Presentación Seilern IM: Funds Experience 2016

Agenda

October 2016 2

The Company1

The Process 3

The Philosophy2

4 Investing in the Seilern Universe

5 Portfolios and Performance

Seilern Investment Management Ltd. | An Introduction

October 2016 3

Conviction

Commitment

Independence

Longevity Business founded in 1989 by Peter Seilern, the current Chairman

One single investment philosophy since inception

Concentrated equity portfolios of 17-25 high-quality growth companies

All research is proprietary and the company is employee owned

October 2016 4

The Company1

The Process 3

The Philosophy2



Agenda

Philosophy

We believe that earnings drive share prices.

Our investments focus on exceptional companies that demonstrate

quality and high, consistent earning power.

Long-term investments in these companies will yield above average

results with lower risk.

October 2016 5

What Makes an Exceptional Company?

October 2016 6

Proven track record of growthSustainable and scalable

business model

Successful and motivated

management team Investable and liquid

Consistent and predictable

earnings

Double digit earnings growth

over a cycle

Leaders within their industry

with superior growth

Sustainable competitive

advantages

Excellent financials

High return on capital

Listed on an OECD

market

Market capitalisation of

over $3bn

Transparent accounting

Long-term strategy and

vision

Ability to implement

strategy

Interests are aligned with

shareholders

Seilern

Universe

In Practice | Qualities We Look For

October 2016 7

Compelling Industry Growth Utilities, banks and telecom

High Pricing Power Commodities, oil and gas, banks, and

airlines

Low Capital Intensity Heavy industrials, automotive, and

banks

Transparent Accounting Banks and insurance

We look for: Which excludes…

October 2016 8

The Company1

The Process 3

The Philosophy2



Agenda

Selection Process and Monitoring | The Seilern Universe

October 2016 9

The Seilern Universe is the result of years of research and accumulated

knowledge. Every company within the Seilern Universe is continually

monitored.

Analysts cover a maximum of 14 companies, and closely follow all aspects of the value

chain. During this process they:

• Conduct company visits

• Review and Analyse Quarterly Reports

• Monitor Management, Competition and Strategy

60-70

companies

Narrowed through an

elimination process and

rigorous research

40,000

listed

companies

Leaving only the highest

quality companies

Selection Process and Monitoring | Entering and Exiting

October 2016 10

RESEARCH EXIT

Initial Screening

• OECD Listed

• Market cap in excess of

$3bn

Detailed Investigation into Candidates

Analysts conduct a thorough investigation and analysis of companies

that have passed the pre-selection process, narrowing the list further

Approval Process

Fund managers must unanimously agree that the company is

appropriate for the Seilern Universe, before the company is

presented to the Chairman for final approval

Conduct Growth Screens

• Screen on sales, EBIT,

EPS growth

Review Growth Themes

PRE-SELECTION

Very Low Turnover

Companies leave

the Seilern Universe

infrequently, usually

for the following

reasons:

• A major change

in the company

or industry

• Management

changes

• Growth slowing

Produce Base Report

Analysts produce a lengthy report on a short list of candidates that

are strong possibilities for inclusion into the Seilern Universe

Qualities of the Seilern Universe

October 2016 11

SEILERN UNIVERSE S&P 500

Record

Year Founded 1944 1999

Sales Growth 2011-2015 CAGR 7.1% 3.8%

EPS Growth 2011-2015 CAGR 10.7% 7.4%

Growth

Sales Growth 2016-2020e CAGR 6.6% 2.8%

EPS Growth 2016-2020e CAGR 11.5% 6.9%

Quality

Return on Capital Employed 2016e 21.3% 10.5%

Cash conversion 2016e 101% 75%

Net debt / FCF 2016e 0.0x 1.3x

Adjusted Net Profit v. Reported Net Profit 2010-2015 +1% +30%

Portfolio Construction | Balancing Quality & Growth

October 2016 12

Accelerating growth rate

Lower level of

predictability

Established companies

with long track records

High level of predictability

Lower growth rate

Consistent growth rates

High quality companies

High Growth High Quality Balanced

Portfolio Construction | Characteristics

October 2015

13

Portfolios are constructed by the fund managers, by selecting 17-25 stocks

from within the Seilern Universe

Low turnover of approximately 25%

Considerations in determining portfolio weighting and entry and exit points:

DCF

EV/EBITDA

Historic multiples

Implied PE

Price Targets

Positive

Negative

Bull Market vs. Bear

Market

Quality vs. Growth

Valuation CatalystsMarket Cycle

Market Liquidity

Stock Liquidity

Liquidity

October 2016

October 2016 14

The Company1

The Process 3

The Philosophy2



Agenda

Assets Under Management

October 2016 15

The global fund, which

invests in OECD country

companies

AUM: 290m USD

Inception date: 15.01.96

The American fund, which

invests in North

American companies

AUM: 26m USD


The European fund,

which invests in

European companies

AUM: 54m EUR


Stryx World Growth

Stryx America

Stryx Europa

Tailor-made accounts

based on the Stryx fund

strategies

Segregated Accounts

67%

16%

6%

11%

AUM by product (€m)

Stryx World Growth

Stryx Europa

Stryx America

Segregated Accounts

Total AUM above €400m

175

195

215

235

255

275

295

315

335

Stryx Funds AUM (€m)Seilern Universe

October 2016 16

The Company1

The Process 3

The Philosophy2



Agenda

Performance, Fees and Operations | Stryx World Growth

October 2016

Stryx

World Growth

CAGR %

MSCI

World TR

USD CAGR %

Inception (5 July 2006) 7.7% 4.8%

2016 7.2% 5.6%

3 years 11.4% 5.8%

5 years 15.8% 11.6%

PERFORMANCE (NET OF FEES – AS OF 30TH SEPTEMBER 2016)

FEES AND OPERATIONS

USD I share class

Inception Date: 15 January 1996 (CHF Class)

Management Fee: GBP I and USD I Class 0.75%

Others 1.50%

Performance Fee: None

Turnover: 18%

Total Expense Ratio: 0.9% (USD I Class)

Currency: USD, GBP, EUR, CHF (hedged); USD, GBP, EUR (unhedged)

FIVE YEAR PERFORMANCEUSD I Share Class

Stryx World Growth MSCI World TR

+108.2%

+73.3%

17

Performance, Fees and Operations | Stryx Europa

October 2016

Stryx

Europa

CAGR %

MSCI

Europe TR

CAGR %

Inception (16 Oct 2009) 13.3% 7.6%

2016 -6.0% -3.3%

3 years 7.0% 5.8%

5 years 14.8% 11.3%


FEES AND OPERATIONS

Inception Date: 16 October 2009

Management Fee: >€1m H Class 1.00%

<€1m Retail Class 1.50%


Turnover: 12%

Total Expense Ratio: 1.2% (H Class)

Currency: EUR

FIVE YEAR PERFORMANCE

Founders share class

Founders Share Class

+71.1%

+99.6%

Stryx Europa MSCI Europe TR

18

Performance, Fees and Operations | Stryx America

October 2016

Stryx America

CAGR %

S&P 500 TR

USD

CAGR %

Inception (11 June 2007) 6.3% 6.3%

2016 9.7% 7.8%

3 years 13.8% 11.2%

5 years 17.4% 16.4%


FEES AND OPERATIONS

Inception Date: 11 June 2007

Management Fee: USD I Class 0.75%

USD Class 1.50%


Turnover: 21%

Total Expense Ratio: 0.9% (USD I Class)

Currency: USD

FIVE YEAR PERFORMANCEUSD I Share Class

USD I share class

Stryx America S&P 500 TR

+122.7%

+113.4%

19

In Summary

Our investment philosophy is

anchored in the belief that

earnings drive share prices.

October 2016

1 2

Through in-depth proprietary

research, we seek out

companies that demonstrate

both quality and growth.

We are extremely selective. We

choose 60-70 of the very best for

inclusion into our investment

universe – the Seilern Universe.

3 4

We are long-term investors.

Companies within the Seilern

Universe perform across market

cycles.

20

October 2016

Frequently Asked

Questions

21

What are the top holdings of Stryx World Growth?

October 2016 22

Top 10 Holdings 30 June 2016

MasterCard 5.9%

UnitedHealth 5.8%

Automatic Data Processing 5.8%

Dassault Systèmes 5.5%

Xylem 5.4%

Priceline Group 5.2%

Stryker Corp 5.2%

Cognizant 5.0%

Amgen 4.8%

Accenture 4.7%

Fund Statistics 30 June 2016

Number of holdings 24

Fund prospective PE (2016) 20.2

Fund prospective FCF yield (2016) 6.6%

Weighted market capitalisation $84bn

Net debt / FCF (2016) 0.7 years

Return on invested capital (2016) 21%

FCF / net profit (2016) 96.7%

Weighted EPS growth (2015-2020) 8% p.a.

What are the top holdings of Stryx Europa?

October 2016 23


SGS 8.1%

Assa Abloy 8.0%

Dassault Systèmes 8.0%

Gemalto 7.6%

Essilor 5.1%

Novozymes 5.1%

Nestlé 5.0%

Novo Nordisk 4.9%

Lindt 4.9%

Intertek 4.8%





Weighted market capitalisation €32bn

Net debt / FCF (2016) -0.5 years

Return on invested capital (2016) 14%

FCF / net profit (2016) 87.3%


What are the top holdings of Stryx America?

October 2016 24


UnitedHealth 7.3%

MasterCard 7.0%

Automatic Data Processing 6.9%

CME 6.0%

Priceline 5.6%

Cognizant 5.4%

Stryker Corp 5.1%

Ulta Salon 5.0%

Xylem 4.7%

3M 4.7%





Weighted market capitalisation $88bn

Net debt / FCF (2016) 0.2 years

Return on Invested Capital (2016) 23%

FCF / Net profit (2016) 93.6%


What is the organisational and ownership structure?

October 2016 25

Board of Directors

Investment Team

Finance and Operations

Peter Seilern-Aspang

Chairman

Founder

Francis Seilern-Aspang

Non-Executive Director

Jean-Michel Boehm

CEO

Tassilo Seilern-Aspang

Fund Manager

Raphael Pitoun

CIO

Fund Manager

Yuan Wang

Finance Manager

Cassie Sereda

Head of Business

Development

Fatima Mohamed

Office Manager

Raphael Pitoun

CIO

Fund Manager


Fund Manager

Fernando Leon

Analyst

Corentin Massin

Analyst

Jean-Michel Boehm

CEO


Chairman

Founder

Seilern Investment Management is fully employee owned. All staff with over 18 months tenure are shareholders.

Michael Faherty

Analyst

Who are the members of the investment team?

October 2016 26

Raphael Pitoun

CIO and Fund Manager


Fund Manager

Fernando Leon

Analyst

Corentin Massin, CFA

Analyst


Chairman and Founder

Peter has been active in the financial services industry

since 1973 when he joined Creditanstalt-Bankverein in

Vienna. He served as an institutional portfolio manager

with Hambros Bank Limited between 1979 and 1986. In

1986 he joined Notz, Stucki and Cie, Geneva and London,

where he managed private client portfolios until 1989. He

is the majority owner of Seilern Investment Management

Ltd.

Tassilo started his career in 2008 as an analyst at SI Capital

in Barcelona, which specializes in private equity for

renewable energy projects. He joined I&F in Liechtenstein in

2009 where he advised on the upcoming changes in the

local trust law. In 2010 he was hired by SIM as an analyst

where he focused on the Stryx Europa fund. He later

became assistant fund manager, taking over full

management of the fund in July 2014. Tassilo is a graduate

of Trinity College in Dublin and completed the Diploma

program at the Diplomatic Academy of Vienna.

Corentin graduated from Reims Management School in

2011 with a degree in International Business. He then

completed a Masters in Finance at the Ecole Superieure

de Commerce de Reims in 2012 (ESC Reims), graduating

with honours. He has passed Level 3 of the CFA exam.

He has been with Seilern Investment Managment Ltd.

since 2013. Corentin is a CFA charterholder.

Raphael has 16 years of experience in equity research

and fund management. He started his career at Dexia as

a sell side analyst. In 2005, he joined the research

management team of Exane BNPP and was in charge of

the idea generation and the management of certificates.

Raphael successfully launched and managed equity

products based on the same strategy as the Stryx funds.

He then joined SIM. Raphael is a graduate of the IEP

Paris, holds a BS in Economics and is a member of the

Société Française des Analystes Financiers.

Fernando obtained undergraduate and master’s degrees in

business management from the Colegio Universitario de

Estudios Financieros and a second master’s degree in

portfolio management from the Instituto de Estudios

Bursatiles in Madrid. Fernando started his career at Lazard

Wealth Management in Madrid, before joining Seilern

Investment Management Ltd. at the beginning of 2014.

Michael graduated from University College Cork in 2010

with a degree in Law and afterward completed a Masters

degree in Finance at Trinity College Dublin. He started his

career as a graduate with J.P. Morgan Chase before

joining the US Equity team at J.P. Morgan Asset

Management and Seilern Investment Management Ltd. in

2016. Michael is a CFA charterholder.

Michael Faherty, CFA

Analyst

How does the investment team work together?

October 2016 27

Insights

Deep understanding

of the markets and

continuous research

gives us insights into

trends, industries and

companies

Debate

All team members

are generalists which

encourages an

ongoing dialogue and

ideas are generated

and shared

constantly

Research

Thorough bottom-up

analysis is conducted

on industries and

companies that meet

the initial thresholds

What are some of the secular growth drivers?

28October 2016

What are some of the competitive advantages you look for?

October 2016 29

These companies benefit from a market configuration that provides

a high barrier to entry or networks that are difficult to replicate.

These companies are often found in industries that have

oligopolies.

Moody’s

MasterCard Regulation

These companies help their clients with a specific economic

advantage in terms of efficiency, cost, process or other benefits.

Xylem

Colgate Change in Focus

These companies derive their pricing power through their

marketing spend. The products here are most often substitutable

and it is undoubtedly a pricing power of a lesser quality. However,

companies excelling in this category often do so for decades and

can provide tremendous shareholder returns.

L'Oréal

Hermes Brand dilution

DESCRIPTION EXAMPLES RISKS

How does this apply to a specific company?

October 2016 30

Shift from cash to electronic payment

Oligopolistic position

10 to 12% per year

Semi-fixed cost base

Close to 20% per year

The P&L of Mastercard

×Market tends to focus on recovery

stocks with poor balance sheets

which will survive

(‘dash for trash’)

Market tends to focus on company-

quality, business positioning, balance

sheets, earnings power and

management superiority

Market tends to focus on superior

earnings-power associated with top

-line growth and

market share gains

Market tends to focus on company-

quality, business positioning, balance

sheets, cash flow, earnings power

and management superiority

When does the strategy underperform?

October 2016 31

The funds will tend to outperform in down markets, but may underperform relative in

strong market rallies. Over time this generates impressive returns relative to the market.

Do earnings really drive stock price?

October 2016 32

Source: Novo Nordisk, Bloomberg, as at 31 December 2015

How much does P/E expansion impact the return?

October 2016 33

4.7%

11.8%

1.0% 1.7%

19.2%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

1y fwd PECAGR

Net EarningsCAGR

BuybacksCAGR

Dividend Yieldavg

Total CAGR

24%

61%

5%9%

Contribution to Total CAGR

1y fwd PE CAGR

Net Earnings CAGR

Buybacks CAGR

Dividend Yield avg

3.2%

9.5%

0.1%

2.4%

15.1%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

1y fwd PECAGR

Net EarningsCAGR

BuybacksCAGR

Dividend Yieldavg

Total CAGR

21%

62%

16%1y fwd PE CAGR

Net Earnings CAGR

Buybacks CAGR

Dividend Yield avg

Contribution to Total CAGR

Stryx Europa FY 2010-2015

Stryx World Growth FY 2010-2015

Aren’t these companies expensive?

October 2016 34

60%

80%

100%

120%

140%

160%

180%

Q22007

Q42007

Q22008

Q42008

Q22009

Q42009

Q22010

Q42010

Q22011

Q42011

Q22012

Q42012

Q22013

Q42013

Q22014

Q42014

Q22015

Q42015

Q22016

P/E of SWG VS. S&P 500

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

Q22007

Q42007

Q22008

Q42008

Q22009

Q42009

Q22010

Q42010

Q22011

Q42011

Q22012

Q42012

Q22013

Q42013

Q22014

Q42014

Q22015

Q42015

Q22016

Earning yield / US Treasury yield

Earning yield Stryx World Growth

US Treasury yield 10y

Difference

Why concentrated funds instead of the entire Universe?

October 2016 35

Source: Yale University, by Antti Petajisto

Relative fund performance of US equity mutual funds 1990-2009 (yearly)

Super concentrated Concentrated Factor bets Moderately active Closet indexers All

Gross Returns 2.61% 1.64% 0.06% 0.82% 0.12% 0.96%

Net Returns 1.26% -0.25% -1.28% -0.52% -0.91% -0.41%

-1.50%

-1.00%

-0.50%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

Awards

October 2016 36

Seilern Investment Management

Best Equity Group, Small Company

Stryx World Growth

Best 5 Year Performance, Global

Equity



Stryx World Growth


Equity



Stryx World Growth


Equity



Stryx World Growth


Equity

Seilern Global Trust

Best 5 Year Performance, Mixed Asset

EUR Flexible



Stryx World Growth


Equity

Stryx World Growth

Outstanding Global Equity Fund

Stryx World Growth

Outstanding Global Equity FundStryx World Growth


Equity

Disclaimer

October 2016 37

• Please note that the value of investments and the income derived from them may fluctuate and you may not

receive back the amount originally invested. Past performance is no guarantee of future performance. Currency

movements may also affect the value of investments. The investment services referred to in this presentation

may not be suitable for all investors. If you are unsure as to whether the investments described in this site are

suitable for you, we strongly recommend you seek professional advice from a financial adviser.

• Stryx World Growth, Stryx America and Stryx Europa are collective investment schemes which are sub-funds of

Stryx International Funds plc, an umbrella fund with segregated liability between sub-funds a recognised

scheme under Section 264 under the Financial Services and Markets Act 2000.

• This presentation does not constitute an offer of sale to buy shares/units of Stryx World Growth Fund, Stryx

America Fund or Stryx Europa Fund (“the Funds”) unless accompanied by the current prospectus and

supplement(s).

• The Directors of Seilern Investment Management Ltd. have direct or indirect holdings in Stryx World Growth

Fund, Stryx America Fund and Stryx Europa Fund.

• Authorised and regulated by the Financial Conduct Authority.

• All sources are Seilern Investment Management Ltd. unless otherwise stated.

Presentación Seilern IM: Funds Experience 2016

Economy & Finance

Transcript of Presentación Seilern IM: Funds Experience 2016