SMID Cap Value Q1 2017


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40 to 50

companies in our fully invested, concentrated portfolio

13

year track record

$17

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

98%

upside market capture ratio since inception (1/1/04)

91%

downside market capture ratio since inception (1/1/04)

  • 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

SMID Cap Value

Quarter 1 2017

Equity Composite Performance

  • Cooke & Bieler - Gross of Fees
  • Cooke & Bieler - Net of Fees
  • Russell 2500™ 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 SMID Cap Value Performance Disclosures

Quality Characteristics1

  • C&B SMID Cap Value
  • Russell 2500™ Value Index*
ROC 5 Year Avg Cash Interest Coverage Debt/Ebitda Forecast P/E** P/Normalized Earnings**
6.9% 8.0x 2.6x 15.3x 13.2x
3.4% 6.2x 2.8x 18.4x
ROC 5 Year Avg 6.9% 3.4%
Cash Interest Coverage 8.0x 6.2x
Debt/Ebitda 2.6x 2.8x
Forecast P/E** 15.3x 18.4x
P/Normalized Earnings** 13.2x
Period Ending: 3.31.2017 * Median ** Weighted Harmonic Mean Source: Factset and Russell®

Portfolio Attributes1

  • C&B SMID Cap Value
  • Russell 2500™ Value Index
# Holdings Market Cap ($B) Range Market Cap ($B) WTD Avg Annual Turnover
44 0.7 - 25.3 5.0 54%
1,704 0.04 - 19.0 4.4
# Holdings 44 1,704
Market Cap ($B) Range 0.7 - 25.3 0.04 - 19.0
Market Cap ($B) WTD Avg 5.0 4.4
Annual Turnover 54%
Source: Factset and Russell®

Top 10 Holdings1

Hill-Rom Holdings Inc. 4.1%
FirstCash Inc. 3.9%
Mednax Inc. 3.6%
Gildan Activewear Inc. 3.3%
Quanex Building Products Corp. 3.2%
Winnebago Industries Inc. 3.2%
AerCap Holdings NV 3.1%
Steelcase Inc. 3.0%
Laboratory Corporation of America 3.0%
Umpqua Holdings Corp. 2.8%

Top 10 Holdings1

Hill-Rom Holdings Inc. 4.1%
FirstCash Inc. 3.9%
Mednax Inc. 3.6%
Gildan Activewear Inc. 3.3%
Quanex Building Products Corp. 3.2%
Winnebago Industries Inc. 3.2%
AerCap Holdings NV 3.1%
Steelcase Inc. 3.0%
Laboratory Corporation of America 3.0%
Umpqua Holdings Corp. 2.8%

Sector Weights1

  • C&B SMID Cap Value
  • Russell 2500™ Value Index
  • Consumer Discretionary

    C&B SMID Cap Value
    18.3%
    Russell 2500™ Value Index
    8.7%
  • Consumer Staples

    C&B SMID Cap Value
    2.0%
    Russell 2500™ Value Index
    2.7%
  • Energy

    C&B SMID Cap Value
    1.7%
    Russell 2500™ Value Index
    7.0%
  • Financials

    C&B SMID Cap Value
    21.0%
    Russell 2500™ Value Index
    26.9%
  • Health Care

    C&B SMID Cap Value
    10.6%
    Russell 2500™ Value Index
    4.5%
  • Industrials

    C&B SMID Cap Value
    20.5%
    Russell 2500™ Value Index
    13.4%
  • Information Technology

    C&B SMID Cap Value
    6.9%
    Russell 2500™ Value Index
    9.4%
  • Materials

    C&B SMID Cap Value
    13.0%
    Russell 2500™ Value Index
    5.7%
  • Real Estate

    C&B SMID Cap Value
    1.9%
    Russell 2500™ Value Index
    14.2%
  • Telecommunication Services

    C&B SMID Cap Value
    Russell 2500™ Value Index
    0.5%
  • Utilities

    C&B SMID Cap Value
    Russell 2500™ Value Index
    6.8%
  • Cash

    C&B SMID Cap Value
    4.1%
    Russell 2500™ Value Index
Source: Factset and Russell®

Market Commentary

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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. 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.

Additional Cooke & Bieler SMID Cap Value Disclosures