NorthCoast Growth. Tactical All-Cap Growth Strategy. Investor Presentation N ORTHC OAST I NVESTMENT A DVISORY T EAM

Transcription

1 NorthCoast Growth Tactical All-Cap Growth Strategy Investor Presentation N ORTHC OAST I NVESTMENT A DVISORY T EAM INFO@ NORTHCOASTAM. COM

2 NORTHCOAST ASSET MANAGEMENT T HE N ORTHC OAST A DVANTAGE EXPERIENCE STABILITY Founded in 1988 $1.8 billion in AUM (as of 6/30/2018) Proprietary, quantitative, and tactical investment strategies Legacy of preserving capital during the bear markets of and 2008 Long-term portfolio performance Exclusive Agreement with Investor s Business Daily ETF Partnership with BlackRock ishares C ORE I NVESTMENT B ELIEFS MARKETS CHANGE AVOID BIG LOSSES NO ONE KNOWS THE FUTURE Even if you re on the right track, you ll get run over if you just sit there. - Will Rogers The first rule is not to lose money. The second rule is not to forget the first rule. - Warren Buffett Wall Street experts have perfected the art of being wrong with confidence. - Bennett Goodspeed 2

3 NORTHCOAST GROWTH NorthCoast Growth seeks long-term growth with downside risk protection through the implementation of 3 active investment tactics: Analyze Market 1 Select Securities Environment 2 3 Manage Risk Identify current risk environment through analysis of 40+ market-moving indicators across four dimensions Technical Macroeconomic Sentiment Valuation Market Risk Meter determines investment level between stocks/cash Daily screening and filtering of 6,000+ stocks through rigorous NorthCoast signals is designed to select stocks with superior risk-adjusted potential Sample Signals Include: Estimates Sentiment Relative Valuation Short Interest Technicals Quality Portfolio Construction Stock Scoring 0 to 40 stocks with ~2-4% weighting allocated to each position Positions monitored daily and action executed at strategic inflection points New Account Special Handling Daily Monitoring Market Exposure Beta Reduction Profit-Takes Position Sizing Sector Allocation Sustainable Research Ongoing research continues to test and assess market signals for sustained accuracy and relevance in today s market 3

4 ANALYZE MARKET ENVIRONMENT CASH SCALING NorthCoast Growth relies on intense daily research of 150+ market indicators across 4 market driving dimensions NorthCoast Cash Scaling Indicator Sample Indicators include: Technical 20/50/100/200 Day Moving Averages Accumulation/Distribution Days Relative Strength Sentiment Put/Call Ratio AAII Bull/Bear Index Mutual Fund/ETF Flows Macroeconomic Year-Over-Year CPI Employment Ratio Indicators Yield Curve Valuation Dividend Yield Inflation adjusted Earnings Yield Price/Earnings NorthCoast Cash Scaling Indicator, = 100% equity invested; 0 = 100% cash More information on NorthCoast cash scaling can be found online NorthCoast Cash Scaling Whitepaper 4

5 STOCK SELECTION We believe underlying factors drive a stock s future performance (positive or negative). Our research focuses on identifying these factors. We utilize 21 individual data points across 7 broad categories. Hypothetical Stock A Example Category Score Weighting Factor Category Score Example Factor Valuation Comprehensive Value Sentiment Management Behavior Diffusion of Information Technical Institutional Attention 0.4 EBITDA trends vs. Enterprise value 2.4 Historical Earnings Yield relative to peer group 1.0 Earnings Estimates revisions 0.4 Stock buy-back or issuance 2.3 Stock price movement relative to information flow 1.0 Price trends in a 12 month window -0.7 Short borrowing activity Composite Score +2.1 Stock Score from -3 to +3 (on a relative scale) The example above shows a hypothetical score of NorthCoast s proprietary security selection tool. 5

6 RISK MANAGEMENT NorthCoast Growth utilizes a variety of risk controls to effectively minimize risk throughout the strategy Risk Control New Account Special Handling Daily Monitoring Beta Reduction Market Exposure Sell-Stops* Profit-Takes* Position Sizing Sector Allocation Sustainable Research Management Implementation New cash accounts take 1-3 months to achieve current allocation target. Attractive entry points are targeted for new positions reduce drawdown potential Positions monitored daily and action executed at strategic inflection points Analyze volatility and drawdown Active market outlook monitors macro environment Target maximum 30% loss per position, depending on expected volatility of individual stock Lock in profit with every 25% price increase Position sizes range from target exposure from 2% to 4% to minimize stock specific risk on the downside Sector allocation maintains +/- 10% allocation with market sector allocation to reduce sector-specific risk Assessing model behavior for sustained accuracy and relevance *Examples of Sell-Stops and Profit-Takes can be found in the Appendix 6

7 & CHARACTERISTICS: 6/30/2018 Past Performance is not indicative of future results. All investments involve risk, including loss of principal. Results are presented net-of-fees. Please reference the Appendix for additional disclosure information. 7

8 2 Ways NorthCoast Growth can fit into a client s allocation Complement a Portfolio as the Tactical/Satellite piece Tactical/Satellite Utilize as the Equity Growth piece of an Asset Allocation All-Cap Growth 10-30% 10-25% NorthCoast Growth CAN SLIM Equities 20-30% NorthCoast CAN SLIM Growth CAN SLIM All-Cap Value 5-25% Fixed Income Alternative Fixed Income 25-50% Gold/ Commodities Real Estate Commodities 20%-30% 10% 0-25% 8

9 NorthCoast Growth is a methodical alternative to passive buy and hold strategies. Consider the following benefits for your clients: Accessible Complementary Defensive A $100,000 account minimum Low correlation to typical benchmarks making it an appealing complement to a strategic or asset allocation portfolio Able to shift between 100% equity and 100% cash equivalents or anywhere between, depending on market conditions Disciplined Quantitative research and rules-based management Transparent Separately managed account (SMA) structure provides real-time account access 9

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11 RISK MANAGEMENT SELL STOPS Customized stop loss target per position, depending on expected volatility of individual stock Basic Materials Mining Company = Buy Point = Sell Point Source: MarketSmith. Individual securities are for informational purposes only and NCAM may not recommend this position at the time of publication. 11

12 RISK MANAGEMENT PROFIT TAKES & EXIT POINTS Lock in profit with every 25% price increase Chinese Lodging Company = Buy Point = Profit Take = Sell Point Source: MarketSmith. Individual securities are for informational purposes only and NCAM may not recommend this position at the time of publication. 12

13 PORTFOLIO MANAGEMENT TEAM D AN K RANINGER P ATRICK J AMIN, CFA, FRM President & Chief Executive Officer Chief Investment Officer KEY MANAGERS Senior Vice President, GE Private Asset Management President, O Shaughnessy Capital Management Merrill Lynch, member of JET Program B.A. in Economics, Villanova University Partner, Numeric Investors (European strategies / World Fundamental Statistical Arbitrage Strategy) Partner, Portfolio Manager, Standard Pacific Capital; Global Long/Short Equity Fund Senior Quantitative Analyst, Invesco; Global Quantitative Fund M.B.A., Harvard Business School, Baker Scholar, Arthur Sachs Scholar M.S. in Telecommunications, Ecole Nationale Superieure des Telecommunications de Paris Ingenieur de I Ecole Polytechnique, Ecole Polytechnique SENIOR ANALYSTS J ULIA Z HU, CFA, FRM YAQIU L I Senior Vice President Market & Security Research Senior Vice President Portfolio Construction Vice President, Research Affiliates, LLC - Quantitative research in equity strategies and asset allocation Associate, First Quadrant, LP Conducted research on GTAA and tactical currency allocation products Master of Economics, Yale University, PhD Candidate M.B.A. with concentration in Finance, University of Southern California Climate Modeling China s National Key Lab of Atmospheric Science, Chinese Academy of Sciences M.S. in Quantitative and Computational Finance & M.S. in Statistics, Georgia Tech, PhD Candidate CFA Level III Candidate PORTFOLIO ENGINEERS S LAVA M ALKIN S UMANTH A MARCHINTA J ASON K RUGLY Senior Vice President Vice President Vice President Quantitative currency trading strategies BNP Paribas Portfolio Manager of global macro strategies Research in Global Tactical Asset Allocation strategies Deutsche Asset Management M.S. in Statistics, Harvard University Senior Investment Analyst, Pyramis Global Advisors Quantitative research and portfolio management M.S. in Computer Engineering, Rochester Institute of Technology B.S. in Electrical Engineering, Roorkee Indian Institute of Technology Research experience with Bank of America, Merrill Lynch, Credit Suisse, Deutsche Bank M.S. in Financial Engineering, Baruch College B.S. & M.S. in Computer Science, Polytechnic Institute of New York University 13

14 DISCLOSURE INFORMATION Past Performance is not indicative of future results. All investments involve risk, including loss of principal. The firm is defined as NorthCoast Asset Management LLC. NCAM was established in 1988 and is an independent Registered Investment Advisor (RIA) registered with the Securities and Exchange Commission (SEC). The firm is a full service investment management company. The firm specializes in quantitative investment programs. NCAM is located in Greenwich, CT, and is not affiliated with any parent organization and has no other offices operating under the same brand name. Performance results shown from November 1, 2012 through March 31, 2013, are the actual results of a single-account composite managed according to the dictates of the strategy. Since April 1, 2013, actual performance results are based on widely accepted performance standards and represent the net composite time-weighted return for the strategy. Returns are presented net-of-fees. Net-of-fee returns are reduced by trading costs and the portfolio s actual management fee. Valuations are computed and performance is reported in U.S. dollars. A complete list of composite descriptions is available upon request. Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request. To obtain a compliant presentation for the associated strategy, please contact one of our advisors at Single account composite performance results reflect the results of actual trading using a single client account managed in accordance with the dictates of the program. Other accounts are excluded to prevent additions, withdrawals and client mandated customizations from biasing the performance results. However actual client accounts are not insulated from these factors. Therefore actual client accounts may have experienced investment results during the corresponding time periods that were materially different from those portrayed in the model. Account statements for the single account for the period are available for inspection upon request. This information contained herein has been prepared by NCAM on the basis of publicly available information, internally developed data and other third party sources believed to be reliable. This material is for informational and illustrative purposes only and should not be viewed as a recommendation or a solicitation to buy or sell any securities or investment products or to adopt any investment strategy. NorthCoast Growth is a tactical, long-term growth strategy focused on capital appreciation with a secondary objective of downside protection. The strategy invests in leading growth stocks during favorable equity environments and scales to cash to preserve gains when bear market risk is high. The strategy adheres to a flexible investment mandate that allows for allocation shifts that range between 0%-100% exposure to equities. Positions are managed (purchased and liquidated) through a proprietary stock scoring system designed to build a comprehensive growth portfolio. Benchmarks - Aggressive Competitor Avg = Morningstar Aggressive Allocation Category Average. Aggressive allocation portfolios seek to provide both capital appreciation and income by investing in three major areas: stocks, bonds, and cash. These portfolios tend to hold larger positions in stocks than moderate-allocation portfolios. These portfolios typically have 70% to 90% of assets in equities and the remainder in fixed income and cash. Tactical Competitor Avg = Morningstar Tactical Allocation Category Average. Tactical Allocation portfolios seek to provide capital appreciation and income by actively shifting allocations between asset classes. These portfolios have material shifts across equity regions and bond sectors on a frequent basis. To qualify for the Tactical Allocation category, the fund must first meet the requirements to be considered in an allocation category. Next, the fund must historically demonstrate material shifts within the primary asset classes either through a gradual shift over three years or through a series of material shifts on a quarterly basis. The cumulative asset class exposure changes must exceed 10% over the measurement period. The S&P 500 Index is used for comparison purposes as it represents a sample of the 500 leading companies in leading industries of the U.S. economy. It is generally considered a proxy for the total market. 14

15 DISCLOSURE INFORMATION This information contained herein has been prepared by NorthCoast Asset Management, LLC ("NorthCoast") on the basis of publicly available information, internally developed data and other third party sources believed to be reliable. NorthCoast has not sought to independently verify information obtained from public and third party sources and makes no representations or warranties as to accuracy, completeness or reliability of such information. All opinions and views constitute judgments as of the date of writing without regard to the date on which the reader may receive or access the information, and are subject to change at any time without notice and with no obligation to update. This material is for informational and illustrative purposes only and is intended solely for the information of those to whom it is distributed by NorthCoast. No part of this material may be reproduced or retransmitted in any manner without the prior written permission of NorthCoast. NorthCoast does not represent, warrant or guarantee that this information is suitable for any investment purpose and it should not be used as a basis for investment decisions. PAST DOESNOT GUARANTEE OR INDICATE FUTURE RESULTS. This material should not be viewed as a current or past recommendation or a solicitation of an offer to buy or sell any securities or investment products or to adopt any investment strategy. The reader should not assume that any investments in companies, securities, sectors, strategies and/or markets identified or described herein were or will be profitable and no representation is made that any investor will or is likely to achieve results comparable to those shown or will make any profit or will be able to avoid incurring substantial losses. Performance differences for certain investors may occur due to various factors, including timing of investment. Investment return will fluctuate and may be volatile, especially over short time horizons. INVESTING ENTAILS RISKS, INCLUDING POSSIBLE LOSS OF SOME OR ALL OF THE INVESTOR'S PRINCIPAL. The investment views and market opinions/analyses expressed herein may not reflect those of NorthCoast as a whole and different views may be expressed based on different investment styles, objectives, views or philosophies. To the extent that these materials contain statements about the future, such statements are forward looking and subject to a number of risks and uncertainties. 15