Traditional Values. Independent Thinking
Cartesian Capital Partners
This presentation is for professional clients and investment professionals only and should not be relied upon by retail clients.
Traditional Values. Independent Thinking
Quarterly update Ignis Cartesian UK Opportunities Fund and Ignis International Cartesian Enhanced Alpha Fund Tuesday 31 July, 10.00am (BST) / 11.00am (CEST)
Andrew Kelly, Partner and Investment Manager, Cartesian Capital Partners Jeremy Hall, Partner and Investment Manager, Cartesian Capital Partners
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Traditional Values. Independent Thinking
Contents •
Review of the quarter
•
Focus on valuation
•
Positioning
•
Q&A
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Traditional Values. Independent Thinking
Cumulative performance (% growth) Q2 Q1 Calendar Calendar Calendar Calendar Calendar Calendar Since 1 2 3 3 3 3 3 3 # 2012 2012 Year 2011 Year 2010 Year 2009 Year 2008 Year 2007 Year 2006 Launch Cartesian UK Opps Fund
-3.0
10.7
-3.9
12.3
11.3
-29.5
4.6
27.9
21.9
Relative to FTSE All-Share
-0.4
+4.6
-0.4
-2.2
-18.8
+0.4
-0.7
+11.1
-5.7
Percentile Rank (IMA)
34
25
23
87
100
39
37
8
46
Q1 Calendar Calendar Calendar Calendar Calendar Calendar Since Q2 5 6 6 6 6 6 6 4 2012 2012 Year 2011 Year 2010 Year 2009 Year 2008 Year 2007 Year 2006 Launch* Cartesian Enhanced Alpha Fund
-1.6
7.5
3.8
30.5
1.6
-20.0
-
-
24.5
Relative to FTSE All-Share
+1.0
+1.4
+7.2
+16.0
-28.5
+9.9
-
-
+19.8
6
57
2
6
100
3
-
-
5
Percentile Rank (IMA) 1 Source:
Lipper, bid to bid, net income reinvested 3 months to 29/06/2012. 2 Source: Lipper, bid to bid, net income reinvested 3 months to 30/03/2012. 3 Source: Lipper, bid to bid, net income reinvested to end December each year. # Source: Lipper, bid to bid, net income reinvested since launch to 29/06/2012. The Ignis Cartesian UK Opportunities Fund was launched on 29 December 2005 . *Source: Lipper, NAV to NAV, gross income reinvested since launch to 29/06/2012. The Ignis International Cartesian Enhanced Alpha Fund was launched 8 November 2007. 4 Source:
Lipper, NAV to NAV, gross income reinvested 3 months to 29/06/2012. 5 Source: Lipper, NAV to NAV, gross income reinvested 3 months to 30/03/2012. 6 Source: Lipper, NAV to NAV, gross income reinvested to end December each year Past performance is not a guide to the future. The value of investments and any income from them can fall as well as rise and you may not get back the amount originally invested. Performance data does not take into account the commissions and costs incurred on the issue and redemption of shares in the funds.
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Traditional Values. Independent Thinking
Diligent Analysis Top Down Story Economy/Themes/Technical
Company Analysis Fundamentals/Best of British
Valuation The price paid!
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Traditional Values. Independent Thinking
Focus on valuation FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE FTSE
ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX ASX
Mining Index Oil Gas Produce Banks Index Automobiles Prt Life Insurance Leisure Goods Fixed Line Tele Nonlife Insur Food Drug Retl Indust Transprt Pharm & Biotech Gen Retailers Gen Industrials Aero & Defense Fin Services Electricity Mobile Telecom Indust Engineer Media Index Elect/Ele Equip Oil Equip Serv Gas Water Util Construct Mater Support Srvcs Travel Leisure Health Care Eqp Hous Gd & Hm Cn Chemicals Index Sftwr Comp Srvs Tobacco Index Food Producers Beverages Index Personal Goods Tech Hardware
INDX_WEIGHT 8.89 17.31 9.55 0.19 3.09 0.01 1.22 0.86 2.30 0.11 7.46 1.49 0.70 2.09 1.59 0.84 5.47 0.83 2.77 0.42 0.69 3.08 0.74 3.94 2.69 0.42 1.86 0.68 0.83 5.40 2.15 4.11 0.41 0.68
FTSE ALL-SHARE INDEX
PRICE 1M 1.6 4.4 7.2 15.6 2.2 12.3 3.5 3.8 1.7 4.5 0.2 2.3 4.6 2.2 0.1 7.6 0.4 1.5 6.1 2.6 8.7 0.2 4.4 1.7 1.1 5.8 1.2 0.5 6.5 2.4 2.6 5.3 4.3 6.3
PRICE 3M 19.0 2.0 9.8 0.7 3.3 18.0 0.1 3.5 1.5 6.7 0.8 5.9 5.2 1.0 5.6 4.7 3.6 14.7 0.2 11.6 14.5 0.0 4.3 4.7 1.5 7.4 4.2 9.3 7.8 1.9 1.3 2.9 11.7 2.8
PRICE 6M 24.7 7.7 9.4 3.6 3.5 33.0 4.7 8.4 1.9 3.0 1.9 3.9 5.3 6.8 0.2 3.0 2.1 8.9 4.0 3.6 1.6 9.5 6.4 4.5 6.6 8.4 3.5 8.0 9.3 10.1 3.6 13.4 4.2 3.8
PE 8.0 8.3 8.4 8.4 8.6 8.7 8.8 9.3 9.8 10.2 10.4 10.5 10.5 10.6 10.6 10.8 11.2 11.3 11.7 12.2 12.3 12.5 12.7 13.1 13.1 13.2 13.4 13.8 14.1 14.5 15.0 16.4 17.5 26.3
EPS 4WK 6.7 4.1 0.1 3.5 0.9 2.3 1.0 2.5 0.6 1.6 1.7 2.1 0.1 0.0 2.1 0.3 2.5 3.0 1.3 0.3 0.4 2.2 1.4 0.9 1.0 0.4 3.3 0.7 0.1 0.6 2.4 6.2 1.2 2.2
EPS 3M 9.4 3.1 1.7 3.0 6.3 1.9 2.7 0.7 0.8 2.7 1.5 2.5 1.6 0.1 3.4 2.7 4.7 3.8 1.8 2.2 1.7 2.7 2.6 0.7 0.1 4.6 5.1 0.8 3.1 1.2 3.2 7.4 0.3 2.3
EPS 6M 22.6 7.0 2.8 0.6 1.3 4.5 10.2 1.5 2.1 1.9 3.5 3.5 3.1 2.1 22.6 3.7 0.1 0.7 0.2 6.1 0.0 8.8 1.1 2.1 3.0 2.2 5.4 6.7 6.3 1.9 6.9 15.3 11.2 8.0
1.0
3.9
3.2
10.3
1.9
1.9
3.9
Source: Bloomberg/Cartesian at 24/07/2012. 5
Traditional Values. Independent Thinking
Focus on valuation •
The market appears cheap – 10.3x earnings, however…
•
Are the earnings downgrades for “lowly” rated sectors concluded?
•
Or, are further downgrades priced in?
•
And, can the market spot this anyway?
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Traditional Values. Independent Thinking
Focus on valuation – BHP Billiton (price and earnings forecasts)
Source: Bloomberg at 25/07/2012. 7
Traditional Values. Independent Thinking
Focus on valuation – BHP Billiton (Op margin and PE)
Source: Bloomberg at 25/07/2012. 8
Traditional Values. Independent Thinking
Focus on valuation – Stagecoach (price and earnings forecast)
Source: Bloomberg at 25/07/2012. 9
Traditional Values. Independent Thinking
Focus on valuation – Stagecoach (Op margin, PE and sales)
Source: Bloomberg at 25/07/2012. 10
Traditional Values. Independent Thinking
Focus on valuation – Greene King (price and earnings forecast)
Source: Bloomberg at 25/07/2012. 11
Traditional Values. Independent Thinking
Focus on valuation – Greene King (Op margin, PE and sales)
Source: Bloomberg at 25/07/2012. 12
Traditional Values. Independent Thinking
Focus on valuation – conclusions •
Yes, pockets of valuation exist, but…
•
Be discerning about valuation
•
Top down can be hazardous!
•
Market offers broad opportunities
•
…but, diligence and care is required!
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Traditional Values. Independent Thinking
Ignis Cartesian UK Opportunities Fund Current portfolio Stock
Active %
UK Emerging
Weighting %
Sector
Weighting Active % %
Nautical Petroleum
+3.0
Advanced Medical Solutions
1.2
Oil & Gas
21.1
+3.3
Stagecoach
+2.7
Digital Barriers
0.6
Consumer Services
16.7
+7.5
Shire
+2.6
Genus
0.6
Technology
12.8
+11.4
Greene King
+2.1
Iomart
1.6
Healthcare
11.5
+3.8
ITV
+2.1
Monitise
1.3
Financials
8.7
-11.6
Imagination Tech
+2.0
Oxford Instruments
1.7
Consumer Goods
7.3
-6.6
Falkland Oil & Gas
+2.0
Spectris
0.9
Industrials
7.3
-1.5
Telecity
+1.8
Spirent Communications
1.0
Telecoms
5.7
-1.0
Snoozebox
+1.7
XP Power
1.1
Basic Materials
2.7
-6.7
Oxford Instruments
+1.7
Utilities
2.0
-2.0
CSR
+1.7
ARM Holdings
+1.6
Iomart
+1.6
Tullow Oil
+1.6
WPP
+1.4
Market Cap
Weighting %
FTSE 100
49.5
Mid cap
23.9
Small cap/other
22.4
Cash
4.2
Source: Internal at 29/06/2012. 14
Traditional Values. Independent Thinking
Ignis International Cartesian Enhanced Alpha Fund Current portfolio Stock
Active %
UK Emerging
Weighting % 1.2
Sector
Short %
Long %
Net %
Consumer Services
-3.2
25.7
+22.5
1.1
Oil & Gas
-0.6
20.3
+19.7
Digital Barriers
0.6
Healthcare
0.0
18.4
+18.4
+3.0
Genus
1.6
Technology
-1.3
14.5
+13.2
ARM Holdings
+2.6
Gooch & Housego
1.9
Financials
-4.3
11.4
+7.1
Shire
+2.6
Iomart
1.8
Consumer Goods
-2.4
9.2
+6.8
Lancashire Holdings
+2.5
Monitise
1.9
Industrials
-9.1
8.8
-0.3
ITV
+2.4
Oxford Instruments
2.2
Telecoms
-1.4
6.7
+5.3
CSR
+2.4
Spectris
0.9
Utilities
0.0
2.4
+2.4
Oxford Instruments
+2.1
Spirent Communications
1.1
Basic Materials
0.0
1.1
+1.1
AstraZeneca
+2.1
Ted Baker
1.0
Smith & Nephew
+2.0
XP Power
1.6
UBM
+2.0
Monitise
+1.9
Falkland Oil & Gas
+1.9
Nautical Petroleum
+3.3
Advanced Medical Solutions
Greene King
+3.3
Anite
Stagecoach
+3.1
Imagination Tech
Source: Internal at 29/06/2012. 15
Traditional Values. Independent Thinking
Q&A
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Traditional Values. Independent Thinking
Contact details Investment Management
Cartesian Capital Partners LLP
Address:
46 Melville Street Edinburgh EH3 7HF
Telephone: Email:
0131 220 7910
[email protected]
Website:
www.cartesiancapital.co.uk
Sales & Marketing
Ignis Asset Management
Address:
50 Bothwell Street Glasgow G2 6HR
Broker Sales Desk: Email:
0845 60 50 444
[email protected]
Website:
www.ignisasset.com
Telephone calls may be monitored and/or recorded for the purpose of security, internal training, accurate account operation, internal customer monitoring and to improve the quality of service. 17
Traditional Values. Independent Thinking
Disclosure This presentation is for professional clients and investment professionals only and should not be relied upon by retail clients. This communication has promotional purposes and is intended as a summary. It does not constitute an invitation, offer, solicitation or recommendation to purchase or sell shares in the Fund. It is only intended for distribution to Investment Professionals. Distribution of this document and the offering of shares in certain jurisdictions may be restricted by law and accordingly persons into whose possession this document comes are required to inform themselves about and to observe such restrictions. The views expressed do not constitute investment advice. This presentation does not form any part of any contract for the sale or purchase of any investment. Subscriptions in the Funds are only valid if made on the basis of the current Prospectus, the Supplement to the Prospectus, the most recent financial reports and the Key Investor Information Document (KIID), which are available on our website www.ignisasset.com. UK based investors should read the KIID in conjunction with the Supplementary Information Document (SID) before investing with us. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change. Potential investors must consult their financial & tax advisers before purchasing or selling shares in the Funds. The Ignis Cartesian UK Opportunities Fund was launched on 29/12/05 and is a UK authorised unit trust which is not registered for sale outside the UK. The Ignis International Cartesian Enhanced Alpha Fund was launched on 08/11/2007 and is a sub-fund of Ignis International Funds plc which is an open-ended investment company with variable capital incorporated in Ireland with registered number 410033. Registered Office: 1 Grand Canal Square, Grand Canal Harbour, Dublin 2, Ireland. Authorised and regulated by the Central Bank of Ireland. The Ignis International Cartesian Enhanced Alpha is currently registered for sale in the following countries, Austria, Belgium, France, Finland, Germany, Italy, Luxembourg, Netherlands, Norway, Spain, Sweden, Switzerland and the UK. Copies of all relevant scheme documentation can be obtained free of charge from the locally appointed paying agents. Austrian Paying Agent: Bank of Austria, Creditanstalt, 9991/AMG, PO Box 35, A-1011 Vienna; Belgium Paying Agent: Fastnet Belgium SA, B-1000 Brussels, Avenue de Port 86C, b320; French Paying Agent: Société Générale SA, 29 Boulevard Haussmann, F-75009 Paris; German Information Agent: Société Générale SA, Frankfurt Branch, Mainzer Landstr. 36, D-60325 Frankfurt; Italian Paying Agent: ALLFUNDS BANK, S.A. 7 Via Santa Margherita 1-20121, Milan; Luxembourg Paying Agent: Société Générale, 11 Avenue Emile Reuter, L-2420 Luxembourg; Netherlands Paying Agent: ING Bank NV, Van Heenvlietlaan 220, Location Code BV.06.01, NL-1083 CN Amsterdam; Spanish Paying Agent: RBC Dexia Investor Services España SA, Fernando el Santo 20, ES-Madrid; Swedish Paying Agent: SEB Merchant Banking, Securities Services, Global Funds, RA6, Rissnelden 110, SE-106 40 Stockholm, Sweden; Swiss Representative: First Independent Fund Services Ltd., Klausstrasse 33, CH-8008 Zurich. Paying Agent in Switzerland is NPB Neue Privat Bank AG, Limmatquai 1, P.O. Box, CH-8022 Zurich. Cartesian Capital TM and the Cartesian Capital logo are trademarks owned by Ignis Investment Services Ltd and are used under licence by Ignis Fund Managers Ltd. Issued by Ignis Investment Services Limited. Registered in Scotland Number SC101825. Registered Office: 50 Bothwell Street, Glasgow G2 6HR. Authorised and regulated by the Financial Services Authority 18
