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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
- 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
Concentrated Value
Quarter 2 2019
Equity Composite Performance
- Cooke & Bieler - Gross of Fees
- Cooke & Bieler - Net of Fees
- Russell 3000® Value Index
Quality Characteristics1
- C&B Concentrated Value†
- Russell 3000® Value Index*
ROC 5 Year Avg | Cash Interest Coverage | Debt/EBITDA | Forecasted P/E** | P/Normalized Earnings** |
---|---|---|---|---|
13.4% | 7.1x | 2.8x | 12.3x | 11.6x |
7.6% | 5.6x | 3.5x | 15.2x | - |
ROC 5 Year Avg | 13.4% | 7.6% |
---|---|---|
Cash Interest Coverage | 7.1x | 5.6x |
Debt/EBITDA | 2.8x | 3.5x |
Forecasted P/E** | 12.3x | 15.2x |
P/Normalized Earnings** | 11.6x | - |
Portfolio Attributes1
- C&B Concentrated Value
- Russell 3000® Value Index
# Holdings | Market Cap ($B) Range | Market Cap ($B) Wtd Avg | Annual Turnover |
---|---|---|---|
20 | 1.0 - 369.9 | 64.9 | 57% |
2,069 | 0.002 - 1,026.9 | 121.0 | - |
# Holdings | 20 | 2,069 |
---|---|---|
Market Cap ($B) Range | 1.0 - 369.9 | 0.002 - 1,026.9 |
Market Cap ($B) Wtd Avg | 64.9 | 121.0 |
Annual Turnover | 57% | - |
Top 10 Holdings1
Winnebago Industries | 7.9% |
AerCap | 7.2% |
Intercontinental Exchange | 6.1% |
Arrow Electronics | 5.9% |
Chubb | 5.7% |
Philip Morris International | 5.3% |
Brookfield Asset Management | 5.2% |
Allergan | 5.1% |
Fidelity National Financial | 4.9% |
Syneos Health | 4.7% |
Top 10 Holdings1
Winnebago Industries | 7.9% |
AerCap | 7.2% |
Intercontinental Exchange | 6.1% |
Arrow Electronics | 5.9% |
Chubb | 5.7% |
Philip Morris International | 5.3% |
Brookfield Asset Management | 5.2% |
Allergan | 5.1% |
Fidelity National Financial | 4.9% |
Syneos Health | 4.7% |
Sector Weights1
- C&B Concentrated Value
- Russell 3000® Value Index
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Communication Services
C&B Concentrated Value 7.9% Russell 3000® Value Index 6.8% -
Consumer Discretionary
C&B Concentrated Value 7.9% Russell 3000® Value Index 5.5% -
Consumer Staples
C&B Concentrated Value 5.3% Russell 3000® Value Index 7.4% -
Energy
C&B Concentrated Value — Russell 3000® Value Index 8.7% -
Financials
C&B Concentrated Value 29.5% Russell 3000® Value Index 23.0% -
Health Care
C&B Concentrated Value 17.8% Russell 3000® Value Index 14.4% -
Industrials
C&B Concentrated Value 18.1% Russell 3000® Value Index 8.2% -
Information Technology
C&B Concentrated Value 5.9% Russell 3000® Value Index 9.9% -
Materials
C&B Concentrated Value 3.9% Russell 3000® Value Index 4.0% -
Real Estate
C&B Concentrated Value — Russell 3000® Value Index 5.5% -
Utilities
C&B Concentrated Value — Russell 3000® Value Index 6.5% -
Cash
C&B Concentrated Value 3.7% Russell 3000® Value Index —
Additional Cooke & Bieler Concentrated Value Disclosures
Concentrated Value Equity Composite
Year | Total Return Gross of Fees (%) | Total Return Net of Fees (%) | Russell 3000® Value Index (%) | Russell 3000® Value Index 3-Yr Std Dev (%) | Composite 3-Yr Std Dev (%) | Composite Dispersion (%) | Market Value ($Millions) | Total Firm Assets ($Millions) | # of Portfolios |
---|---|---|---|---|---|---|---|---|---|
7/1/15-12/31/15 | (1.61) | (2.06) | (3.64) | - | <3 Years | N/M | 1.9 | 4,804.9 | <5 |
2016 | 20.75 | 19.71 | 18.40 | - | <3 Years | N/M | 2.4 | 5,303.4 | <5 |
2017 | 21.10 | 20.07 | 13.19 | - | <3 Years | N/M | 2.8 | 5,912.3 | <5 |
2018 | (6.75) | (7.60) | (8.58) | 11.05 | 13.73 | N/M | 2.6 | 5,084.6 | <5 |
N/M: 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.
Cooke & Bieler, L.P. (the Firm) is 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.
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. The Firm has been independently verified for the period January 1, 1993 through December 31, 2018. 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 Cooke & Bieler Concentrated Value Equity Composite has been examined for the period from January 1, 2018 through December 31, 2018. The examination report is available upon request.
The Cooke & Bieler Concentrated Value Equity Composite (Composite) whose inception date is July 1, 2015, currently includes all fully discretionary, fee paying, concentrated value equity portfolios managed for a full month. For investment purposes, we generally define concentrated portfolios as those consisting of 15 - 25 holdings. Holdings in this strategy generally have a market capitalization greater than $1.5b and are within the range of the Russell 3000® Index at initial time of purchase. Securities are selected using the firm’s fundamental, bottom-up approach. Portfolios are more concentrated and a subset of the All Cap Value Model Strategy. The Composite was created in August 2015.
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. The standard fee agreement is 0.85 of 1% per annum on the first $25 million of principal, 0.70 of 1% per annum on the next $25 million of principal, and 0.60 of 1% per annum on the balance, however fees are negotiable. As an example, the "cost" of the investment advisory fee of a $25 million portfolio is 0.85% on an annualized basis. In a ten-year period, the effect of the investment advisory fee may reduce a 5% annual return by as much as 13.3% on a cumulative basis. Net of fee returns are calculated quarterly by deducting one quarter of the maximum fee rate for the respective period from the gross of fee Composite return.
For comparison purposes, the composite is measured against the Russell 3000® 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. 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 dispersion is measured using an asset weighted standard deviation of portfolio returns represented within the Composite for the full year. A list of composite descriptions is available upon request. Policies for valuing portfolios, calculating performance, and preparing compliant presentations are also available upon request.
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
The second quarter was a bumpy ride for the U.S. stock market. The rally that began late last year continued through April, was upended in May by renewed concerns about the economy and a more protracted trade war, then was revived in June by the Fed’s clear pivot toward monetary easing.
The Russell 3000® Value Index (RAV) returned 3.68%, with every sector except Energy posting gains, led by Financials and Industrials. Returns were strongest for large cap stocks, but otherwise underlying market dynamics lacked discernable themes.