Large Cap Value Q1 2017


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40 to 50

companies in our fully invested, concentrated portfolio

40

year track record

$3.8

billion Large Cap Value assets under management as of 3/31/2017

101%

upside market capture ratio since 2000

80%

downside market capture ratio since 2000

  • 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

Large Cap Value

Quarter 1 2017

Equity Composite Performance

  • Cooke & Bieler - Gross of Fees
  • Cooke & Bieler - Net of Fees
  • Russell 1000® Value Index
Periods Ending 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 Large Cap Value Performance Disclosures

Quality Characteristics1

  • C&B Large Cap Value
  • Russell 1000® Value Index*
ROC 5 Year Avg. Cash Interest Coverage Debt/EBITDA Forecasted P/E** P/Normalized Earnings**
8.4% 10.2x 2.3x 15.9x 14.7x
4.9% 7.0x 2.9x 16.8x -
ROC 5 Year Avg. 8.4% 4.9%
Cash Interest Coverage 10.2x 7.0x
Debt/EBITDA 2.3x 2.9x
Forecasted P/E** 15.9x 16.8x
P/Normalized Earnings** 14.7x -
Period Ending: 3.31.2017 * Median ** Weighted Harmonic Mean Source: Factset and Russell®

Portfolio Attributes1

  • C&B Large Cap Value
  • Russell 1000® Value Index
# Holdings Market Cap ($B) Range Market Cap ($B) WTD Avg. Annual Turnover
49 2.2 - 411.1 73.5 33%
692 0.6 - 753.7 121.0
# Holdings 49 692
Market Cap ($B) Range 2.2 - 411.1 0.6 - 753.7
Market Cap ($B) WTD Avg. 73.5 121.0
Annual Turnover 33%
Source: Factset and Russell®

Top 10 Holdings1

Abbott Laboratories 3.2%
Laboratory Corp. of America 3.1%
AerCap Holdings NV 3.0%
Fidelity National Financial Inc. 2.9%
Progressive Corp. 2.8%
Twenty-First Century Fox Inc. 2.8%
Gildan Activewear Inc. 2.8%
Unilever NV 2.7%
Axalta Coating Systems Ltd. 2.7%
Eaton Corp. PLC 2.6%

Top 10 Holdings1

Abbott Laboratories 3.2%
Laboratory Corp. of America 3.1%
AerCap Holdings NV 3.0%
Fidelity National Financial Inc. 2.9%
Progressive Corp. 2.8%
Twenty-First Century Fox Inc. 2.8%
Gildan Activewear Inc. 2.8%
Unilever NV 2.7%
Axalta Coating Systems Ltd. 2.7%
Eaton Corp. PLC 2.6%

Sector Weights1

  • C&B Large Cap Value
  • Russell 1000® Value Index
  • Consumer Discretionary

    C&B Large Cap Value
    15.4%
    Russell 1000® Value Index
    4.6%
  • Consumer Staples

    C&B Large Cap Value
    6.4%
    Russell 1000® Value Index
    8.5%
  • Energy

    C&B Large Cap Value
    4.9%
    Russell 1000® Value Index
    12.2%
  • Financials

    C&B Large Cap Value
    25.3%
    Russell 1000® Value Index
    26.4%
  • Health Care

    C&B Large Cap Value
    15.6%
    Russell 1000® Value Index
    10.8%
  • Industrials

    C&B Large Cap Value
    15.1%
    Russell 1000® Value Index
    10.1%
  • Information Technology

    C&B Large Cap Value
    6.6%
    Russell 1000® Value Index
    10.0%
  • Materials

    C&B Large Cap Value
    6.7%
    Russell 1000® Value Index
    2.9%
  • Real Estate

    C&B Large Cap Value
    1.8%
    Russell 1000® Value Index
    4.6%
  • Telecommunication Services

    C&B Large Cap Value
    Russell 1000® Value Index
    3.6%
  • Utilities

    C&B Large Cap Value
    Russell 1000® Value Index
    6.2%
  • Cash

    C&B Large Cap Value
    2.2%
    Russell 1000® Value Index
Source: Factset and Russell®

Market Commentary

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Large cap 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. Similarly, the style characteristics that propelled equities higher in November and December also shifted. Investors rewarded size this quarter – with stocks of large cap companies generally beating those of smaller companies – and displayed a renewed interest in higher quality businesses with good growth prospects. Companies with the highest return on capital profiles dramatically outperformed those with the lowest and as a whole growth outperformed value, standing in clear contrast to the trends 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 Large Cap Value Disclosures