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Guides
Philosophy
- Fundamentals drive stock prices
- Capital preservation improves returns
- Culture shapes investment decisions
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Shapes
Process
- Thorough, proprietary research by career analysts
- Focus on valuation and risk controls
- Team environment – group discussion/analyst decision
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Generates
Portfolio
- Concentrated and diversified
- Long-term/low turnover
- Fully invested/limit on cash
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Performance
- Consistent pattern of results
- Objective: Outperform the benchmark over the longer term
Mid Cap Value
Quarter 1 2017
Equity Composite Performance
- Cooke & Bieler - Gross of Fees
- Cooke & Bieler - Net of Fees
- Russell Midcap® Value Index
Quality Characteristics1
- C&B Mid Cap Value†
- Russell Midcap® Value Index*
ROC 5 Year Avg. | Cash Interest Coverage | Debt/EBITDA | Forecast P/E** | P/Normalized Earnings** |
---|---|---|---|---|
8.0% | 10.2x | 2.3x | 15.2x | 13.5x |
4.5% | 6.4x | 3.0x | 18.0x |
ROC 5 Year Avg. | 8.0% | 4.5% |
---|---|---|
Cash Interest Coverage | 10.2x | 6.4x |
Debt/EBITDA | 2.3x | 3.0x |
Forecast P/E** | 15.2x | 18.0x |
P/Normalized Earnings** | 13.5x |
Portfolio Attributes1
- C&B Mid Cap Value
- Russell Midcap® Value Index
# Holdings | Market Cap ($B) Range | Market Cap ($B) WTD Avg. | Annual Turnover |
---|---|---|---|
48 | 0.7 - 33.3 | 9.8 | 41% |
565 | 0.6 - 39.5 | 13.8 |
# Holdings | 48 | 565 |
---|---|---|
Market Cap ($B) Range | 0.7 - 33.3 | 0.6 - 39.5 |
Market Cap ($B) WTD Avg. | 9.8 | 13.8 |
Annual Turnover | 41% |
Top 10 Holdings1
Gildan Activewear Inc. | 3.3% |
FirstCash Inc. | 3.2% |
AerCap Holdings NV | 3.0% |
Laboratory Corporation of America | 3.0% |
Fidelity National Financial Inc. | 2.8% |
Mednax Inc. | 2.8% |
RenaissanceRe Holdings Ltd. | 2.8% |
Axalta Coating Systems Ltd. | 2.6% |
Omnicom Group Inc. | 2.5% |
Whirlpool Corp. | 2.5% |
Top 10 Holdings1
Gildan Activewear Inc. | 3.3% |
FirstCash Inc. | 3.2% |
AerCap Holdings NV | 3.0% |
Laboratory Corporation of America | 3.0% |
Fidelity National Financial Inc. | 2.8% |
Mednax Inc. | 2.8% |
RenaissanceRe Holdings Ltd. | 2.8% |
Axalta Coating Systems Ltd. | 2.6% |
Omnicom Group Inc. | 2.5% |
Whirlpool Corp. | 2.5% |
Sector Weights1
- C&B Mid Cap Value
- Russell Midcap® Value Index
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Consumer Discretionary
C&B Mid Cap Value 16.7% Russell Midcap® Value Index 8.5% -
Consumer Staples
C&B Mid Cap Value 2.0% Russell Midcap® Value Index 3.3% -
Energy
C&B Mid Cap Value 1.6% Russell Midcap® Value Index 9.6% -
Financials
C&B Mid Cap Value 21.9% Russell Midcap® Value Index 19.6% -
Health Care
C&B Mid Cap Value 9.9% Russell Midcap® Value Index 4.1% -
Industrials
C&B Mid Cap Value 18.8% Russell Midcap® Value Index 12.9% -
Information Technology
C&B Mid Cap Value 10.4% Russell Midcap® Value Index 9.5% -
Materials
C&B Mid Cap Value 11.1% Russell Midcap® Value Index 6.1% -
Real Estate
C&B Mid Cap Value 1.8% Russell Midcap® Value Index 14.0% -
Telecommunication Services
C&B Mid Cap Value — Russell Midcap® Value Index 1.2% -
Utilities
C&B Mid Cap Value — Russell Midcap® Value Index 11.2% -
Cash
C&B Mid Cap Value 5.8% Russell Midcap® Value Index —
Additional Cooke & Bieler Mid Cap Value Disclosures
Mid Cap Value Equity Composite
Year | Total Return Gross of Fees (%) | Total Return Net of Fees (%) | Russell Midcap Value Index (%) | Russell Midcap Value Index 3-Yr Std. Dev (%) | Composite 3-Yr Std Dev (%) | Composite Dispersion (%) | Market Value ($Millions) | Total Firm Assets ($Millions) | # of Portfolios |
---|---|---|---|---|---|---|---|---|---|
2007 | (7.83) | (8.33) | (1.42) | - | - | 0.22 | 1,741.6 | 7,854.3 | 48 |
2008 | (32.33) | (32.70) | (38.44) | - | - | 0.60 | 737.6 | 3,910.4 | 22 |
2009 | 30.46 | 29.71 | 34.21 | - | - | 0.75 | 769.6 | 5,004.0 | 17 |
2010 | 22.64 | 21.93 | 24.75 | - | - | 0.31 | 582.0 | 4,841.5 | 12 |
2011 | (0.88) | (1.46) | (1.38) | 22.78 | 21.42 | 0.18 | 414.3 | 4,471.6 | 10 |
2012 | 20.53 | 19.82 | 18.51 | 16.76 | 17.27 | 0.25 | 452.6 | 4,434.6 | 10 |
2013 | 38.66 | 37.89 | 33.46 | 13.69 | 13.80 | 0.18 | 634.0 | 4,724.5 | 12 |
2014 | 5.65 | 5.08 | 14.75 | 9.81 | 10.98 | 0.12 | 547.7 | 4,921.9 | 11 |
2015 | (1.83) | (2.33) | (4.78) | 10.71 | 11.93 | 0.15 | 398.2 | 4,804.9 | 11 |
2016 | 24.90 | 24.25 | 20.00 | 11.30 | 13.03 | 0.29 | 441.3 | 5,303.4 | 8 |
Cooke & Bieler, L.P. claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. Cooke & Bieler has been independently verified for the period January 1, 1993 through December 31, 2014.
Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation. The Mid Cap Value Equity Composite has been examined for the period from March 1, 1998 through December 31, 2014. The verification and examination reports are available upon request.
The Firm is defined as Cooke & Bieler, L.P., an independent investment management firm, and is registered as an investment adviser under the Investment Advisers Act of 1940. Registration does not imply a certain level of skill or training.
The Cooke & Bieler Mid Cap Value Equity Composite (Composite), whose inception date is March 1, 1998, currently includes all fully discretionary, fee paying, mid cap value equity portfolios managed for more than one month. During 2012, the market value for inclusion was $1 million. Prior to 2012, the minimum market value for inclusion was $2,500. For investment purposes, mid cap equity investing is generally defined as investing in securities of companies whose market capitalizations are within the range of the Russell Midcap® Index at the time of purchase. Securities are selected using the firm’s fundamental, bottom-up approach. Portfolios are more concentrated, typically holding approximately 40-50 securities. The Composite was created in March 1998.
Rates of return are expressed in U.S. dollars. Portfolios are valued monthly on a trade date basis. Portfolio returns reflect the reinvestment of dividend and interest income and are calculated using the Modified Dietz method. Composite returns are calculated monthly by weighting portfolio returns according to the size of each portfolio at the beginning of the month.
Performance returns are presented both gross and net of fees. Gross of fee returns do not reflect the deduction of our investment advisory fees. Individual client returns will be reduced by investment advisory fees and other expenses that it may incur in the management of its investment advisory account. Investment advisory fees are described in Part 2A of Form ADV. The standard fee agreement is 0.85 of 1% per annum on the first $20 million of principal, 0.75 of 1% per annum on the next $20 million, 0.70 of 1% per annum on the next $20 million, and 0.65 of 1% per annum on the remaining balance; however, fees are negotiable. Net of fee returns reflect the deduction of actual management fees, and are calculated in the same manner as gross of fee returns. As an example, the “cost” of the investment advisory fee of a $20 million portfolio is .85% on an annualized basis. In a ten-year period, the effect of the investment advisory fee will reduce a 5% annual return by as much as 13.3% on a cumulative basis. The actual fee charged may depend on the asset size and type of portfolio.
The dispersion is the asset weighted standard deviation of portfolio returns represented within the Composite for the full year. For those annual periods with less than five portfolios included for the entire year, dispersion is not presented as it is not considered to be meaningful. A list of composite descriptions is available upon request. Policies for valuing portfolios, calculating performance, and preparing compliant presentations are also available upon request.
For comparison purposes, the composite is measured against the Russell Midcap® Value Index. The index returns are provided to represent the investment environment existing during the time periods shown and are not covered by the report of independent verifiers. Each index is fully invested and includes the reinvestment of income. The returns for each index do not include any transaction costs, management fees, or other costs. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group.
The three-year annualized ex-post standard deviation measures the variability of the composite (using gross returns) and the benchmark for the preceding 36-month period. The three-year annualized ex-post standard deviation is not required to be presented for periods prior to 2011 or when 36 monthly composite returns are not available. Past performance is not indicative of future results.
Strategy Commentary
Download Commentary
In the first quarter, the Russell Midcap® Value Index (RMV) posted the highest return of any of the major Russell Value Indices, a continuation of the robust performance seen in 2016. Performance drivers differed from those of late 2016, though, as investors struggled to process and predict the impact of legislative outcomes across a variety of industries. Sectors that did well in the post-election surge, including Energy and Financials, 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 shifted. Investors rewarded size this quarter, and displayed a renewed interest in higher quality businesses with good growth prospects. Companies with the highest return on capital profiles tended to outperform those with the lowest and growth outperformed value, standing in clear contrast to the patterns that drove markets in Q4 2016.