Mff Capital Investments Ltd. · ASX:MFF
Mff Capital Investments — Magellan Flagship Fund — Investor Presentation (April 2008)
68 slides from Mff Capital Investments's investor presentation, Apr 3, 2008
Slide 1: Magellan Flagship Fund Limited Investor Briefing
For personal use only Magellan Flagship Fund Limited Investor Briefing 3 April 2008 1
Slide 2: Important Notice
Important Notice For personal use only This presentation is provided for informational and discussion purposes only and does not constitute an offer to sell or a solicitation of an offer to purchase any security of Magellan Flagship Fund (“MFF”) or its affiliates. Any current or prospective investor
Slide 3: Agenda
Agenda For personal use only 1. Outstanding Businesses at Compelling Valuations 2. Construction of Magellan’s Unique Portfolio 3. World’s Best = Lower Risks & Growth Opportunities 4. FMCG - case studies in profitable returns 5. Markets, Outlooks & Risks 6. Questions & Answers 3
Slide 4: Key Messages
Key Messages For personal use only Magellan intends to maintain our cautious, risk focussed, rational investing discipline. MFF’s portfolio is absolutely world class, as market dislocations have dropped the prices of some outstanding companies and materially increased our Margins of Safety. In almos
Slide 5: Key Messages
Key Messages For personal use only We own some unique businesses which combine: Almost impregnable sustainable advantages in profitable core businesses Relatively low risk multi year sales and margin growth opportunities and growing competitive advantages Earnings rates at multiples of cost of capit
Slide 6: Key Messages
Key Messages For personal use only We fully expect our approach to result in attractive shareholder returns over time, although volatile markets should always be expected and we have factored in a sustained economic downturn in our analysis. Stock and bond market irrationality and fluctuations will
Slide 7: Current NTA Snapshot
Current NTA Snapshot (2) For personal use only Approximate NTA as at 3/4/08 88cps(1) NTA as at 31/12/07 92cps(1) Performance for YTD (after costs) (-4.3%) MSCI in AUD Performance since 31/12/07 (-10.3%) MSCI in AUD Performance since 31/12/06 (-12.2%) ASX 200 Performance since 31/12/07 (-15.4%) ASX 2
Slide 8: Outstanding Businesses at Compelling Valuations
1. Outstanding Businesses at Compelling Valuations For personal use only Panic & Pessimism = Opportunities for Prepared Investors Selective international markets offer outstanding investment opportunities for disciplined, medium term focussed investors in quality companies Some outstanding companies
Slide 9: Outstanding Businesses at Compelling Valuations
1. Outstanding Businesses at Compelling Valuations For personal use only MFF has acquired shares in some outstanding businesses over the past 15 months where their underlying cashflows will conceivably rise meaningfully for some decades. We have paid a significant discount to our conservative estima
Slide 10: Magellan's Portfolio Holdings as at 31/3/08
2. Construction of Magellan’s Unique Portfolio For personal use only Magellan’s Portfolio Holdings as at 31/3/08 $Am $Am Market Market price price American Express 58.7 Western Union 3.5 Nestlé 37.2 ConnectEast 3.2 eBay 32.9 Moody's 3.1 Yum! Brands 31.6 CVS Caremark 2.7 Wal-Mart 25.4 Walgreen 2.5 Pe
Slide 11: Construction of Magellan's Unique Portfolio
2. Construction of Magellan’s Unique Portfolio For personal use only - There were no sales in the latest Quarter (after 4/1/08 sale of remaining 78K of Cross Harbour) - We acquired shares in some companies at prices materially below where we had made sales in 2007 (eBay, Tesco, ConnectEast, Google,
Slide 12: Construction of Magellan's Unique Portfolio
2. Construction of Magellan’s Unique Portfolio For personal use only - We have sought to avoid exposure to some of the areas where investors have suffered or will likely suffer material permanent loss of capital such as: Global Investment Banks, many financial and property companies and emerging mar
Slide 13: World's Best Companies: Lower Business Risks
3. World’s Best Companies For personal use only Lower Business Risks Consider the business risks of Nestlé operating in over 200 countries, producing annual after tax free cashflow of well over $10 billion from a suite of products with global acceptance such that the more than 20 which earn annual r
Slide 14: World's Best Companies: Lower Financial Risks
3. World’s Best Companies For personal use only Lower Financial Risks The competitive positions of our financials are improving as competitors are forced to leave the industry or scale back their operations in retail banking, credit cards and student lending. Contrast the financial strength of Bank
Slide 15: World's Best Companies: Growth Opportunities
3. World’s Best Companies For personal use only Growth opportunities Perspective:- Australia ranks about #53 in the world in terms of population and #16 in the world for the size of the economy. Most significant business opportunities in history as the populations of more than 200 countries more ful
Slide 16: FMCG - case studies in profitable returns
4. FMCG - case studies in profitable returns For personal use only Nestlé recently forecast an acceleration in its sales growth targets including a 19% gain in annual sales from Russia to about $2 billion. When L’Oreal announced that it achieved double digit eps growth in 2007 for the 23rd year in a
Slide 17: FMCG - case studies in profitable returns
4. FMCG - case studies in profitable returns For personal use only There are no more than 20 FMCG companies with sizable, growing, profitable presences in at least 50 major global markets and we own some of the best of them, as well as some of the global leaders in financials, internet, software and
Slide 18: FMCG - case studies in profitable returns
4. FMCG - case studies in profitable returns For personal use only Our FMCG companies are concurrently increasing sales and market shares in multiple countries and have sustained increased prices (and sales) beyond what we anticipated, given rising commodity input costs. They are also not seeing a m
Slide 19: Unilever
4. Unilever For personal use only 19 Unilever, 2008 CAGNY 20th February 2008 presentation, Jim Lawrence, Chief Financial Officer
Slide 20: Unilever
4. Unilever For personal use only 20 Unilever, 2008 CAGNY 20th February 2008 presentation, Jim Lawrence, Chief Financial Officer
Slide 21: Unilever
4. Unilever For personal use only 21 Unilever, 2008 CAGNY 20th February 2008 presentation, Jim Lawrence, Chief Financial Officer
Slide 22: Unilever
4. Unilever For personal use only 22 Unilever, 2008 CAGNY 20th February 2008 presentation, Jim Lawrence, Chief Financial Officer
Slide 23: Unilever
4. Unilever For personal use only 23 Unilever, 2008 CAGNY 20th February 2008 presentation, Jim Lawrence, Chief Financial Officer
Slide 24: Unilever
4. Unilever For personal use only 24 Unilever, 2008 CAGNY 20th February 2008 presentation, Jim Lawrence, Chief Financial Officer
Slide 25: Unilever
4. Unilever For personal use only 25 Unilever, 2008 CAGNY 20th February 2008 presentation, Jim Lawrence, Chief Financial Officer
Slide 26: Unilever
4. Unilever For personal use only 26 Unilever, 2008 CAGNY 20th February 2008 presentation, Jim Lawrence, Chief Financial Officer
Slide 27: Unilever
4. Unilever For personal use only 27 Unilever, 2008 CAGNY 20th February 2008 presentation, Jim Lawrence, Chief Financial Officer
Slide 28: Unilever
4. Unilever For personal use only 28 Unilever, 2008 CAGNY 20th February 2008 presentation, Jim Lawrence, Chief Financial Officer
Slide 29: Unilever
4. Unilever For personal use only 29 Unilever, 2008 CAGNY 20th February 2008 presentation, Jim Lawrence, Chief Financial Officer
Slide 30: Unilever
4. Unilever For personal use only 30 Unilever, 2008 CAGNY 20th February 2008 presentation, Jim Lawrence, Chief Financial Officer
Slide 31: Yum! Brands
4. Yum! Brands For personal use only 31 Yum!, 2007 Investor Update 10th December 2007 presentation, David Novak, Chairman and CEO
Slide 32: Yum! Brands
4. Yum! Brands For personal use only 32 Yum!, 2007 Investor Update 10th December 2007 presentation, David Novak, Chairman and CEO
Slide 33: Yum! Brands
4. Yum! Brands For personal use only 33 Yum!, 2007 Investor Update 10th December 2007 presentation, David Novak, Chairman and CEO
Slide 34: Yum! Brands
4. Yum! Brands For personal use only 34 Yum!, 2007 Investor Update 10th December 2007 presentation, David Novak, Chairman and CEO
Slide 35: Yum! Brands
4. Yum! Brands For personal use only 35 Yum!, 2007 Investor Update 10th December 2007 presentation, David Novak, Chairman and CEO
Slide 36: Yum! Brands
4. Yum! Brands For personal use only 36 Yum!, 2007 Investor Update 10th December 2007 presentation, David Novak, Chairman and CEO
Slide 37: Yum! Brands
4. Yum! Brands For personal use only 37 Yum!, 2007 Investor Update 10th December 2007 presentation, David Novak, Chairman and CEO
Slide 38: Yum! Brands
4. Yum! Brands For personal use only 38 Yum!, 2007 Investor Update 10th December 2007 presentation, David Novak, Chairman and CEO
Slide 39: Yum! Brands
4. Yum! Brands For personal use only 39 Yum!, 2007 Investor Update 10th December 2007 presentation, David Novak, Chairman and CEO
Slide 40: Yum! Brands
4. Yum! Brands For personal use only 40 Yum!, 2007 Investor Update 10th December 2007 presentation, David Novak, Chairman and CEO
Slide 41: L'Oreal
4. L’Oreal For personal use only 41 L'Oreal, 2007 Results 14th February 2008, Mr. Jean-Paul AGON Chief Executive Officer
Slide 42: L'Oreal
4. L’Oreal For personal use only 42 L'Oreal, 2007 Results 14th February 2008, Mr. Jean-Paul AGON Chief Executive Officer
Slide 43: L'Oreal
4. L’Oreal For personal use only 43 L'Oreal, 2007 Results 14th February 2008, Mr. Jean-Paul AGON Chief Executive Officer
Slide 44: L'Oreal
4. L’Oreal For personal use only 44 L'Oreal, 2007 Results 14th February 2008, Mr. Jean-Paul AGON Chief Executive Officer
Slide 45: L'Oreal
4. L’Oreal For personal use only 45 L'Oreal, 2007 Results 14th February 2008, Mr. Jean-Paul AGON Chief Executive Officer
Slide 46: L'Oreal
4. L’Oreal For personal use only 46 L'Oreal, 2007 Results 14th February 2008, Mr. Jean-Paul AGON Chief Executive Officer
Slide 47: L'Oreal
4. L’Oreal For personal use only 47 L'Oreal, 2007 Results 14th February 2008, Mr. Jean-Paul AGON Chief Executive Officer
Slide 48: L'Oreal
4. L’Oreal For personal use only 48 L'Oreal, 2007 Results 14th February 2008, Mr. Jean-Paul AGON Chief Executive Officer
Slide 49: L'Oreal
4. L’Oreal For personal use only 49 L'Oreal, 2007 Results 14th February 2008, Mr. Jean-Paul AGON Chief Executive Officer
Slide 50: L'Oreal
4. L’Oreal For personal use only 50 L'Oreal, 2007 Results 14th February 2008, Mr. Jean-Paul AGON Chief Executive Officer
Slide 51: L'Oreal
4. L’Oreal For personal use only 51 L'Oreal, 2007 Results 14th February 2008, Mr. Jean-Paul AGON Chief Executive Officer
Slide 52: L'Oreal
4. L’Oreal For personal use only 52 L'Oreal, 2007 Results 14th February 2008, Mr. Jean-Paul AGON Chief Executive Officer
Slide 53: L'Oreal
4. L’Oreal For personal use only 53 L'Oreal, 2007 Results 14th February 2008, Mr. Jean-Paul AGON Chief Executive Officer
Slide 54: Nestlé
4. Nestlé For personal use only 54 Nestlé, 2007 Full Year results road show, 25th February 2008, Paul Bulcke, CEO
Slide 55: Nestlé
4. Nestlé For personal use only 55 Nestlé, 2007 Full Year results road show, 25th February 2008, Paul Bulcke, CEO
Slide 56: Nestlé
4. Nestlé For personal use only 56 Nestlé, 2007 Full Year results road show, 25th February 2008, Paul Bulcke, CEO
Slide 57: Nestlé
4. Nestlé For personal use only 57 Nestlé, 2007 Full Year results road show, 25th February 2008, Paul Bulcke, CEO
Slide 58: Nestlé
4. Nestlé For personal use only 58 Nestlé, 2007 Full Year results road show, 25th February 2008, Paul Bulcke, CEO
Slide 59: Nestlé
4. Nestlé For personal use only 59 Nestlé, 2007 Full Year results road show, 25th February 2008, Paul Bulcke, CEO
Slide 60: Markets, Outlooks & Risks
5. Markets, Outlooks & Risks For personal use only Massive discrepancies in markets:- Some market beset by fear and panic pushing depressed prices to irrational lows. Some continue in the grip of speculative excess, for example extrapolation of current supply/demand dislocations. Some speculative bu
Slide 61: Markets, Outlooks & Risks
5. Markets, Outlooks & Risks For personal use only Obvious mathematics will work in our favour:- Irrational over investment in Treasuries means yields of 1-3.5% depending on duration whereas investor pessimism produces current free cashflows yields for some high quality bonds and equities of 7% + ,
Slide 62: Markets, Outlooks & Risks
5. Markets, Outlooks & Risks For personal use only Significant short selling activity adds to business risks and some price volatility. >10% one day rise in financials from short covering post Bear Sterns illustrates. Rolling wave of ‘second order’ market business and economic effects e.g. from corr
Slide 63: Markets, Outlooks & Risks
5. Markets, Outlooks & Risks For personal use only Past Market cycles: Consider Berkshire 1973 Chairman’s letter “On the investment side of our insurance operation, we made substantial additional commitments in common stocks in 1973. We had significant unrealised depreciation – over $12 million – in
Slide 64: Markets, Outlooks & Risks
5. Markets, Outlooks & Risks For personal use only In 1973 and 1974, Charlie Munger’s limited partnership fell 31.9% and 31.5% respectively. Yet he achieved a 19.8% p.a. compound return for the 14 year life of the partnership till 1975 and subsequently made a major contribution to the Berkshire Hath
Slide 65: Markets, Outlooks & Risks
5. Markets, Outlooks & Risks For personal use only Buffett said yes, he was well aware the world is in a mess… and there is population explosion, resource scarcity, nuclear proliferation. But, he went on, you can’t invest in anticipation of calamity; gold coins and art collections can’t protect you
Slide 66: Markets, Outlooks & Risks: Currencies
5. Markets, Outlooks & Risks For personal use only Currencies We continue to provide Australian and New Zealand investors with diversification by currency, geography and company. We are now closer to fully invested in companies, many of which have operations in 30 or more countries. Our companies ar
Slide 67: Markets, Outlooks & Risks: Market and Business Risks
5. Markets, Outlooks & Risks For personal use only Market and Business Risks Assessment of risks remains a key focus. We became progressively more cautious about near term economic conditions through 2007. In 2008 it is clear that the US Fed and Government are doing everything possible to minimise t
Slide 68: Questions and Answers
6. Questions and Answers For personal use only 68
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