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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 2 2019
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 | Forecasted P/E** | P/Normalized Earnings** |
---|---|---|---|---|
13.5% | 10.1x | 2.6x | 12.7x | 12.4x |
9.1% | 6.3x | 3.4x | 16.3x | - |
ROC 5 Year Avg | 13.5% | 9.1% |
---|---|---|
Cash Interest Coverage | 10.1x | 6.3x |
Debt/EBITDA | 2.6x | 3.4x |
Forecasted P/E** | 12.7x | 16.3x |
P/Normalized Earnings** | 12.4x | - |
Portfolio Attributes1
- C&B Mid Cap Value
- Russell Midcap® Value Index
# Holdings | Market Cap ($B) Range | Market Cap ($B) Wtd Avg | Annual Turnover |
---|---|---|---|
47 | 0.6 - 46.7 | 11.2 | 35% |
587 | 0.7 - 41.7 | 15.7 | - |
# Holdings | 47 | 587 |
---|---|---|
Market Cap ($B) Range | 0.6 - 46.7 | 0.7 - 41.7 |
Market Cap ($B) Wtd Avg | 11.2 | 15.7 |
Annual Turnover | 35% | - |
Top 10 Holdings1
Fidelity National Financial | 3.3% |
Arrow Electronics | 3.2% |
Reliance Steel & Aluminum | 3.0% |
AerCap | 2.8% |
Helen of Troy | 2.8% |
American Eagle Outfitters | 2.8% |
Schweitzer-Mauduit International | 2.7% |
TCF Financial | 2.7% |
Synchrony Financial | 2.6% |
Syneos Health | 2.5% |
Top 10 Holdings1
Fidelity National Financial | 3.3% |
Arrow Electronics | 3.2% |
Reliance Steel & Aluminum | 3.0% |
AerCap | 2.8% |
Helen of Troy | 2.8% |
American Eagle Outfitters | 2.8% |
Schweitzer-Mauduit International | 2.7% |
TCF Financial | 2.7% |
Synchrony Financial | 2.6% |
Syneos Health | 2.5% |
Sector Weights1
- C&B Mid Cap Value
- Russell Midcap® Value Index
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Communication Services
C&B Mid Cap Value 3.3% Russell Midcap® Value Index 3.2% -
Consumer Discretionary
C&B Mid Cap Value 13.7% Russell Midcap® Value Index 8.4% -
Consumer Staples
C&B Mid Cap Value — Russell Midcap® Value Index 4.7% -
Energy
C&B Mid Cap Value — Russell Midcap® Value Index 5.4% -
Financials
C&B Mid Cap Value 20.1% Russell Midcap® Value Index 17.8% -
Health Care
C&B Mid Cap Value 10.0% Russell Midcap® Value Index 7.1% -
Industrials
C&B Mid Cap Value 24.0% Russell Midcap® Value Index 12.7% -
Information Technology
C&B Mid Cap Value 12.3% Russell Midcap® Value Index 9.0% -
Materials
C&B Mid Cap Value 10.0% Russell Midcap® Value Index 6.0% -
Real Estate
C&B Mid Cap Value 1.9% Russell Midcap® Value Index 14.0% -
Utilities
C&B Mid Cap Value — Russell Midcap® Value Index 11.4% -
Cash
C&B Mid Cap Value 4.8% 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 |
---|---|---|---|---|---|---|---|---|---|
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 |
2017 | 16.30 | 15.33 | 13.34 | 10.32 | 11.72 | 0.13 | 496.9 | 5,912.3 | 7 |
2018 | (13.58) | (14.32) | (12.29) | 11.96 | 13.89 | 0.07 | 483.6 | 5,084.6 | 9 |
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 Mid Cap Value Equity Composite has been examined for the period from March 1, 1998 through December 31, 2018. The examination report is available upon request.
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, we generally define mid cap equity securities as those of companies whose market capitalization is within the Russell Midcap® Index at initial 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. The standard fee agreement is 0.75 of 1% on the first $25 million, 0.65 of 1% on the next $25 million and 0.58 of 1% per annum on the remaining balance, however fees are negotiable. As an example, the "cost" of the investment advisory fee of a $25 million portfolio is .75% 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 11.8% on a cumulative basis. Effective 1/1/2017, net of fee returns are calculated monthly by deducting one twelfth of the maximum fee rate for the respective period across all accounts in the composite. Prior to 1/1/2017, net of fee returns reflect the deduction of actual management fees.
For comparison purposes, the Composite is measured against the Russell Midcap® Value Index. The Russell Midcap® Value Index measures the performance of those companies with lower price-to-book ratios and lower forecasted growth values. The stocks are also members of the Russell 1000® 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 Midcap® Value Index (RMV) returned 3.19%, with the strongest gains in Industrials and Communication Services, while Energy lagged significantly. Returns were strongest for large cap stocks, but otherwise underlying market dynamics lacked discernable themes.