibilities: Investment & Corporate Risk Manager Investment experience: 19 years Paolo Rizzini joined Mensarius in 2013 and has a long experience in quantitative analysis and risk management in long-only and alternative asset management companies. His responsibilities include setting-up and maintaining the risk management framework for Mensarius and its portfolios, as well as monitoring compliance with risk limits. Paolo supports the firm s asset management function with quantitative analyses and portfolio risk and performance reports. Paolo independently monitors the risk profiles of the firm s portfolios, as well as monitoring all corporate risks. He reports directly to the Board of Directors. Prior to joining Mensarius, Paolo worked for five years as Portfolio Risk Manager in the fund-of-hedge funds business of Man Group in Switzerland. From 1999 till 2008 he worked in the asset management business of UBI Banca Group, where he started as quantitative analyst and became Head of Risk Management in Paolo earned his Master of Science degree in Statistics and Economics from the Università Cattolica of Milano in

36 Contact Us Mensarius AG Dufourstrasse Zollikon (Zurich) Switzerland Telephone clientrelations@mensarius.com

37 Disclaimer This document is directed only at persons having professional experience in matters relating to investments. If you do not have professional experience in matters relating to investments, you should not rely on it. This document is marketing material only. The information herein may be based on estimates and may in no event be relied upon. Mensarius AG does not assume any liability with respect to incorrect or incomplete information (whether received from public sources or whether prepared by itself or not). This material does neither constitute a prospectus, an offer, nor a recommendation of any kind, e.g. to buy/subscribe or sell/redeem investment instruments or to perform other transactions. This material may not be reproduced or otherwise disseminated in whole or in part without prior written consent from Mensarius. The investment instruments and/or services mentioned herein involve significant risks including the possible loss of the amount invested. Investors should understand these risks before reaching any decision with respect to these services or instruments. The start date of the Mensarius composite is the 31st December The Mensarius track record refers to the gross performance of the composite European Value Strategy for the period of 31/12/ /12/2017. Past performance is no indication or guarantee of future performance.