All Cap Value Q1 2017


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40 to 50

companies in our fully invested, concentrated portfolio

16

year track record

$341

million All Cap Value assets under management as of 3/31/2017

107%

upside market capture ratio since inception (5/1/01)

93%

downside market capture ratio since inception (5/1/01)

  • Guides

    Philosophy

    • Fundamentals drive stock prices
    • Capital preservation improves returns
    • Culture shapes investment decisions
  • Shapes

    Process

    • Thorough, proprietary research by career analysts
    • Focus on valuation and risk controls
    • Team environment – group discussion/analyst decision
  • Generates

    Portfolio

    • Concentrated and diversified
    • Long-term/low turnover
    • Fully invested/limit on cash
  • Performance

    • Consistent pattern of results
    • Objective: Outperform the benchmark over the longer term

All Cap Value

Quarter 1 2017

Equity Composite Performance

  • Cooke & Bieler - Gross of Fees
  • Cooke & Bieler - Net of Fees
  • Russell 3000® Value Index
Annualized Returns As of 3.31.2017 Source: Factset and Russell® Past Performance is not indicative of future results Taxable client returns may vary from the results above due to tax-efficient portfolio management and higher fee schedules that result from lower portfolio minimums. Click for additional C&B All Cap Value Performance Disclosures

Quality Characteristics1

  • C&B All Cap Value
  • Russell 3000® Value Index*
ROC 5 Year Avg. Cash Interest Coverage Debt/EBITDA Forecasted P/E** P/Normalized Earnings**
8.6% 10.3x 2.3x 15.8x 13.7x
3.7% 6.5x 2.8x 16.9x
ROC 5 Year Avg. 8.6% 3.7%
Cash Interest Coverage 10.3x 6.5x
Debt/EBITDA 2.3x 2.8x
Forecasted P/E** 15.8x 16.9x
P/Normalized Earnings** 13.7x
Period Ending: 3.31.2017 * Median ** Weighted Harmonic Mean Source: Factset and Russell®

Portfolio Attributes1

  • C&B All Cap Value
  • Russell 3000® Value Index
# Holdings Market Cap ($B) Range Market Cap ($B) WTD Avg. Turnover
49 0.7 - 411.1 63.4 34%
2,044 0.04 - 753.7 111.6
# Holdings 49 2,044
Market Cap ($B) Range 0.7 - 411.1 0.04 - 753.7
Market Cap ($B) WTD Avg. 63.4 111.6
Turnover 34%
Source: Factset and Russell®

Top 10 Holdings1

Mednax Inc. 3.0%
Abbott Laboratories 2.9%
AerCap Holdings NV 2.9%
Twenty-First Century Fox Inc. 2.9%
FirstCash Inc. 2.8%
Unilever NV 2.6%
Omnicom Group Inc. 2.6%
Gildan Activewear Inc. 2.5%
JPMorgan Chase & Co. 2.5%
Progressive Corp. 2.5%

Top 10 Holdings1

Mednax Inc. 3.0%
Abbott Laboratories 2.9%
AerCap Holdings NV 2.9%
Twenty-First Century Fox Inc. 2.9%
FirstCash Inc. 2.8%
Unilever NV 2.6%
Omnicom Group Inc. 2.6%
Gildan Activewear Inc. 2.5%
JPMorgan Chase & Co. 2.5%
Progressive Corp. 2.5%

Sector Weights1

  • C&B All Cap Value
  • Russell 3000® Value Index
  • Consumer Discretionary

    C&B All Cap Value
    16.4%
    Russell 3000® Value Index
    5.0%
  • Consumer Staples

    C&B All Cap Value
    6.3%
    Russell 3000® Value Index
    8.0%
  • Energy

    C&B All Cap Value
    2.9%
    Russell 3000® Value Index
    11.6%
  • Financials

    C&B All Cap Value
    28.3%
    Russell 3000® Value Index
    26.9%
  • Health Care

    C&B All Cap Value
    15.4%
    Russell 3000® Value Index
    10.3%
  • Industrials

    C&B All Cap Value
    17.2%
    Russell 3000® Value Index
    10.4%
  • Information Technology

    C&B All Cap Value
    5.6%
    Russell 3000® Value Index
    10.0%
  • Materials

    C&B All Cap Value
    6.6%
    Russell 3000® Value Index
    3.1%
  • Real Estate

    C&B All Cap Value
    Russell 3000® Value Index
    5.1%
  • Telecommunication Services

    C&B All Cap Value
    Russell 3000® Value Index
    3.4%
  • Utilities

    C&B All Cap Value
    Russell 3000® Value Index
    6.2%
  • Cash

    C&B All Cap Value
    1.3%
    Russell 3000® Value Index
Source: Factset and Russell®

Market Commentary

Download Commentary

U.S. stocks continued their upward path in the first quarter, though the drivers of these gains differed from those of late 2016. Markets struggled to process and predict the impact of legislative outcomes across a variety of industries. As a result, sectors that did well in the post-election surge took a step back, and others, particularly Health Care and Information Technology, advanced. The style characteristics that propelled equities higher in November and December also shifted. Unlike last quarter, size was not a factor. Growth outperformed value, also standing in clear contrast to the trend observed in Q4 2016.

As economic cycles mature, divergence in operating results and stock price performance increases, providing opportunities for active managers. Such opportunities can be harder to find in early portions of market cycles, when stock prices tend to be driven by a single factor, such as Quantitative Easing in the most recent case. In our view, great businesses with strong balance sheets, the ability to reinvest for growth, and that are not reliant on policy decisions are the best starting point for a successful investment strategy. These types of companies go in and out of market favor, but they also tend to quietly and steadily compound value.

Additional Cooke & Bieler All Cap Value Disclosures