Westwood Holdings Group Inc · NYSE:WHG
Westwood — Investor Presentation (March 2009)
32 slides from Westwood's investor presentation, Mar 30, 2009
Slide 1: Westwood Holdings Group, Inc. Spring 2009 Investor Presentation
Exhibit 99.1 Westwood Holdings Group, Inc. Spring 2009 Investor Presentation Brian O. Casey William R. Hardcastle, Jr. President, Vice President, Chief Executive Officer Chief Financial Officer
Slide 2: Forward-Looking Statements
Forward – Looking Statements Statements in this presentation that are not purely historical facts, including statements about our expected future financial position, results of operations or cash flows, as well as other statements including words such as “anticipate,” “believe,” “plan,” “estimate,”
Slide 3: Agenda
Agenda I. Firm Overview II. Investment Process & Products III. Financial Highlights IV. Summary Page 2
Slide 4: Firm Overview
Firm Overview • Well-established asset management firm • Clear focus on investment management and client service since 1983 • Strong long-term performance • Strict adherence to our process has resulted in strong risk-adjusted returns for our clients • Growing asset base • $7.2 billion in assets unde
Slide 5: Westwood History
Westwood History Westwood • Registered Investment Advisor Management Corp. 1983 • Institutional focus SWS Provided: Acquired by Southwest • Capital 1993 • Autonomy Securities (SWS) • Technology • Distribution Westwood Funds 1994 • Distributed by Gabelli • Sub-advised by Westwood Westwood Trust 1996
Slide 6: Westwood Value Proposition
Westwood Value Proposition • At our spin-off in 2002 we said we would: • Build out our research team • Expand our product offerings • Deliver excellent performance for our clients • Operate the firm in a stockholder-friendly manner • Energize our employees • Since that time we have: • Developed a ta
Slide 7: Product Distribution
Product Distribution Westwood Management Corp. • Separately managed portfolios – large institutions • Subadvisory • Collective funds – large defined contribution marketplace • Managed accounts (“SMA”) – select platforms • Institutional consultants Account minimum – $25,000,000 Westwood Trust • Commi
Slide 8: Subadvisory
Subadvisory • Subadvisory opportunities – attractive means for enhanced distribution of scalable products – LargeCap and MidCap • Access to established distribution channels • Generally lower average fee, but high profitability due to low incremental costs • Current Westwood subadvisory mandates • U
Slide 9: Overview of Investment Process
Overview of Investment Process • Idea generation Research • Proprietary fundamental research Analysts • Make buy & sell recommendations • Led by senior analysts 4 Research • Weekly due diligence meetings to review analyst recommendations Groups • Approved securities move to list of portfolio candida
Slide 10: Peer Group Product Comparisons Trailing 3-Years as of 12/31/08
Peer Group Product Comparisons Trailing 3-Years as of 12/31/08 LargeCap SMidCap SmallCap AllCap eA Large Cap Value Equity Universe eA Small-Mid Cap Value Equity Universe eA Small Cap Value Equity Universe eA All Cap Value Equity Universe Trailing 3-Years (Ending 12/31/08) Trailing 3-Years (Ending 12
Slide 11: Peer Group Performance Comparison
Peer Group Performance Comparison Percentile Ranking as of December 31, 2008 Returns for Returns for Returns for Returns for Returns for 1 Year 3 Years 5 Years 10 Years 20 Years Trailing Trailing Trailing Trailing Trailing LargeCap 21 7 5 21 3 SMidCap 7 2 1 8 N/A SmallCap 45 27 11 N/A N/A AllCap 41
Slide 12: Significant Product Capacity Remains
Significant Product Capacity Remains Seasoned Products Assets Under Estimated (>3 year track record & Management Maximum Capacity Asset Growth Product >$100 Million in assets) As of 12/31/08 AUM Potential Inception LargeCap Value $4.0 billion $25 billion $21.0 billion 1987 SMidCap Value $1.4 billion
Slide 13: Seasoned Products & Capacity Available
Seasoned Products & Capacity Available Estimated Capacity ($ millions) Page 12
Slide 14: Westwood Trust
Westwood Trust • Consistent asset growth – 11% compound annual growth rate of assets over the last five years TM • Enhanced Balanced – Asset allocation model – 7 asset classes managed by Westwood Management 5 asset classes managed by subadvisors – Consultative approach – Low cost, efficient solution
Slide 15: Mutual Funds
Mutual Funds WHG Funds – Advised by Westwood Management WHG SMidCap (WHGMX) WHG Income Opportunity (WHGIX) WHG LargeCap Value (WHGLX) To be rated 7/1/09 WHG Balanced (WHGBX) To be rated 9/8/09 WHG SmallCap Value (WHGSX) To be rated 4/1/10 Other Funds – Subadvised by Westwood Management GAMCO Westwoo
Slide 16: Financial Highlights – 2008
Financial Highlights – 2008 • Strong asset inflows and performance fees offset difficult market environment Year-over-year Metric 2008 Result Change • Assets under management $7.2 billion -9% (vs. -37% for S&P 500) • Revenue $46.5 million +28% • GAAP net income $10.5 million +33% • Cash earnings $17
Slide 17: Growth in Assets Under Management
Growth in Assets Under Management Quarterly AUM Growth AUM Growth in a Challenging Environment • From Q1 2004 – Q4 2008, Westwood’s AUM has increased by 85%, or a compound annual growth rate of 14% • Over this same period, the level of the S&P 500 index has declined by 20% • Westwood achieved the hi
Slide 18: Change in AUM vs. Product Performance & Benchmarks
Change in AUM vs. Product Performance & Benchmarks • Westwood’s strong asset inflows and relative outperformance mitigated the impact of the 2008 market decline on assets under management Westwood Management Westwood Trust Page 17
Slide 19: Westwood AUM vs. Peers
Westwood AUM vs. Peers 2008 Quarterly Dividend AUM Change Action Westwood Holdings Group, Inc. (WHG) -8.5% no change Blackrock (BLK) -3.6% no change Epoch Holding Corp. (EPHC) -20.9% no change Eaton Vance (EV) -21.2% 3% increase Q4 Boston Private Financial Holdings (BPFH) -24.6% 90% cut Q3 '08 Wadde
Slide 20: Revenue, Earnings and Dividend Growth
Revenue, Earnings and Dividend Growth Revenue Growth Cash Earnings Growth Dividend Growth • Compound annual growth rate from 2004 – 2008 • Revenue 23% • Cash earnings 35% • Performance-based fees • 2007 $3.0 million • 2008 $8.7 million • Dividend yield of 3.2% as of March 24, 2009 Page 19
Slide 21: WHG Stock Performance
WHG Stock Performance • Cumulative total return from December 31, 2002 to December 31, 2008 of 105%, compared to 4% for the SNL Asset Manager Index and -5% for the Russell 2000 Index • Outperformed SNL Asset Manager Index by 56% in 2007 and 31% in 2008 • Added to Russell 3000 and related indexes in
Slide 22: Near-term Objectives
Near-term Objectives • Serve clients attentively • Generate competitive investment performance • Cultivate consultant relationships • Leverage referral sources at Westwood Trust ~75% of new assets from referrals • Match manufacturing capability with distribution partners through subadvisory opportun
Slide 23: Ownership & Results
Ownership & Results Our main objective: Deliver superior returns to our clients and our stockholders Ownership • We believe owners behave differently than employees. • All employees participate in our equity compensation program, which represents a significant portion of total compensation. • Unique
Slide 24: Summary
Summary • Established firm with recognized institutional presence • Seasoned competitive products • Attractive product pipeline with strong performance; solid momentum in institutional marketplace • Private client growth opportunities • Employees are stakeholders • Opportunity to realize operational
Slide 25: Cash to GAAP Reconciliations
Cash to GAAP Reconciliations Cash Earnings Reconciliation ($ thousands) Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 GAAP net income $ 1,117 $ 988 $ 685 $ 896 $ 875 $ 937 $ 814 $ 1,010 Add: Restricted stock expense 202 203 426 419 385 415 657 657 Add: Stock option expense 62 62 63
Slide 26: LargeCap Disclosure Information
LargeCap Disclosure Information PERFORMANCE RESULTS: LARGECAP EQUITY COMPOSITE LARGECAP EQUITY LARGECAP EQUITY January 1, 1995 through December 31, 2008 COMPOSITE RETURNS COMPOSITE RETURNS Reporting Currency: USD Creation Date: January 1994 Gross of Net of Russell 1000 S&P Gross of Net of Russell S&
Slide 27: SMidCap Disclosure Information
SMidCap Disclosure Information PERFORMANCE RESULTS: SMIDCAP COMPOSITE SMIDCAP EQUITY January 1, 1998 through December 31, 2008 COMPOSITE RETURNS Reporting Currency: USD Creation Date: July 1997 Russell Gross of Net of Russell 2500 Percentage Fees Fees 2500 Value Gross of Net of Total Assets Percenta
Slide 28: SmallCap Value Disclosure Information
SmallCap Value Disclosure Information PERFORMANCE RESULTS: SMALLCAP VALUE COMPOSITE January 1, 2004 through December 31, 2008 SMALLCAP VALUE Reporting Currency: USD Creation Date: January 2004 COMPOSITE RETURNS Gross of Net of Russell Percentage Fees Fees 2000 Value Gross Net of Total Assets Percent
Slide 29: AllCap Value Disclosure Information
AllCap Value Disclosure Information PERFORMANCE RESULTS: ALLCAP VALUE COMPOSITE July 1, 2002 through December 31, 2008 ALLCAP VALUE Reporting Currency: USD Creation Date: July 2002 COMPOSITE RETURNS Gross of Net of Fees Fees Russell 3000 Value Gross Net of Total Assets Percentage ANNUALIZED RETURNS
Slide 30: Balanced Disclosure Information
Balanced Disclosure Information PERFORMANCE RESULTS: BALANCED COMPOSITE January 1, 1995 through December 31, 2008 Reporting Currency: USD Creation Date: January 1994 BALANCED BALANCED COMPOSITE RETURNS COMPOSITE RETURNS Gross of Net of 60% S&P Total Assets Percentage Gross of Net of 60% S&P500 / Gro
Slide 31: Morningstar Disclaimer
Morningstar© Disclaimer © 2009 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its conte
Slide 32: www.westwoodgroup.com
www.westwoodgroup.com 200 Crescent Court Suite 1200 Dallas, Texas 75201 (214)756-6900
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