CAN SLIM Investment Program Investor Presentation N ORTHC OAST I NVESTMENT A DVISORY T EAM 203.532.7000 INFO@ NORTHCOASTAM. COM
NORTHCOAST ASSET MANAGEMENT An established leader in the field of tactical investment management, specializing in quantitative research and constructing institutional-caliber portfolios designed for the individual investor. E XPERIENCE. Founded in 1988 $1.8 billion in AUM (as of 12/31/2017) S TABILITY. Proprietary, quantitative, and tactical investment strategies Legacy of preserving capital during the bear markets of 2000-2002 and 2008 P ERFORMANCE. Long-term portfolio performance Exclusive Agreement with Investor s Business Daily ETF Partnership with BlackRock ishares Recognized as a Financial Times Top 300 Registered Investment Adviser (2014, 2015) ishares and BlackRock are registered trademarks of BlackRock, Inc. and its affiliates ( BlackRock ) and are used under license. BlackRock makes no representations or warranties regarding the advisability of investing in any product or service offered by NorthCoast Asset Management LLC. BlackRock has no obligation or liability in connection with the operation, marketing, trading or sale of any product or service offered by NorthCoast. The 2015 Financial Times Top 300 Registered Investment Advisors is an independent listing produced by the Financial Times (June, 2015). The FT 300 is based on data gathered from RIA firms, regulatory disclosures, and the FT s research. As identified by the FT, the listing reflected each practice s performance in six primary areas, including assets under management, asset growth, compliance record, years in existence, credentials and accessibility. Neither the RIA firms nor their employees pay a fee to The Financial Times in exchange for inclusion in the FT 300.
NorthCoast offers a suite of tactical investment strategies designed to meet the individual goals and objectives of the investor. Our dedicated advisory team will work with you to construct a portfolio catered to your needs. RISK-ADJUSTED GROWTH UPSIDE CAPTURE GROWTH INCOME ALTERNATIVE Strategies that first analyze market risk then determine the desired asset allocation and security selection Strategies that seek to generate return greater than the respective market benchmark Strategies designed to generate yield and return through traditional and non-traditional income sources Strategies that aim to generate return that is independent of the equity and fixed income markets 3
RISK-ADJUSTED GROWTH UPSIDE CAPTURE GROWTH INCOME ALTERNATIVE CAN SLIM CAN SLIM INTERNATIONAL LEGENDS VALUE VISTA CORE FIXED INCOME TACTICAL INCOME ZERO BETA GLOBAL TACTICAL GROWTH U.S. SECTOR SELECT AGGRESSIVE INCOME U.S. SECTOR SELECT HEDGED INTERNATIONAL SELECT HEDGED GLOBAL SELECT INTERNATIONAL SELECT EMERGING MARKET SELECT Constructing a Customized Portfolio Solution INCOME ALTERNATIVE Enhance client outcomes to specific risk and return needs Risk-adjusted return potential is enhanced when combining strategies with low-cross correlation RISK-ADJUSTED GROWTH Approach diversification in addition to asset class diversification UPSIDE CAPTURE 4
INVESTMENT PROGRAM What is? A stock management process derived from researching the top-performing stocks in history and identifying 7 (C-A-N-S-L-I-M) characteristics that each stock shared prior to significant price gains. Introducedand created by distinguishedinvestor, William O Neil: - Founder of the Investor s Business Daily newspaper - Author of the best-selling book: How to Make Money in Stocks. Factors Founding Guidelines Enhanced by NorthCoast C Current Earnings Growth Current earnings up 20% or more Sustainable, reasonable, and industry-adjusted A Annual Earnings Growth Annual earnings increasing 20% or more Sustainable, reasonable, and industry-adjusted N S New Product or Service Supply/Demand of Shares Product, service, or management change provides a catalyst Shares outstanding should be large and trading volume should be big as the stock price increases L Leading Industry Buy the leading stock in a leading industry I M Institutional Sponsorship Market Direction Institutional ownership by mutual funds in recent quarters should be increasing The market should be in a confirmed up trend since three out of four stocks follow the market s overall trend Analyst estimates of forward earnings impact and relative strength Short interest indicators and share buybacks Historical price, profitability and management trends Sell side analyst recommendationsand estimates Market Technicals complemented with Valuation, Sentiment, and Macroeconomic indicators 5
NorthCoast seeks long-term growth with downside risk protection through the implementation of 3 active investment tactics: Determine Equity 1 Select Stocks Exposure 2 3 Identify current risk environment through analysis of 40+ marketmoving indicators across four dimensions Technical Macroeconomic Sentiment Valuation Daily screening and scoring of 3,000+ stocks through CAN SLIM attributes and rigorous NorthCoast enhancements CAN SLIM Attributes Manage Risk Utilizing a comprehensive and collaborating set of risk controls to effectively minimize risk Market Risk Meter determines investment level between stocks/cash NorthCoast Enhancements Portfolio Construction Purchase positions that exhibit the highest risk-adjusted return potential and complement existing portfolio positions New Account Special Handling Daily Monitoring Market Exposure Beta Reduction Profit-Takes Position Sizing Sector Allocation Sustainable Research 6
BENEFITS OF DOWNSIDE PROTECTION CAN SLIM Investment Program vs. Competitive Benchmarks Hypothetical Growth of $100,000: 1/1/2007-12/31/2017 Equity Exposure CAN SLIM S&P 500 Index Morningstar Aggressive Allocation Morningstar Tactical Average 100% $225,000 90% 80% $200,000 Equity Exposure Level 70% 60% 50% 40% 30% $175,000 $150,000 $125,000 $100,000 20% 10% $75,000 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 $50,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total Thru 12/31/17 12.4% -12.8% 9.7% 16.6% -10.1% 8.6% 28.5% 12.4% -5.3% 3.0% 18.6% 104.6% Tactical Competitor Avg 6.3% -24.9% 19.6% 12.4% -2.9% 9.3% 8.5% 2.7% -5.9% 6.2% 12.3% 42.4% Aggressive Competitor Avg 7.4% -34.4% 29.3% 13.4% -3.4% 13.4% 20.9% 5.6% -2.7% 7.7% 16.1% 75.8% S&P 500 Index 4.9% -37.4% 25.5% 14.4% 1.5% 15.2% 31.5% 13.0% 0.7% 11.2% 21.1% 122.2% Past Performance is not indicative of future results. All investments involve risk, including loss of principal. NorthCoast Asset Management (NCAM) claims compliance with the Global Investment Performance Standards (GIPS ). Results are presented net-of-fees. Please reference the Appendix for additional disclosure information. 7
COMPETITIVE Annualized Returns (% Net) As of 12/31/2017 1-Year 3-Year 5-Year 10-Year Since Inception 1/1/2007 18.6 5.0 10.8 6.2 6.7 Tactical Competitor Average 12.3 3.9 4.6 3.0 3.3 Aggressive Competitor Average 16.1 6.7 9.2 5.1 5.3 S&P 500 Index 21.1 10.7 15.1 7.8 7.5 Competitive Risk Metrics (vs. S&P 500 Index) 1/1/2007 12/31/2017 Tactical Competitor Average Aggressive Competitor Average S&P 500 Index Beta 0.55 0.57 0.85 - R2 59.9% 87.5% 95.4% - Standard Deviation 10.4% 8.9% 12.8% 14.6% Sharpe Ratio 0.53 0.24 0.32 0.43 Correlation 0.77 0.94 0.98 - Max Drawdown -20.4% -34.1% -45.2% -51.4% Past Performance is not indicative of future results. All investments involve risk, including loss of principal. NorthCoast Asset Management (NCAM) claims compliance with the Global Investment Performance Standards (GIPS ). Results are presented net-of-fees. Please reference the Appendix for additional disclosure information. 8
WHY CAN SLIM? Investment Program aims to provide client portfolios with the following benefits overtime: Market Participation Lower volatility (Beta) Less drawdown +6.7% +7.5% Annualized Net Return, 1/1/2007 12/31/2017 S&P 500 S&P 500 Max Portfolio Drawdown, 1/1/2007 12/31/2017-20.4% -51.4% *Portfolio Beta (1/1/2007 12/31/2017) = 0.55 S&P 500 = 1.00 Past Performance is not indicative of future results. All investments involve risk, including loss of principal. NorthCoast Asset Management (NCAM) claims compliance with the Global Investment Performance Standards (GIPS ). Results are presented net-of-fees. Please reference the Appendix for additional disclosure information. 9
CAN SLIM - OPTIONS FOR EVERY INVESTOR Over the past decade, NorthCoast has evolved as a result of investor demand and expanded its separate account offerings. Transparency Access to daily holdings and transactions Liquidity Managed account structure offers access to capital without lockups Customization Ability to customize portfolio based on risk exposures, investor mandate, or risk/return attributes 10
CAN SLIM Investment Program 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 Does not correlate strongly 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 Quantitatively researched and rules-based management Transparent 24/7 online access. Experienced advisory team readily available to provide portfolio insight and analysis 11
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PORTFOLIO MANAGEMENT TEAM D AN K RANINGER President & Chief Executive Officer PATRICK J AMIN, CFA, FRM Chief Investment Officer KEY MANAGERS SENIOR ANALYSTS Senior Vice President, GE Private Asset Management President, O Shaughnessy Capital Management Merrill Lynch, member of JET Program B.A. in Economics, Villanova University J ULIA Z HU, CFA, FRM Senior Vice President Market & Security Research 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 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 Y AQIU L I Senior Vice President Portfolio Construction 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
DEFINITION OF STATISTICAL TERMS Beta: A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. You can think of beta as the tendency of a security's returns to respond to swings in the market. A beta of 1 indicates that the security's price will move with the market. A beta of less than 1 means that the security will be less volatile than the market. A beta of greater than 1 indicates that the security's price will be more volatile than the market. For example, if a stock s beta is 1.2, it's theoretically 20% more volatile than the market. Alpha: A measure of performance on a risk-adjusted basis. Alpha takes the volatility (price risk) of a security and compares its risk-adjusted performance to a benchmark index. The excess return of the security relative to the return of the benchmark index is a security's alpha. A positive alpha of 1.0 means the fund has outperformed its benchmark index by 1%. Correspondingly, a similar negative alpha would indicate an underperformance of 1%. R-squared: A statistical measure that represents the percentage of a security's movements that can be explained by movements in a benchmark index. For fixedincome securities, the benchmark is the T-bill. For equities, the benchmark is the S&P 500. R-squared values range from 0 to 100. An R-squared of 100 means that all movements of a security are completely explained by movements in the index. A high R-squared (between 85 and 100) indicates the portfolio s performance patterns have been in line with the index. A portfolio with a low R-squared (70 or less) doesn't act much like the index. Standard Deviation: A measure of the dispersion of a set of data from its mean. The more spread apart the data, the higher the deviation. Standard deviation is applied to the annual rate of return of an investment to measure the investment's volatility. Standard deviation is also known as historical volatility and is used by investors as a gauge for the amount of expected volatility. Sharpe Ratio: A ratio developed by Nobel laureate William F. Sharpe to measure risk-adjusted performance. The Sharpe ratio is calculated by subtracting the riskfree rate - such as that of the 10-year U.S. Treasury bond - from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns. The Sharpe ratio formula is: The Sharpe ratio tells us whether a portfolio's returns are due to smart investment decisions or a result of excess risk. This measurement is very useful because although one portfolio or fund can reap higher returns than its peers, it is only a good investment if those higher returns do not come with too much additional risk. The greater a portfolio's Sharpe ratio, the better its risk-adjusted performance has been. A negative Sharpe ratio indicates that a risk-less asset would perform better than the security being analyzed. Correlation: Correlation is computed into what is known as the correlation coefficient, which ranges between -1 and +1. Perfect positive correlation (a correlation co-efficient of +1) implies that as one security moves, either up or down, the other security will move in lockstep, in the same direction. Alternatively, perfect negative correlation means that if one security moves in either direction the security that is perfectly negatively correlated will move in the opposite direction. If the correlation is 0, the movements of the securities are said to have no correlation; they are completely random. Drawdown (Max Drawdown): The peak-to-trough decline during a specific record period of an investment. A drawdown is usually quoted as the percentage between the peak and the trough. For our purposes, the max drawdown refers to the maximum peak to trough decline between January 1, 2001 and the present time. * Source: Investopedia.com 14
IMPORTANT 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. 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 800.274.5448. 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. The CAN SLIM investment program 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 combination of CAN SLIM guidelines and a proprietary stock scoring system designed to build a comprehensive growth portfolio. Benchmarks: Aggressive Competitor Avg = Morningstar Allocation--70% to 85% Equity Category Average. Funds in allocation categories seek to provide both income and capital appreciation by investing in multiple asset classes, including stocks, bonds, and cash. These portfolios are dominated by domestic holdings and have equity exposures between 70% and 85%.. 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. 15
IMPORTANT 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 DOES NOT 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. 16