NorthCoast Growth Tactical All-Cap Growth Strategy Investor Presentation N ORTH C OAST I NVESTMENT A DVISORY T EAM 203.532.7003 INFO @ NORTHCOASTAM . COM
NorthCoastGrowthTactical All-Cap Growth Strategy
Investor Presentation
N O R T H C O A S T I N V E S T M E N TA D V I S O R Y T E A M
2 0 3 . 5 3 2 . 7 0 0 3I N F O @ N O R T H C O A S TA M . C O M
OVERVIEW
INVESTMENT PROCESS
- MARKET EXPOSURE
- STOCK SELECTION
- RISK MANAGEMENT
PERFORMANCE
PORTFOLIO POSITIONING
SUMMARY
APPENDIX
NORTHCOAST ASSET MANAGEMENT
2
MARKETS CHANGE AVOID BIG LOSSES NO ONE KNOWS THE FUTURE
“Even if you’re on the right track, you’ll get run over if you
just sit there.”
- Will Rogers
“The first rule is not to lose money. The second rule is not
to forget the first rule.”
- Warren Buffett
“Wall Street experts have perfected the art of being wrong with confidence.”
- Bennett Goodspeed
EXPERIENCE STABILITY PERFORMANCE
Founded in 1988$1.9 billion in AUM(as of 9/30/2018)
Proprietary, quantitative, and tactical investment strategiesLegacy of preserving capital
during the bear markets of 2000-2002 and 2008
Long-term portfolio performanceExclusive Agreement with
Investor’s Business Daily®
ETF Partnership with BlackRock® iShares®
T H E N O RT HC OA ST A DVA NTAG E
C O R E I N V ES T ME NT B E L I E FS
NORTHCOAST GROWTH INVESTMENT PROCESS
Daily screening and filtering of 6,000+ stocks through rigorous NorthCoast signals is designed to select stocks with superior
risk-adjusted potential
Identify current risk environment through analysis of 40+ market-moving indicators across four dimensions
• Technical• Macroeconomic• Sentiment• Valuation
Market Risk Meter determines investment level between stocks/cash
Ongoing research continues to test and assess market signals for sustained accuracy and relevance in today’s market
Positions monitored daily and action executed at strategic inflection points
New Account Special HandlingDaily MonitoringMarket ExposureBeta Reduction
Profit-TakesPosition Sizing
Sector AllocationSustainable Research
NorthCoast Growth seeks long-term growth with downside risk protection through the implementation of 3 active investment tactics:
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OVERVIEW
INVESTMENT PROCESS
- MARKET EXPOSURE
- STOCK SELECTION
- RISK MANAGEMENT
PERFORMANCE
PORTFOLIO POSITIONING
SUMMARY
APPENDIX
Stock Scoring
Portfolio Construction
Sample Signals Include:EstimatesSentiment
Relative ValuationShort Interest
Technicals Quality
0 to 40 stocks with ~2-4% weighting
allocated to each position
Analyze Market Environment Select Securities Manage Risk① ② ③
NorthCoast Growth relies on intensedaily research of 150+ marketindicators across 4 market drivingdimensions
Sample Indicators include:
Technical 20/50/100/200 Day Moving
Averages Accumulation/Distribution Days Relative Strength
Sentiment Put/Call Ratio AAII Bull/Bear Index Mutual Fund/ETF Flows
Macroeconomic Year-Over-Year CPI Employment Ratio Indicators Yield Curve
Valuation Dividend Yield Inflation adjusted Earnings Yield Price/Earnings
ANALYZE MARKET ENVIRONMENT – CASH SCALING
NorthCoast Cash Scaling Indicator, 1990-2013- 1 = 1 0 0 % e q u i t y i n v e s t e d ; 0 = 1 0 0 % c a s h
More information on NorthCoast cash scaling can be found online –
NorthCoast Cash Scaling Whitepaper
NorthCoast Cash Scaling Indicator
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OVERVIEW
INVESTMENT PROCESS
- MARKET EXPOSURE
- STOCK SELECTION
- RISK MANAGEMENT
PERFORMANCE
PORTFOLIO POSITIONING
SUMMARY
APPENDIX
STOCK SELECTION
OVERVIEW
INVESTMENT PROCESS
- MARKET EXPOSURE
- STOCK SELECTION
- RISK MANAGEMENT
PERFORMANCE
PORTFOLIO POSITIONING
SUMMARY
APPENDIX
5
We believe underlying factors drive a stock’s future performance (positive or negative). Our research focuses on identifying these factors.
We utilize 21 individual data points across 7 broad categories.
Hypothetical Stock “A” Example
Category Score Weighting Factor Category Score Example Factor
0.4 EBITDA trends vs. Enterprise value
2.4 Historical Earnings Yield relative to peer group
1.0 Earnings Estimates revisions
0.4 Stock buy-back or issuance
2.3 Stock price movement relative to information flow
1.0 Price trends in a 12 month window
-0.7 Short borrowing activity
Composite Score +2.1 Stock Score from -3 to +3 (on a relative scale)
Valuation
Comprehensive Value
Sentiment
Management Behavior
Diffusion of Information
Technical
Institutional Attention
The example above shows a hypothetical score of NorthCoast’s proprietary security selection tool.
Risk Control Management Implementation
New Account Special Handling New cash accounts take 1-3 months to achieve current allocation target. Attractive entry points are targeted for new positions reduce drawdown potential
Daily Monitoring Positions monitored daily and action executed at strategic inflection points
Beta Reduction Analyze volatility and drawdown
Market Exposure Active market outlook monitors macro environment
Sell-Stops* Target maximum 30% loss per position, depending on expected volatility of individual stock
Profit-Takes* Lock in profit with every 25% price increase
Position Sizing Position sizes range from target exposure from 2% to 4% to minimize stock specific risk on the downside
Sector Allocation Sector allocation maintains +/- 10% allocation with market sector allocation to reduce sector-specific risk
Sustainable Research Assessing model behavior for sustained accuracy and relevance
NorthCoast Growth utilizes a variety of risk controls to effectively minimize risk throughout the strategy
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RISK MANAGEMENT
*Examples of Sell-Stops and Profit-Takes can be found in the Appendix
OVERVIEW
INVESTMENT PROCESS
- MARKET EXPOSURE
- STOCK SELECTION
- RISK MANAGEMENT
PERFORMANCE
PORTFOLIO POSITIONING
SUMMARY
APPENDIX
PERFORMANCE & CHARACTERISTICS: 9/30/2018
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OVERVIEW
INVESTMENT PROCESS
- MARKET EXPOSURE
- STOCK SELECTION
- RISK MANAGEMENT
PERFORMANCE
PORTFOLIO POSITIONING
SUMMARY
APPENDIX
Past Performance is not indicative of future results. All investments involve risk, including loss of principal. Results are presented net-of-fees.Please reference the Appendix for additional disclosure information.
Tactical/Satellite
10-30%
2 Ways NorthCoast Growth can fit into a client’s allocation
All-Cap Value
5-25%
Complement a Portfolio as the ‘Tactical/Satellite’ piece
Utilize as the ‘Equity Growth’ piece of an Asset Allocation
Equities
20-30%
Fixed Income
20%-30%
Alternative
10%
CAN SLIM®
All-Cap Growth
10-25%
Fixed Income
25-50%
CAN SLIM®
Gold/ CommoditiesReal Estate
Commodities
0-25%
CAN SLIM®
PORTFOLIO POSITIONING
8
NorthCoast Growth
OVERVIEW
INVESTMENT PROCESS
- MARKET EXPOSURE
- STOCK SELECTION
- RISK MANAGEMENT
PERFORMANCE
PORTFOLIO POSITIONING
SUMMARY
APPENDIX
NorthCoast Growth
Accessible A $ 1 0 0 ,0 0 0 a c c o u n t m i n i m u m
Complementary L o w c o r r e l a t i o n t o t y p i c a l b e n c h m a r k s m a k i n g i t a n a p p e a l i n g c o m p l e m e n t t o a s t r a t e g i c o r a s s e t a l l o c a t i o n p o r t f o l i o
Defensive A b l e t o s h i f t b e t w e e n 1 0 0 % e q u i t y a n d 1 0 0 % c a s h e q u i v a l e n t s o r a n y w h e r e b e t w e e n , d e p e n d i n g o n m a r k e t c o n d i t i o n s
Disciplined Q u a n t i t a t i v e r e s e a r c h a n d r u l e s -b a s e d m a n a g e m e n t
Transparent S e p a r a t e l y m a n a g e d a c c o u n t (S M A ) s t r u c t u r e p r o v i d e s r e a l -t i m e a c c o u n t a c c e s s
NorthCoast Growth is a methodical alternative to passive buy andhold strategies. Consider the following benefits for your clients:
SUMMARY
9
OVERVIEW
INVESTMENT PROCESS
- MARKET EXPOSURE
- STOCK SELECTION
- RISK MANAGEMENT
PERFORMANCE
PORTFOLIO POSITIONING
SUMMARY
APPENDIX
APPENDIX
1 0
OVERVIEW
INVESTMENT PROCESS
- MARKET EXPOSURE
- STOCK SELECTION
- RISK MANAGEMENT
PERFORMANCE
PORTFOLIO POSITIONING
SUMMARY
APPENDIX
RISK MANAGEMENT – SELL STOPS
Source: MarketSmith. Individual securities are for informational purposes only and NCAM may not recommend this position at the time of publication.
= Buy Point
= Sell Point
Customized stop loss target per position, depending on expected volatility of individual stock
Basic Materials Mining Company
1 1
OVERVIEW
INVESTMENT PROCESS
- MARKET EXPOSURE
- STOCK SELECTION
- RISK MANAGEMENT
PERFORMANCE
PORTFOLIO POSITIONING
SUMMARY
APPENDIX
Source: MarketSmith. Individual securities are for informational purposes only and NCAM may not recommend this position at the time of publication.
RISK MANAGEMENT – PROFIT TAKES & EXIT POINTS
= Buy Point
= Profit Take
= Sell Point
Lock in profit with every 25% price increase
Chinese Lodging Company
1 2
OVERVIEW
INVESTMENT PROCESS
- MARKET EXPOSURE
- STOCK SELECTION
- RISK MANAGEMENT
PERFORMANCE
PORTFOLIO POSITIONING
SUMMARY
APPENDIX
PORTFOLIO MANAGEMENT TEAM
1 3
OVERVIEW
INVESTMENT PROCESS
- MARKET EXPOSURE
- STOCK SELECTION
- RISK MANAGEMENT
PERFORMANCE
PORTFOLIO POSITIONING
SUMMARY
APPENDIX
KEY
MA
NA
GER
S
D A N K R A N I N G E R PAT R I C K J A M I N , C F A , F R MPresident & Chief Executive Officer Chief Investment Officer
S e n i o r V i c e P r e s i d e n t , G E P r i v a t e A s s e t M a n a g e m e n t P r e s i d e n t , O ’ S h a u g h n e s s y C a p i t a l
M a n a g e m e n t M e r r i l l L y n c h , m e m b e r o f J E T P r o g r a m B .A . i n E c o n o m i c s , V i l l a n o v a
U n i v e r s i t y
P a r t n e r , N u m e r i c I n v e s t o r s (E u r o p e a n s t r a t e g i e s / W o r l d F u n d a m e n t a l S t a t i s t i c a l A r b i t r a g e S t r a t e g y ) P a r t n e r , P o r t f o l i o M a n a g e r , S t a n d a r d P a c i f i c C a p i t a l ; G l o b a l L o n g /S h o r t E q u i t y F u n d S e n i o r Q u a n t i t a t i v e A n a l y s t , I n v e s c o ; G l o b a l Q u a n t i t a t i v e F u n d M .B .A ., H a r v a r d B u s i n e s s S c h o o l , B a k e r S c h o l a r , A r t h u r S a c h s S c h o l a r M .S . i n T e l e c o m m u n i c a t i o n s , E c o l e N a t i o n a l e S u p e r i e u r e d e s T e l e c o m m u n i c a t i o n s
d e P a r i s I n g e n i e u r d e I ’ E c o l e P o l y t e c h n i q u e , E c o l e P o l y t e c h n i q u e
SEN
IOR
AN
ALY
STS
J U L I A Z H U , C F A , F R M YA Q I U L ISenior Vice President – Market & Security Research Senior Vice President – Portfolio Construction
V i c e P r e s i d e n t , R e s e a r c h A f f i l i a t e s , L L C - Q u a n t i t a t i v e r e s e a r c h i n e q u i t y s t r a t e g i e s a n d a s s e t a l l o c a t i o n A s s o c i a t e , F i r s t Q u a d r a n t , L P – C o n d u c t e d r e s e a r c h o n G T A A a n d
t a c t i c a l c u r r e n c y a l l o c a t i o n p r o d u c t s M a s t e r o f E c o n o m i c s , Y a l e U n i v e r s i t y , P h D C a n d i d a t e M .B .A . w i t h c o n c e n t r a t i o n i n F i n a n c e , U n i v e r s i t y o f S o u t h e r n
C a l i f o r n i a
C l i m a t e M o d e l i n g – C h i n a ’ s N a t i o n a l K e y L a b o f A t m o s p h e r i c S c i e n c e , C h i n e s e A c a d e m y o f S c i e n c e s M .S . i n Q u a n t i t a t i v e a n d C o m p u t a t i o n a l F i n a n c e &
M .S . i n S t a t i s t i c s , G e o r g i a T e c h , P h D C a n d i d a t e C F A L e v e l I I I C a n d i d a t e
PORT
FOLI
OEN
GIN
EERS
S L AVA M A L K I N S U M A N T H A M A R C H I N TA J A S O N K R U G LYSenior Vice President Vice President Vice President
Q u a n t i t a t i v e c u r r e n c y t r a d i n g s t r a t e g i e s – B N P P a r i b a s P o r t f o l i o M a n a g e r o f g l o b a l m a c r o
s t r a t e g i e s R e s e a r c h i n G l o b a l T a c t i c a l A s s e t
A l l o c a t i o n s t r a t e g i e s – D e u t s c h e A s s e t M a n a g e m e n t M .S . i n S t a t i s t i c s , H a r v a r d U n i v e r s i t y
S e n i o r I n v e s t m e n t A n a l y s t , P y r a m i sG l o b a l A d v i s o r s – Q u a n t i t a t i v e r e s e a r c h a n d p o r t f o l i o m a n a g e m e n t M .S . i n C o m p u t e r E n g i n e e r i n g ,
R o c h e s t e r I n s t i t u t e o f T e c h n o l o g y B .S . i n E l e c t r i c a l E n g i n e e r i n g ,
R o o r k e e I n d i a n I n s t i t u t e o f T e c h n o l o g y
R e s e a r c h e x p e r i e n c e w i t h B a n k o f A m e r i c a , M e r r i l l L y n c h , C r e d i t S u i s s e , D e u t s c h e B a n k M .S . i n F i n a n c i a l E n g i n e e r i n g , B a r u c h
C o l l e g e B .S . & M .S . i n C o m p u t e r S c i e n c e ,
P o l y t e c h n i c I n s t i t u t e o f N e w Y o r k U n i v e r s i t y
DISCLOSURE INFORMATION
Past Performance is not indicative of future results. All investments involve risk, including loss of principal. The firm is defined as NorthCoast Asset Management LLC. NCAM was established in 1988 and is an independent Registered Investment Advisor (RIA) registered with the Securities and Exchange Commission (SEC). The firm is a full service investment management company. The firm specializes in quantitative investment programs. NCAM is located in Greenwich, CT, and is not affiliated with any parent organization and has no other offices operating under the same brand name.
Performance results shown from November 1, 2012 through March 31, 2013, are the actual results of a single-account composite managed according to the dictates of the strategy. Since April 1, 2013, actual performance results are based on widely accepted performance standards and represent the net composite time-weighted return for the strategy. Returns are presented net-of-fees. Net-of-fee returns are reduced by trading costs and the portfolio’s actual management fee. Valuations are computed and performance is reported in U.S. dollars. A complete list of composite descriptions is available upon request. Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request. To obtain a compliant presentation for the associated strategy, please contact one of our advisors at 800.274.5448.
Single account composite performance results reflect the results of actual trading using a single client account managed in accordance with the dictates of the program. Other accounts are excluded to prevent additions, withdrawals and client mandated customizations from biasing the performance results. However actual client accounts are not insulated from these factors. Therefore actual client accounts may have experienced investment results during the corresponding time periods that were materially different from those portrayed in the model. Account statements for the single account for the period are available for inspection upon request.
This information contained herein has been prepared by NCAM on the basis of publicly available information, internally developed data and other third party sources believed to be reliable. This material is for informational and illustrative purposes only and should not be viewed as a recommendation or a solicitation to buy or sell any securities or investment products or to adopt any investment strategy.
NorthCoast Growth is a tactical, long-term growth strategy focused on capital appreciation with a secondary objective of downside protection. The strategy invests in leading growth stocks during favorable equity environments and scales to cash to preserve gains when bear market risk is high. The strategy adheres to a flexible investment mandate that allows for allocation shifts that range between 0%-100% exposure to equities. Positions are managed (purchased and liquidated) through a proprietary stock scoring system designed to build a comprehensive growth portfolio.
Benchmarks - Aggressive Competitor Avg = Morningstar Aggressive Allocation Category Average. Aggressive allocation portfolios seek to provide both capital appreciation and income by investing in three major areas: stocks, bonds, and cash. These portfolios tend to hold larger positions in stocks than moderate-allocation portfolios. These portfolios typically have 70% to 90% of assets in equities and the remainder in fixed income and cash. Tactical Competitor Avg = Morningstar Tactical Allocation Category Average. Tactical Allocation portfolios seek to provide capital appreciation and income by actively shifting allocations between asset classes. These portfolios have material shifts across equity regions and bond sectors on a frequent basis. To qualify for the Tactical Allocation category, the fund must first meet the requirements to be considered in an allocation category. Next, the fund must historically demonstrate material shifts within the primary asset classes either through a gradual shift over three years or through a series of material shifts on a quarterly basis. The cumulative asset class exposure changes must exceed 10% over the measurement period. The S&P 500 Index is used for comparison purposes as it represents a sample of the 500 leading companies in leading industries of the U.S. economy. It is generally considered a proxy for the total market.
1 4
OVERVIEW
INVESTMENT PROCESS
- MARKET EXPOSURE
- STOCK SELECTION
- RISK MANAGEMENT
PERFORMANCE
PORTFOLIO POSITIONING
SUMMARY
APPENDIX
DISCLOSURE INFORMATION
1 5
OVERVIEW
INVESTMENT PROCESS
- MARKET EXPOSURE
- STOCK SELECTION
- RISK MANAGEMENT
PERFORMANCE
PORTFOLIO POSITIONING
SUMMARY
APPENDIX
This information contained herein has been prepared by NorthCoast Asset Management, LLC ("NorthCoast") on the basis of publicly available
information, internally developed data and other third party sources believed to be reliable. NorthCoast has not sought to independently verify
information obtained from public and third party sources and makes no representations or warranties as to accuracy, completeness or reliability of such
information. All opinions and views constitute judgments as of the date of writing without regard to the date on which the reader may receive or access
the information, and are subject to change at any time without notice and with no obligation to update. This material is for informational and
illustrative purposes only and is intended solely for the information of those to whom it is distributed by NorthCoast. No part of this material may be
reproduced or retransmitted in any manner without the prior written permission of NorthCoast. NorthCoast does not represent, warrant or guarantee
that this information is suitable for any investment purpose and it should not be used as a basis for investment decisions.
PAST PERFORMANCE DOES NOT GUARANTEE OR INDICATE FUTURE RESULTS.
This material should not be viewed as a current or past recommendation or a solicitation of an offer to buy or sell any securities or investment products
or to adopt any investment strategy. The reader should not assume that any investments in companies, securities, sectors, strategies and/or markets
identified or described herein were or will be profitable and no representation is made that any investor will or is likely to achieve results comparable to
those shown or will make any profit or will be able to avoid incurring substantial losses. Performance differences for certain investors may occur due to
various factors, including timing of investment. Investment return will fluctuate and may be volatile, especially over short time horizons.
INVESTING ENTAILS RISKS, INCLUDING POSSIBLE LOSS OF SOME OR ALL OF THE INVESTOR'S PRINCIPAL.
The investment views and market opinions/analyses expressed herein may not reflect those of NorthCoast as a whole and different views may be expressed based on different investment styles, objectives, views or philosophies. To the extent that these materials contain statements about the future, such statements are forward looking and subject to a number of risks and uncertainties.