Managed By You Ain't Seen Nothin' Yet
Managed byYou Ain't Seen Nothin' YetPresented by:Lead Portfolio Manager Bill Smeadwww.smeadcap.com 2014 Smead Capital Management, All Rights Reserved.Opinions expressed are those of Smead Capital Management, are subject to change, are not guaranteed, and should not be considered recommendations to buy or sell any security.
You Ain't Seen Nothin' YetYou Ain't Seen Nothin' Yet Review our Beginning of the Year ThesisProfessionals Dominate the MarketMain Street Beats Wall StreetWinnersLosers
You Ain't Seen Nothin' YetRhyme with 1984: Coming off a Deep RecessionSource: 011/07/how-close-are-we-to-a-second-recession.html
You Ain't Seen Nothin' YetRhyme with 1984: Oil Coming Off Historic Tops1918 - 2012Source: il/Gasoline inflation chart.htm
You Ain't Seen Nothin' YetRhyme with 1984: High UnemploymentSource: Thomson Reuters Baseline
You Ain't Seen Nothin' YetRhyme with 1984: Interest Rates move HigherSource: Thomson Reuters Baseline
You Ain't Seen Nothin' YetRhyme with 1984: Stronger than Expected GDPSource: Thomson Reuters Baseline
You Ain't Seen Nothin' YetRhyme with 1984: Small Caps Very PopularSPX Index S&P 500IndexRTY Russell 2000IndexPast performance does not guarantee future results.Source: Bloomberg
You Ain't Seen Nothin' YetRhyme with 1984: Leadership RotationSPX Index S&P 500IndexRTY Russell 2000IndexPast performance does not guarantee future results.Source: Bloomberg
You Ain't Seen Nothin' YetRhyme with 1984: Large beat Small for 4 YearsSPX Index S&P 500IndexRTY Russell 2000IndexPast performance does not guarantee future results.Source: Bloomberg
You Ain't Seen Nothin' YetRhyme with 1984: Small beat Large for 14 YearsSPX Index S&P 500IndexRTY Russell 2000IndexPast performance does not guarantee future results.Source: Bloomberg
You Ain't Seen Nothin' YetRhyme with 1984: Leadership Change 2014 YTDSPX Index S&P 500IndexRTY Russell 2000IndexPast performance does not guarantee future results.Source: Bloomberg
You Ain't Seen Nothin' YetYou Ain't Seen Nothin' Yet Review our Beginning of the Year Thesis Professionals Dominate the MarketMain Street Beats Wall StreetWinnersLosers
You Ain't Seen Nothin' YetProfessionals Dominate: Investor SentimentSource: Hays Advisory Market Outlook, September 25, 2014
You Ain't Seen Nothin' YetProfessionals Dominate: Asset Mis-AllocationNote: alternative strategies include private equity (LBOs, mezzanine, M&A funds and international private equity); marketablealternatives (hedge funds, absolute return, market neutral, long/short, 130/30, event-driven and derivatives); venture capital; privateequity real estate (non-campus); energy and natural resources (oil, gas, timber, commodities and managed futures); and distresseddebtPast Performance does not Guarantee Future ReturnsSource: NACUBO-Commonfund public NCSE information
You Ain't Seen Nothin' YetProfessionals Dominate: Investors are Risk-AverseSource: MarketWatch / Howard Gold article “Not even a bull market can interest people in stocks”, June 8, 2014
You Ain't Seen Nothin' YetProfessionals Dominate: ETF Panacea and Continued AnointingPast Performance does not Guarantee Future ReturnsSource: 2014 Investment Company Fact Book
You Ain't Seen Nothin' YetProfessionals Dominate: Private Equity OvercapitalizationSource: http://online.wsj.com/news/article 02670650-lMyQjAxMTA0MDEwODExNDgyWj
You Ain't Seen Nothin' YetProfessionals Dominate: Investment Bankers at WorkSource: Hays Advisory Market Outlook, September 25, 2014
You Ain't Seen Nothin' YetYou Ain't Seen Nothin' Yet Review our Beginning of the Year Thesis Professionals Dominate the Market Main Street Beats Wall StreetWinnersLosers
You Ain't Seen Nothin' YetMain Street Beats Wall Street: Households Ready to Spend% (Percent)Federal Reserve US Financial Obligations Ratio - An estimate of the ratio of debt payments todisposable income. The types of debt included in the financial obligation ratio include mortgagepayments, credit cards, property tax and lease payments.Source: Bloomberg
You Ain't Seen Nothin' YetMain Street Beats Wall Street: Gasoline “Tax Cut”Source: Bloomberg
You Ain't Seen Nothin' YetMain Street Beats Wall Street: Housing Starts Near Historic LowsNumber of new housing units started in the U.S.,annually, In ThousandsSource: Bloomberg
You Ain't Seen Nothin' YetMain Street Beats Wall Street: Housing Very AffordableSource: BloombergTo interpret the indices, a value of 100 means that a family with the medianincome has exactly enough income to qualify for a mortgage on a medianpriced home. An index above 100 signifies that family earning the medianincome has more than enough income to qualify for a mortgage loan on amedian-priced home, assuming a 20 percent down payment.
You Ain't Seen Nothin' YetMain Street Beats Wall Street: Household FormationSource: eaving-nest/
You Ain't Seen Nothin' YetYou Ain't Seen Nothin' Yet Review our Beginning of the Year Thesis Professionals Dominate the Market Main Street Beats Wall Street WinnersLosers
You Ain't Seen Nothin' YetWinners: The U.S. Trade Weighted DollarPriceSource: Bloomberg
You Ain't Seen Nothin' YetWinners: Banks Strong and Ready to LendSt Louis Fed Financial Stress Index(Ticker: STLFSI / SLF FSI):This Index measures the degreeof financial stress in themarkets and is constructedfrom 18 weekly data series:seven interest rate series, sixyield spreads and five otherindicators. Values below zerosuggest below-average financialmarket stress, while valuesabove zero suggest aboveaverage financial market stress.Past performance does not guarantee future results.Source: Bloomberg
You Ain't Seen Nothin' YetWinners: Homebuilders (Look at Building Permits!)Past performance does notguarantee future results.Source: Bloomberg
You Ain't Seen Nothin' YetWinners: ConsumersPast performance does not guarantee future results.Source: Thomson Reuters Baseline
You Ain't Seen Nothin' YetWinners: Leadership Change Favoring LargePast performance does not guarantee future results.Source: Bloomberg
You Ain't Seen Nothin' YetWinners: The U.S. Economy(British Thermal Units)Source: gy-efficient-economy-in.html
You Ain't Seen Nothin' YetYou Ain't Seen Nothin' Yet Review our Beginning of the Year ThesisProfessionals Dominate the MarketMain Street Beats Wall StreetWinnersLosers
You Ain't Seen Nothin' YetLosers: The Commodity Train10-year smoothed commodity price growth maybe peaking within widening amplitude1795to firstApr-2,10-yr.M.A. April 2, 2014Data going backDatato 1795,withdata2014point(TTM),12/31/1805– through15%U.S. debasement,EM growth14%Cold War(1980 peak)13%12%11%World War 1(1920 peak)10%9%7%6%5%World War 2,Korean ConflictU.S.Civil War(1864 peak)8%War of 1812 &Napoleonic Wars(1814 185518451835182518151805-6%PPI All Commodities (Up to 1956) and CRB Commodity Futures (1957-now) Linked Commodity Prices Y/Y % Change, 10-Yr. Moving AverageSource: Commodities 1795 to 1890 are the Warren & Pearson index constructed with farm products, foods, hides & leather, textiles, fuel & lighting, metals & metal products, buildingmaterials, chemicals & drugs, household furnishing goods, spirits and other commodities. 1891 to 1913 is the Wholesale Commodities Price Index from the BLS and other agencies.1914 to 1956 is the PPI for All Commodities, and 1957 to present is the CRB CCI Index.Past Performance is not a guarantee of future resultsSource: Stifel Nicolaus / Barry Bannister April 2, 2014
You Ain't Seen Nothin' YetLosers: Commodities and ChinaPast Performance is not a guarantee of future resultsSource: Bloomberg
You Ain't Seen Nothin' YetLosers: China"We are not afraid to entrust the American peoplewith unpleasant facts, foreign ideas, alienphilosophies, and competitive values. For a nationthat is afraid to let its people judge the truth andfalsehood in an open market is a nation that is afraidof its people.“John F. Kennedy, February 26, 1962Source: rk/?id 12765
You Ain't Seen Nothin' YetLosers: Oil Drilling FrenzyPast Performance does not Guarantee Future ReturnsSource: Fidelity Investments Institutional – Investment Themes for 2014, page 12
You Ain't Seen Nothin' YetLosers: Non-U.S. Revenue StreamsPast Performance is not a guarantee of future resultsSource: S&P Dow Jones Indicies , S&P 500 2013: Global Sales Year In Review
You Ain't Seen Nothin' YetLosers: Overvalued Small CapsPast performance does not guarantee future results.Source: Thomson Reuters Baseline
You Ain't Seen Nothin' YetLosers: Private EquityPast performance does not guarantee future results.Source: e-funds-private-equity/
You Ain't Seen Nothin' YetLosers: Junk Bonds Tied to LBO’sPast performance does not guarantee future results.Source: 3/08/28/the-stormy-history-of-leveraged-buyouts
You Ain't Seen Nothin' YetYou Ain't Seen Nothin' Yet Review our Beginning of the Year ThesisProfessionals Dominate the MarketMain Street Beats Wall StreetWinnersLosers
DefinitionsS&P 500 Index: A market-value weighted index consisting of 500 stocks chosen for market size, liquidity, andindustry group representation.Russell 1000 Value Index (R 1000 Value): A measure of the performance of those Russell 1000 companies withlower price-to-book ratios and lower forecasted growth values. One cannot invest directly in an index.Free Cash Flow (FCF): measures the cash generating capability of a company by adding non-cash charges (e.g.depreciation) and interest expense to pretax income.Book Value: is the net asset value of a company, calculated by subtracting total liabilities from total assets.Price / Book ratio: current price / most recent book value per share.Long Term Debt (L/T Debt): Loans with obligations of over one year on which interest is paid.Basis point (bps): A unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.Earnings Stability (R2): R2 measures the deviation of a company's earnings from its historical earnings growth rate.Earnings per share (EPS): is calculated by taking the total earnings divided by the number of shares outstanding.Return on Equity (ROE): ROE is equal to a fiscal year's net income (after preferred stock dividends but beforecommon stock dividends) divided by total equity (excluding preferred shares), expressed as a percentage.Cash Flow: A revenue or expense stream that changes a cash account over a given period.Net Profit Margin (NPM): Earnings divided by revenue.Earnings Stability: The complement of the standard deviation of annual earnings from those which would be plottedon reconstructed regression slope lines determined by the stock's annual rate of growth of earnings.P/E Rel to 10 Year Average: The price/earnings ratio of the trailing 12-month period, compared to the averageprice/earnings ratio of the last 10-years for a securityMSCI Emerging Markets Index (notated as “EM”): An index created by Morgan Stanley Capital International (MSCI)that is designed to measure equity market performance in global emerging markets.MSCI All World Index: An index created by Morgan Stanley Capital International (MSCI) that is designedto measure broad global equity benchmarks.
Definitions (cont.)Russell 2000 Index: The Russell 2000 serves as a benchmark for small-cap stocks in the United States.Beta: A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as awhole. Beta is used in the capital asset pricing model (CAPM), a model that calculates the expected return of anasset based on its beta and expected market returns.Sharpe Ratio: A risk-adjusted measure developed by William F. Sharpe, calculated using standard deviation andexcess return to determine reward per unit of risk. The higher the Sharpe ratio, the better the fund's historical riskadjusted performance.Debt / Equity Ratio: A measure of a company's financial leverage calculated by dividing its total liabilities bystockholders' equity. It indicates what proportion of equity and debt the company is using to finance its assets. Average Market Cap: the average Market Capitalization of a portfolio/universe, weighted by the dollars investedin the respective companies; Market Capitalization is the total dollar market value of all of a company’s outstandingshares, calculated by multiplying a company’s shares outstanding by the current market price of one shareHousehold Debt Service Ratio: the Household Debt Service Ratio is an estimate of the ratio of debt payments todisposable personal income. Debt payments consist of the estimated required payments on outstanding mortgageand consumer debt.“Nasdaq” is Nasdaq Composite: A market-capitalization weighted index of the more than 3,000 common equitieslisted on the Nasdaq stock exchange.Brazil Bovespa Index: The Bovespa Index (IBovespa) is the main indicator of the average performance of theBM&FBovespa exchange. The IBovespa covers more than 80% of the trades and approximately 70% of the marketcapitalization of the exchange.Russian RTS Index: The Russian RTS Index is a capitalization-weighted index of 50 Russian stocks traded on theMoscow Exchange in Moscow, Russia. The list of stocks is reviewed every three months by the RTS InformationCommittee.India BSE Sensex Index: The S&P BSE Sensex Index is a cap-weighted index. The index members have been selectedon the basis of liquidity, depth, and floating-stock-adjustment depth and industry representation. Sensex has a basedate and value of 100 in 1978-1979.
Definitions (cont.)Shanghai SE Comp Index: The Shanghai Stock Exchange Composite Index is a capitalization-weighted index. Theindex tracks the daily price performance of all A-shares and B-shares listedon the Shanghai Stock Exchange. Theindex was developed on December 19, 1990 with a base value of 100.CRB Index: The CRB Index is a measure of price movements of 22 sensitive basic commodities whose markets arepresumed to be among the first to be influenced by changes in economic conditions. induDow Jones 30 Index (Dow Jones Industrial Average): The Dow Jones Industrial Average is a price-weighted averageof 30 blue-chip stocks that are generally the leaders in their industry. It has been a widely followed indicator of thestock market since October 1, 1928.Price/Earnings (Trailing): the ratio of a firm’s closing stock price & its trailing 12 months’ earnings/share.Price/Earnings (Forward): the ratio of a firm’s closing stock price & its forward expected 12 months’earnings/share.EBITDA: Used as a proxy for Operating Earnings. EBITDA is earnings before taxes, depreciation, and amortizationEnt Value / Ebitda: A ratio with Enterprise Value as numerator, and EBITDA as denominator.Alpha: Alpha is the excess return of a fund relative to the return of its benchmark.Standard Deviation: A measure of the dispersion of a set of data from its mean. The more spread apart the data,the higher the deviation. Standard deviation is calculated as the square root of variance.Russell 1000: An index of approximately 1,000 of the largest companies in the U.S. equity markets, the Russell 1000is a subset of the Russell 3000 Index.Russell Microcap (“RMICRO Index”): The Russell Microcap Index measures the performance of the microcapsegment of the U.S. equity market. It makes up less than 3% of the U.S. equity market. It includes 1,000 of thesmallest securities in the small-cap Russell 2000 Index based on the combination of their market cap and currentmembership.GARP: Growth at a Reasonable Price
DisclosuresThe fund's investment objectives, risks, charges and Professionals Dominate theMarket must be considered carefully before investing. The summary and statutoryprospectuses contain this and other important information about the investmentcompany, and it may be obtained by calling 877-807-4122 or visitingwww.smeadfunds.com. Read it carefully before investing.Forward earnings does not guarantee a corresponding increase in the market value ofthe holding or the Fund.Mutual fund investing involves risk. Principal loss is possible. The Fund is nondiversified, meaning it may concentrate its assets in fewer individual holdings thana diversified fund. Therefore, the fund is more exposed to individual stockvolatility than a diversified fund.
Questions & AnswersQuestions for the Portfolio Managers?Email questions to info@smeadcap.comSales desk 877.701.2883
Source: Thomson Reuters Baseline . You Ain't Seen Nothin' Yet Rhyme with 1984: Interest Rates move Higher . Source: Thomson Reuters Baseline . You Ain't Seen Nothin' Yet . Rhyme with 1984: Stronger than Expected GD
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Ain't Nobody 4:43 100 Disco Hits [Disc 1] Rufus & Chaka Khan Ain't Nobody's Business 2:11 Rock Me Baby Ike And Tina Turner Ain't Nobody Here But Us Chickens 3:07 Rock 'n' Roll Number 1's Louis Jordan & His Tympany Five Ain't Nobody Who Can Do It Like Leslie . 2:21 Revolution! Paul Revere & the Raiders Ain't
Ain't Nothin' 'Bout You 3:38 The Greatest Hits Collection Volum Brooks & Dunn Ain't Nothing Like The Real Thing 2:19 Hitsville USA: The Motown Singles Marvin Gaye & Tammi Terrell Ain't That A Shame 2:28 Millenium Rock N' Roll Party Fats Domino Ain't To P
Ain't Nobody's Business If I Do - Billie Holiday ----- 6415 Ain't Nothing 'Bout You - Brooks & Dunn ----- 8229 Ain't Nothing Like The Real Thing - Marvin Gaye & T Terrell----- 2196 Ain't Nothing Like The Real Thing - Vince Gill & G Knight----- 9
Ain’t Got Time to Die (Ain-a That Good News?) Arr. Philip Kern SATB . 1.65 00-17946_ . Ain’t-a That Good, Good News! Good News * Swing Low, Sweet Chariot * Ain’t-a That Good News! Traditional Spirituals / arr. Sally K. Albrecht
