Buffettology June 2019 - Unique Manager Showcase Series
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June 2019
Buffettology
Investing is most intelligent when it is most business-likeImportant 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. 04605261. Registered Office: 111 Piccadilly, Manchester, M1 2HY. Sanford DeLand Asset Management Ltd (SDL) is registered in England & Wales No. 07197573. 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 contentsof 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. Buffettology 2
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 May 2019. 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. Buffettology 3
The Team behind
Sanford DeLand Buffettology
Keith Ashworth-Lord Andrew Vaughan
Chief Investment Officer Investment Research Analyst
Prior to founding Sanford DeLand, Keith was a Prior to joining Sanford DeLand, Andrew held
self-employed consultant working with a variety of consulting roles in research, with a specialisation in
stockbroking, fund management and investor Business Perspective Investment. He previously
clients. He is a Chartered Fellow of the Chartered worked in equity research and sales in London
Institute for Securities and Investment. and the Far East.
Buffettology 4Fund Performance
• Total outperformance
Outperformance
since inception:
+163.87%
• Annualised
outperformance:
+8.97%
Since
3 Month 6 Month 1 Year 3 Year 5 Year
Inception
CFP SDL UK Buffettology Fund Institutional
12.72% 10.76% 12.14% 64.60% 108.07% 239.86%
Inc TR in GB
IA UK All Companies 3.10% 5.20% -4.70% 23.57% 28.52% 75.99%
Rank 6 / 265 24 / 264 2 / 263 2 / 250 1 / 236 1 / 218
Quartile 1 1 1 1 1 1
Source: Data from FE based on the returns of the Institutional Income share class to 31 May 2019. 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.
Buffettology In the long-term, there is a 100% correlation between the success of a business and its share price performance 5Low Volatility, High Returns
Buffettology Fund vs. IA UK All Companies Sector Since Launch
18
Tracker
Since inception Buffettology Sector
Buffettology Fund Funds
(28/03/11) Fund Average
16 Average
Annualised
+16.13% +6.34% +7.06%
14 Return
Annualised Return (%)
Annualised
+10.19% +13.54% +12.46%
12 Volatility
10
8
Tracker Funds
6
sit here
4
2
9 11 13 15 17 19 21
Volatility (%)
Source: Data from FE Analytics based on the returns of the Institutional Income share class as at 31 May 2019.
6
Buffettology The ideal holding period of an investment is foreverHistorically Low Correlation
The Fund has historically shown a lower than average correlation to the top 5 largest funds in the IA UK All Companies sector
CFP - SDL UK
Invesco - High LF - Woodford Lindsell Train - LF Liontrust - Special
Buffettology Halifax - UK Growth
Over 3 Years Income (UK) Z Acc Equity Income C Acc Lindsell Train UK Situations I Inc TR
Institutional Inc TR C TR in GB
TR in GB GBP in GB Equity Acc in GB in GB
in GB
CFP SDL UK
Buffettology
0.57 0.62 0.53 0.59 0.75
Institutional Inc TR in
GB
Halifax UK Growth
0.57 0.89 0.78 0.80 0.90
C TR in GB
Invesco High Income
0.62 0.89 0.88 0.76 0.86
(UK) Z Acc TR in GB
LF Woodford Equity
Income C Acc GBP in 0.53 0.78 0.88 0.60 0.76
GB
Lindsell Train LF
Lindsell Train UK 0.59 0.80 0.76 0.60 0.86
Equity Acc in GB
Liontrust Special
Situations I Inc TR in 0.75 0.90 0.86 0.76 0.86
GB
Source: Data from FE based on the returns of the Institutional Income share class over 3 years as at 31 May 2019 (ex-Tracker Funds)
Buffettology To achieve superior performance you have to do things differently from the crowd 7What 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.
Bought at Investment
Excellent Businesses Discounted Prices Opportunity
Key fundamental requirements:
Enduring franchise with pricing power Strong free cash flow
and growth potential Robust balance sheet
Predictable earnings Strong senior management
Higher return on capital and equity
Buffettology 8How is it achieved: The Filter
Initial Screen Watch List Business Perspective
Investing
Portfolio 25-35 Holdings
45-60 Companies
Growth Record
Proprietary Model
Universe 3000
Analysis Superior Business with
Profitability High Economic Worth
Forecasting &
Valuation
Return on Equity
Long Term View
Target Entry Level
Free Cash
Generation
Buffettology Investing is most intelligent when it is most business-like 9Economic Moats
Patented People
proprietary
technology Skills
Non-
patented Brand Power
proprietary
technology
Games
Workshop
Buffettology Great investment opportunities arise when excellent companies are affected by unusual circumstances 10Patented Stock Example
proprietary
technology
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 £2,462.7m
Date first bought:
Sector Industrial Engineering May 2015: 8 June 2011
Index UK Stock Market 10:1 share split Price when first bought:
166.8400
Source: Sanford DeLand as at 31/05/19. 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 11Non-
patented
proprietary
Stock Example
technology
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 £190.0m
Sector Pharmaceuticals & Biotechnology Date first bought:
Index UK Stock Market 3 December 2014
Price when first bought:
712.1300
Source: Sanford DeLand as at 31/05/19. 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 12People
Stock Example
Skills
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 2004. 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 £1,679.6m
Sector Support Services Date first bought:
Index UK Stock Market 12 April 2011
Price when first bought:
80.0000
Source: Sanford DeLand as at 31/05/19. 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 13Brand 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 £1,450.9m
Sector Leisure Goods Date first bought:
6 April 2011
Index UK Stock Market
Price when first bought:
373.0000
Source: Sanford DeLand as at 31/05/19. 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 14Sell discipline
F U N D A M E N T A L CHANG E
BLACK SWAN Sell:
Since launch, 15 company
investments completely sold & 3 taken
over
OVERSIGHT 12 month Portfolio Turnover Rate:
3.0%
SWITCH
Source: Sanford DeLand as at 31 May 2019.
Buffettology 15Portfolio Snapshot
Market Cap Breakdown Geographical Earnings Exposure Sector Exposure
Financial Services 12.4%
Support Services 11.8%
14.1% 12.4%
14.1% Industrial Engineering 10.5%
19.0% 14.1%
2.1% Pharmaceuticals & Biotechnology 8.9%
Mega Cap>£10bn UK 30.0% 2.5%
7.4% 30.0%
Europe 15.6% 2.7% Chemicals 6.8%
Large Cap£1-10bn 7.6% 11.8%
Mid Cap£500m - £1bn4.9% 2.8% Travel & Leisure 6.3%
Americas 25.6%
17.6% 4.6%
Small Cap£100-500m Asia-Pacific 4.6% 5.0% Food & Beverages 6.0%
Micro CapConclusion
Track Record Low volatility, high
+108.07% total and risk-
Over 5 years* adjusted returns*
Disciplined, Proprietary Low correlation
patient, thorough to top asset
process
model raisers*
Source: *Data from FE based on the returns of the Institutional Income share class to 31 May 2019.
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.
Buffettology 17How To Invest
Share Classes and Type of Shares General Institutional Institutional Shares may be bought directly from Castlefield Fund Partners or through a
Income Income Accumulation professional adviser or other intermediary, application forms may be obtained
Shares Shares Shares from Castlefield.
Investment Adviser’s Annual Management 1.5% 1.0% 1.0%
Fee
ACD’s Annual Management Fee 0.2% 0.2% 0.2% Postal Application 8th Floor,
111 Piccadilly,
OCF ~1.73% ~1.23% ~1.23% Manchester,
M1 2HY
Minimum Initial Investment (Waived via £500 £250,000 £250,000
platforms) Telephone 0161 233 4890
Minimum Holding £500 £250,000 £250,000
Minimum Top Up £100 £10,000 £10,000
Minimum Regular Savings Plan £50 per Not available Not available The dealing office is normally open from 9.00 a.m. to 5.30 p.m. (London time)
month on each Dealing Day to receive requests for the purchase, sale or conversion of
Shares.
ISIN Code GB00B3QQF GB00BKJ9C GB00BFOL
Valid applications to purchase shares received before the Valuation Point on a
J66 676 DZ31
Business Day will be processed at the Share price calculated at that Valuation
Dividend Frequency Half Yearly Half Yearly Half Yearly Point.
SIPP/SSAS/ Offshore Bond Eligible Yes Yes Yes
Settlement is due within four business days of the Valuation Point.
The initial purchase must, at the discretion of Castlefield, be accompanied by an
ISA/ Regular Savings Eligible Yes Yes Yes application form.
The current Valuation Point is 12.00 noon London time on each Dealing Day.
Buffettology 18Availability
Platforms Approved 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
Buffettology 19Contact Details
For further information or to request a copy of the
prospectus, please contact our team at Candlewick
Capital:
020 7071 3930
info@sanford-deland.uk
www.candlewickcapital.com
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.
Buffettology 20Further 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/070619.
Buffettology 21Appendix 1. Discrete Performance
The Fund has positive returns for every full calendaryear:
Since
Inception
2018 2017 2016 2015 2014 2013 2012 Mar 2011
to May
2019
CFP SDL UK Buffettology Fund
0.4 25.6 11.9 27.9 1.8 36.0 34.3 239.9
Institutional Inc TR in GB
Sector : IA UK All CompaniesTR
-11.2 14.0 10.8 4.9 0.6 26.2 15.1 76.0
in GB
Index : UK Stock Market TR -9.5 13.1 16.8 1.0 1.2 20.8 12.3 72.6
Source: Data from FE based on the returns of the Institutional Income share class to 31 May 2019.
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.
Buffettology 22Appendix 2. Top Quartile Fund Ratios
CFP SDL UK Buffettology Sector : IA UK All Companies
Over 5 Years Quartile
Institutional Inc TR in GB TR in GB
Alpha 11.58 0.00 1
Beta 0.72 1.00 1
Downside Risk 11.31 11.79 1
Info Ratio Rel. 1.37 0.00 1
Jensens Alpha 10.50 0.00 1
Max Drawdown -11.12 -16.18 1
Max Gain 11.00 11.29 4
Max Loss -7.70 -9.08 1
Negative Periods 99.00 116.00 1
Positive Periods 161.00 144.00 1
r2 0.60 1.00 4
Relative Return 9.92 0.00 1
Return 15.53 5.11 1
Sharpe 1.16 0.14 1
Sortino 1.06 0.14 1
Tracking Error 7.26 0.00 4
Treynor 16.78 1.61 1
Volatility 10.36 11.22 1
Source: Data from FE based on the returns of the Institutional share class to 31 May 2019.
Buffettology Margin of Safety – the 3 most important words in investing 23You can also read
