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Thomas A. Russo CFA Society of Nebraska Dinner May 3, 2012.

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Presentation on theme: "Thomas A. Russo CFA Society of Nebraska Dinner May 3, 2012."— Presentation transcript:

1 Thomas A. Russo CFA Society of Nebraska Dinner May 3, 2012

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5 Musings on Global Value Equity Investing 5 Value Investing – 50 Cent Dollar Bills Stanford Business and Law School, 1982 Capacity to Reinvest 2008 market collapse Capacity to Suffer Berkshire Hathaway Nestlé – 35 year planning horizon Pernod Ricard – credit default swap mayhem SABMiller emerging market beer specialist Invest for the long term White space Position capital globally Currency gains Circle of competence Tax efficiency Virtues of low expectations! Market volatility is long-term investor friend

6 6 Capacity to Suffer B ERKSHIRE H ATHAWAY INC. GEICO Equity index put options Extraordinarily cautious short-term deposits, fiscal year, 2007

7 7 Nestlé S.A. Capacity to Reinvest

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9 YE 2008 Billionaire Brands Presentation 9

10 Nestlé Capacity to Reinvest YE 2011 Billionaire Brands Presentation 10

11 Nestle Capacity to Suffer Russian Ruble crisis (1998) Nespresso China and India Alcon (1970s through 2010) Novartis payment/DiGiorno acquisition (2010) 2011 Chinese acquisitions in confectionary (Hsu Fu Chi International ) and beverage (Yinlu.) 11

12 12 Pernod Ricard Capacity to Reinvest

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14 Pernod Ricard Capacity to Suffer China (early 2000s) Addressable market -- over 500 million cases local spirits Absolut (2009) – global leader & premium vodka India (2012) Addressable market -- over 100 million cases of India made Scotch Whiskey currently consumed Leading premium priced local Scotch Whiskey brand 14

15 15 SABMiller Capacity to Reinvest

16 16 SABMiller Capacity to Suffer

17 17 Credit Default Mayhem,

18 SABMiller Capacity to Suffer China 50% interest in Snow, Chinas leading brewer Sub-Saharan Africa Addressable market million barrels beer consumption Indian Market Addressable market – current consumption 1 liter per capita Recently completed Fosters acquisition Strategic partnership with Efes to coordinate Russian operations and expand together in Turkey, Efes home market 18

19 19 Market Volatility is a Friend of the Long-term Global Value Investor 1.Permits more effective reinvestment. 2.Offers merger and acquisition opportunity. 3.Enhances return from share repurchase.

20 20 Capacity to Suffer

21 21 Semper Vic Partners, L.P., Annual Return Semper VicDow JonesS & P YearPartnersIndustrials (Thru 3/31)12.2%8.8%12.6% %8.4%2.1% %14.0%15.1% %22.7%26.5% %-31.9%-37.0% %8.9%5.5% %19.1%15.8% %1.7%4.9% %5.3%10.9% %28.3%28.7% %-15.1%-22.1% %-5.4%-11.9% %-4.7%-9.1% %27.2%21.0% %18.1%28.6% %24.9%33.4% %28.8%23.0% %36.9%37.5% %5.0%1.3% %16.7%10.1% %7.4%7.6% %24.5%30.5% %-0.7%-3.1% %31.8%31.7% %16.2%16.5% %5.5%5.2% %27.2%18.8% %33.6%31.7% %1.0%6.2% Compound Annual Return15.3%11.7%10.6%

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26 26 Semper Vic Partners, L.P. Geographic Revenue Analysis 2011 Summary Company Developed Markets Emerging Markets Portfolio Weight Weighted Average Emerging Markets Exposure Phillip Morris International54%46%11.6%5.3% Nestle59%41%10.4%4.3% Berkshire Hathaway100%0%10.2%0.0% Compagnie Financiere Richemont67%33%7.1%2.3% SABMiller33%67%6.7%4.5% Heineken44%56%6.1%3.4% Pernod Ricard65%35%6.3%2.2% Mastercard79%21%5.2%1.1% Wells Fargo100%0%5.0%0.0% British American Tobacco31%69%4.3%3.0% Altria100%0%4.2%0.0% Unilever50% 4.1%2.1% Anheuser-Busch InBev63%37%3.9%1.4% Brown-Forman88%12%3.0%0.4% Diageo65%35%3.0%1.1% Martin Marietta Materials100%0%2.5%0.0% Comcast100%0%2.1%0.0% Scripps Networks Interactive100%0%1.4%0.0% Washington Post100%0%1.0%0.0% Hasbro88%12%0.5%0.1% Berner Gruppen100%0%0.8%0.0% Norges Handels100%0%0.1%0.0% 99.5%31.0% Notes: Analysis excludes cash held in portfolio, which is generally less than 2% of portfolio. Data from company reports, Capital IQ and GRG estimates.

27 27 Semper Vic Partners, L.P. Annual Summary of Limited Partner Returns Currency Effects Highlights Semper VicDow JonesS & P YearPartnersIndustrials (Thru 3/31)12.2%8.8%12.6% %8.4%2.1% %14.0%15.1% %22.7%26.5% %-31.9%-37.0% %8.9%5.5% %19.1%15.8% %1.7%4.9% %5.3%10.9% %28.3%28.7% %-15.1%-22.1% %-5.4%-11.9% %-4.7%-9.1% %27.2%21.0% %18.1%28.6% %24.9%33.4% %28.8%23.0% %36.9%37.5% %5.0%1.3% %16.7%10.1% %7.4%7.6% %24.5%30.5% %-0.7%-3.1% %31.8%31.7% %16.2%16.5% %5.5%5.2% %27.2%18.8% %33.6%31.7% %1.0%6.2% Compound Annual Return15.3%11.7%10.6%

28 28 Semper Vic Partners, LP Analysis of Currency Contribution From December 31, 1999 through March 31, 2012 Year Foreign Currency Portfolio Effect 1 Semper Vic Partners, (Q.P.) L.P. Total Return Semper Vic Partners, L.P. Total Return Dow Jones Industrial AverageS&P YTD2.0%11.8%12.2%8.8%12.6% %6.8%6.9%8.4%2.1% %21.2%21.5%14.1%15.1% %26.9%25.8%22.7%26.5% %-30.5%-31.5%-31.9%-37.0% %7.1%7.7%8.9%5.5% %19.8%20.8%19.1%15.8% %3.7%3.2%1.7%4.9% %10.0%11.9%5.3%10.9% %na %28.3%28.7% %na %-15.1%-22.1% %na %-5.4%-11.9% %na %-4.7%-9.1% Comparison of Contribution for the Semper Vic Partnerships Foreign Currency Portfolio Effect 1 Semper Vic Partners, (Q.P.) L.P. Total Return Semper Vic Partners, L.P. Total Return Dow Jones Industrial AverageS&P Year-1.8%15.5%15.8%10.2%8.5% 3 Year4.0%117.0%116.6%78.9%87.8% 5 Year4.6%33.3%31.7%22.7%23.5% 10 Year17.57%na %63.05%49.63% 1) Based on a weighted average 2) QP commenced 10/15/2003

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