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Buffettology February 2019
Investing is most intelligent when it is most business-like
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Important Information
Buffettology Important Information For professional investors only and should not be distributed or shown to retail investors This presentation is approved as a financial promotion for the above purpose only by Castlefield Investment Partners LLP (CIP). The Authorised Corporate Director (ACD) of the CFP SDL UK Buffettology Fund (‘Buffettology Fund’) is Castlefield Fund Partners Limited (CFP), which is authorised and regulated by the Financial Conduct Authority. Registered in England & Wales No Registered Office: 111 Piccadilly, Manchester, M1 2HY. Sanford DeLand Asset Management Ltd (SDL) is registered in England & Wales No Registered office: 8th Floor, 111 Piccadilly Manchester, M1 2HY. SDL is an Appointed Representative of Castlefield Investment Partners LLP (CIP), which is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange. CIP is registered in England & Wales No. OC302833 Opinions constitute our judgement as of this date and are subject to change without warning. The officers, employees and agents of CIP, may have positions in any securities mentioned herein. This document shall be governed by and construed in accordance with the law of England and Wales and is subject to the exclusive jurisdiction of the English Courts. The information, products and services referred to in this publication are not directed at any person or entity in any jurisdiction or country outside the United Kingdom. The value of investments, and the income from them, can go down as well as up, and you may not recover the amount of your original investment. Past performance is not necessarily a guide to future performance. Where an investment involves exposure to a foreign currency, changes in rates of exchange may cause the value of the investment, and the income from it, to go up or down. In the case of some investments, you should be aware that there is no recognised market for them, and that it may therefore be difficult for you to deal in them or for you to obtain reliable information about their value or the extent of the risks to which they are exposed. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors. Before contemplating any transaction, you should consider whether you require financial advice, which we would be pleased to provide upon request. Whilst the contents of this document are provided in good faith for information purposes only, no representation or warranty, express or implied is given by CIP or by any of its partners, members, employees or agents as to its accuracy or completeness or that it is up to date, and it should not be relied on as such. To the fullest extent allowed by law and the rules and regulations of the FCA, CIP and its partners, members, employees and agent shall not be liable, whether in contract, tort (including negligence) or otherwise howsoever, for any losses, damages, costs or expenses of whatever nature (including (without limitation) any consequential, indirect or unforeseeable loss or loss of bargain, opportunity or profit) incurred or suffered by you or any third party arising out of or in connection with the use of the contents of this document. The information in this presentation is not intended as an offer or solicitation to buy or sell securities or any other investment or banking product, nor does it constitute a personal recommendation.
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Sanford DeLand Asset Management Ltd.
Buffettology Sanford DeLand Asset Management Ltd. Privately owned, established March 2010 Keith Ashworth-Lord: Over 30 years’ experience in equity markets Invests significant amount of net worth in the fund Fundamental bottom-up stock picking approach Concentrated Portfolio consisting of 25 – 35 stocks Unconstrained by benchmarks The only Buffettology license holder outside of the US The Buffettology Fund has the highest risk-adjusted returns in the IA UK All Companies sector since launch* Source: *Data from FE based on the returns of the Institutional Income share class to 31 January All performance stated has been calculated as net. Past performance is not a guide to future performance; the value of an investment and income from it can go down as well as up.
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The Team behind Buffettology Sanford DeLand
Keith Ashworth-Lord Managing Director Prior to founding Sanford DeLand, Keith was a self-employed consultant working with a variety of stockbroking, fund management and investor clients. He is a Chartered Fellow of the Chartered Institute for Securities and Investment. Rosemary Banyard Investment Director Andrew Vaughan Investment Research Analyst Rosemary has had a very successful career within fund management, managing various UK small and mid-cap equity mandates for retail and Institutional clients at Schroder's before joining Sanford DeLand. Prior to joining Sanford DeLand, Andrew held consulting roles in research, with a specialisation in Business Perspective Investment. He previously worked in equity research and sales in London and the Far East. Buffettology
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Buffettology In the long-term, there is a 100% correlation between the success of a business and its share price performance Fund Performance Total outperformance since inception: % Annualised outperformance: % Outperformance 3 Month 6 Month 1 Year 3 Year 5 Year Since Inception CFP SDL UK Buffettology Fund Institutional Inc TR in GB -9.90% -5.65% 0.37% 41.00% 83.49% 192.70% IA UK All Companies -12.46% -13.49% -11.19% 12.20% 18.41% 59.51% Rank 43 / 266 2 / 266 3 / 263 4 / 250 2 / 238 1 / 222 Quartile 1 Source: Data from FE based on the returns of the Institutional Income share class to 31 December All performance stated has been calculated as net. Past performance is not a guide to future performance; the value of an investment and income from it can go down as well as up.
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What is Buffettology Investing?
Business Perspective Investing Long-term, there is a 100% correlation between the success of a business and its share price performance, the ideal holding period of an investment is forever. Key fundamental requirements: Excellent Businesses Bought at Discounted Prices Investment Opportunity Enduring franchise with pricing power and growth potential Predictable earnings Higher return on capital and equity Strong free cash flow Robust balance sheet Strong senior management
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Non-patented proprietary technology Patented proprietary technology
Buffettology Great investment opportunities arise when excellent companies are affected by unusual circumstances Economic Moats People Skills Brand Power Non-patented proprietary technology Patented proprietary technology Games Workshop
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Stock Example Financial Performance About Rotork May 2015:
Patented proprietary technology Stock Example Financial Performance About Rotork The market leading actuator manufacturer and flow control company operating in any market where the flow of gases or liquids needs to be controlled. Rotork Site Services offers expertise for the design, installation and commissioning of retrofitted valve actuators and control systems. Target growth achieved through organic development and acquisition. Strong balance sheet and ongoing cash generation at 109%. Market Cap £2,451.92m Sector Industrial Engineering Index UK Stock Market Date first bought: 8 June 2011 Price when first bought: May 2015: 10:1 share split Source: as at 31/01/19. Price shown is a price from the month the stock was added to the portfolio. Past performance is not a guide to future performance; the value of an investment and income from it can go down as well as up. Buffettology
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Stock Example Financial Performance About Bioventix Buffettology
Non-patented proprietary technology Stock Example Financial Performance About Bioventix Monoclonal antibodies harvested from sheep. Used in diagnostic blood test assays, e.g. Vitamin D deficiency, cardiac arrest. Annuity-type business model with all R&D expensed as incurred. Moat comes from regulatory process. High margins, high return on equity and excellent cash generation. Does not need cash for reinvestment so pays it out as dividends. Market Cap £170.70m Sector Pharmaceuticals & Biotechnology Index UK Stock Market Date first bought: 3 December 2014 Price when first bought: Source: as at 31/01/19. Price shown is a price from the month the stock was added to the portfolio. Past performance is not a guide to future performance; the value of an investment and income from it can go down as well as up. Buffettology
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Financial Performance
People Skills Stock Example Financial Performance About RWS Holdings The UK’s leading patent and commercial translations business with a roster of large multinational clients located in Europe and the US. Unique skill set with translators being graduates in both linguistics and (usually) a scientific specialisation. Strong and unbroken sales, earnings and dividend record going back to flotation in Achieved through a combination of organic growth and bolt-on acquisitions. Consistent converter of 100% of earnings into free cash and high teens returns on equity. Market Cap £1,297.96m Sector Support Services Index UK Stock Market Date first bought: 12 April 2011 Price when first bought: Source: as at 31/01/19. Price shown is a price from the month the stock was added to the portfolio. Past performance is not a guide to future performance; the value of an investment and income from it can go down as well as up. Buffettology
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Games Workshop Stock Example Financial Performance
Brand Power Games Workshop Stock Example Financial Performance About Games Workshop Group The largest and the most successful hobby miniatures company in the world. Their major brands are Warhammer and Warhammer 40,000 with products sold through their chain of over 400 retail stores internationally. Circa 70% of sales revenue generated from overseas, benefiting from the continuing favourable impact of the weaker pound. Surplus cash returned to owners, aiming to do so in ever increasing amounts. Market Cap £950.57m Sector Leisure Goods Index UK Stock Market Date first bought: 6 April 2011 Price when first bought: Source: as at 31/01/19. Price shown is a price from the month the stock was added to the portfolio. Past performance is not a guide to future performance; the value of an investment and income from it can go down as well as up. Buffettology
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Geographical Earnings Exposure
Buffettology Portfolio Snapshot Market Cap Breakdown Geographical Earnings Exposure Sector Exposure As at 31 January 2019
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Conclusion Proprietary model
Diversified exposure to quality UK stocks Buffettology Conclusion Track Record % Over 5 years* Low volatility, high total and risk-adjusted returns* Disciplined, patient, thorough process Low correlation to top asset raisers* Proprietary model Source: *Data from FE based on the returns of the Institutional Income share class to 31 December 2018. All performance stated has been calculated as net. Past performance is not a guide to future performance; the value of an investment and income from it can go down as well as up.
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Further Important Information
Buffettology Further Important Information You should not rely on any information or opinions contained in this document in making an investment or other decision but should obtain appropriate and specific professional advice of your own. Nothing contained in this document constitutes or should be construed to constitute investment, legal, tax or other advice. The information supplied is not and in no way should be construed to constitute a recommendation with respect to the purchase or sale of any investment. In particular: Market price may not be fully reflected in underlying net asset value. The value of the investment may go down as well as up and an investor may not get back the full amount invested. Any shares held (even if listed on the London Stock Exchange’s market for listed securities) are likely to be illiquid and shareholders may have difficulty in selling them. Units in funds may also be illiquid in certain circumstances. Past performance is not necessarily a guide to future performance. There can be no guarantee that investment objectives can be achieved. Portfolio investments in smaller companies typically involves a higher degree of risk. There are potential difficulties in acquiring, valuing and disposing of underlying investments and information for determining the value or risks may also not be available. The value of the portfolio companies depends on stock market conditions. Existing tax rules and legislation may change over time and changes can be retrospective. The value of any tax reliefs depends on the personal circumstances of the investors, who should consult their own tax advisers before making an investment. Whilst the contents of this document are provided in good faith for information purposes only, no representation or warranty, express or implied is given by Castlefield or by any of its partners, members or employees as to its accuracy or completeness or that it is up to date, and it should not be relied on as such. To the fullest extent allowed by law and the rules and regulations of the FCA, Castlefield and its partners, members and employees shall not be liable, whether in contract, tort (including negligence) or otherwise howsoever, for any losses, damages, costs or expenses of whatever nature (including (without limitation) any consequential, indirect or unforeseeable loss or loss of bargain, opportunity or profit) incurred or suffered by you or any third party arising out of or in connection with the use of the contents of this document. Compliance Code: TNBUFFPRESAY/080119
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Business Perspective Investing
Buffettology Investing is most intelligent when it is most business-like Appendix 1. The Filter Initial Screen Watch List Business Perspective Investing Universe 3000 Growth Record Profitability Return on Equity Free Cash Generation Portfolio Holdings Superior Business with High Economic Worth Long Term View 45-60 Companies Proprietary Model Analysis Forecasting & Valuation Target Entry Level
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FUNDAMENTAL CHANGE BLACK SWAN OVERSIGHT SWITCH
Buffettology Appendix 2. Sell discipline FUNDAMENTAL CHANGE BLACK SWAN Sell: Since launch, 15 company investments completely sold & 3 taken over 12 month Portfolio Turnover Rate: 6.9% OVERSIGHT SWITCH
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Buffettology The ideal holding period of an investment is forever
Appendix 3. Low Volatility, High Returns Since inception (31/03/11) Buffettology Fund Tracker Funds Average Sector Average Annualised Return +14.73% +5.49% +6.02% Annualised Volatility +10.22% +13.72% +12.62% Tracker Funds sit here Source: Data from FE Analytics based on the returns of the Institutional Income share class as at 31 December 2018.
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Appendix 4. Historically Low Correlation
Buffettology To achieve superior performance you have to do things differently from the crowd Appendix 4. Historically Low Correlation The SDL funds have historically shown a lower than average correlation to the top 5 largest funds in the IA UK All Companies sector Over 1 year CFP - SDL Free Spirit Acc GBP in GB CFP - SDL UK Buffettology Institutional Inc TR in GB Halifax - UK Growth C TR in GB Invesco - High Income (UK) Z Acc TR in GB LF - Woodford Equity Income C Acc GBP in GB Lindsell Train - LF Lindsell Train UK Equity Acc in GB TB - Evenlode Income B Inc TR in GB CFP SDL Free Spirit Acc GBP in GB 0.83 0.79 0.73 0.82 0.7 CFP SDL UK Buffettology Institutional Inc TR in GB 0.64 0.77 0.87 Halifax UK Growth C TR in GB 0.93 Invesco High Income (UK) Z Acc TR in GB 0.94 0.84 0.85 LF Woodford Equity Income C Acc GBP in GB 0.89 Lindsell Train LF Lindsell Train UK Equity Acc in GB TB Evenlode Income B Inc TR in GB Source: Data from FE based on the returns of the Institutional Income share class over 1 years as at 31 December 2018 (ex-Tracker Funds)
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The Fund has positive returns for every full calendar year:
Buffettology Appendix 5. Discrete Performance The Fund has positive returns for every full calendar year: 2018 2017 2016 2015 2014 2013 2012 Since Inception Mar 2011 to Dec 2018 CFP SDL UK Buffettology Fund Institutional Inc TR in GB 0.4 25.6 11.9 27.9 1.8 36.0 34.3 192.7 Sector : IA UK All Companies TR in GB -11.2 14.0 10.8 4.9 0.6 26.2 15.1 59.5 Index : UK Stock Market TR -9.5 13.1 16.8 1.0 1.2 20.8 12.3 58.4 Source: Data from FE based on the returns of the Institutional Income share class to 31 December 2018. All performance stated has been calculated as net. Past performance is not a guide to future performance; the value of an investment and income from it can go down as well as up.
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Appendix 6. Top Quartile Fund Ratios
Buffettology Margin of Safety – the 3 most important words in investing Appendix 6. Top Quartile Fund Ratios Over 5 Years CFP SDL UK Buffettology Institutional Inc TR in GB Sector : IA UK All Companies TR in GB Quartile Alpha 10.20 0.00 1 Beta 0.70 1.00 Downside Risk 11.41 12.23 Info Ratio Rel. 1.26 Jensens Alpha 9.09 Max Drawdown -11.12 -16.18 Max Gain 10.11 11.29 4 Max Loss -7.70 -9.08 Negative Periods 99.00 115.00 Positive Periods 161.00 145.00 r2 0.61 Relative Return 9.07 Return 12.66 3.29 Sharpe 0.90 Sortino 0.80 -0.02 Tracking Error 7.19 Treynor 13.01 -0.21 Volatility 10.19 11.30 Source: Data from FE based on the returns of the Institutional share class to 31 December 2018.
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Appendix 6. Availability
Buffettology Appendix 6. Availability Platforms Approved Ascentric AXA Elevate Aviva All Funds Bank CoFunds Transact FNZ Alliance Trust Hargreaves Lansdown Selftrade Novia Old Mutual Nucleus Aegon James Hay Pershing Fidelity Standard Life Seven Investment Management AJ Bell Zurich
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Appendix 7. How To Invest Buffettology
Shares may be bought directly from Castlefield Fund Partners or through a professional adviser or other intermediary, application forms may be obtained from Castlefield. The dealing office is normally open from 9.00 a.m. to 5.30 p.m. (London time) on each Dealing Day to receive requests for the purchase, sale or conversion of Shares. Valid applications to purchase shares received before the Valuation Point on a Business Day will be processed at the Share price calculated at that Valuation Point. Settlement is due within four business days of the Valuation Point. The initial purchase must, at the discretion of Castlefield, be accompanied by an application form. The current Valuation Point is noon London time on each Dealing Day. Share Classes and Type of Shares General Income Shares Institutional Income Shares Institutional Accumulation Shares Investment Adviser’s Annual Management Fee 1.5% 1.0% ACD’s Annual Management Fee 0.2% OCF ~1.73% ~1.23% Minimum Initial Investment (Waived via platforms) £500 £250,000 Minimum Holding Minimum Top Up £100 £10,000 Minimum Regular Savings Plan £50 per month Not available ISIN Code GB00B3QQFJ66 GB00BKJ9C676 GB00BFOLDZ31 Dividend Frequency Half Yearly SIPP/SSAS/ Offshore Bond Eligible Yes ISA/ Regular Savings Eligible Postal Application 8th Floor, 111 Piccadilly, Manchester, M1 2HY Telephone
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Contact Details 020 7071 3968 info@sanford-deland.uk
Buffettology Contact Details For further information or to request a copy of the prospectus, please contact our team at Candlewick Capital: Candlewick Capital is a division of LGBR Capital London Limited. LGBR Capital London Limited is an Appointed Representative of Mirabella Advisers LLP, which is authorised and regulated by the Financial Conduct Authority.
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