Bristol Gate Concentrated US Equity ETF · TSX:BGU
Bristol Gate Concentrated US Equity ETF — Bristol Gate Capital Partners — Investor Presentation (December 2021)
37 slides from Bristol Gate Concentrated US Equity ETF's investor presentation, Dec 31, 2021
Slide 1: Bristol Gate U.S. & Canadian Equity Strategy
Bristol Gate U.S. & Canadian Equity Strategy Dividend Growth Investing for the Digital Age As at December 31, 2021 Full introduction to the firm - including GIPS®-verified performance information Private and confidential ｜ Copyright © Bristol Gate Capital Partners Inc. Bristol Gate Capital Partners
Slide 2: The Art and Science of Investing
The Art and Science of Investing We are not organized like most investment management companies. We believe in putting the “scientific method” up front in the investment process. Data Science and Machine Learning are part of our DNA and make us better at identifying opportunities that we can provide
Slide 3: Bristol Gate Capital Partners
Bristol Gate Capital Partners Our Thesis We believe that if you can build a portfolio by predicting the best dividend growers for the coming 12 months, over time the portfolio will outperform the market with less downside risk. Our Value Proposition Focused on superior income growth for clients Majo
Slide 4: Way Beyond Yield
Way Beyond Yield What you get • The investment process identifies stocks with remarkable dividend growth potential Bristol Gate’s proprietary approach examines capital allocation • We use data science to help inform our decisions and improve our efficiency • We find companies that are returning cash
Slide 5: Bristol Gate's Four Pillars of Portfolio Construction
Bristol Gate’s Four Pillars of Portfolio Construction Minimum acceptable level of Determining fair value of a security predicted dividend growth in order and paying a reasonable price for to be considered in the portfolio quality 1 3 2 + 4 Fundamental analysis on the Building a well balanced portfol
Slide 6: Bristol Gate U.S. Equity Strategy
Bristol Gate U.S. Equity Strategy
Slide 7: Concentration is a Result of Extreme Selectivity
Concentration is a Result of Extreme Selectivity The framework reflects a market reality: Quality companies with high dividend growth are uncommon – that’s why we own just 4% of the companies in the S&P 500 As at December 31, 2021 Source: Bloomberg 7
Slide 8: Process Details
Process Details Start with the S&P 500 Portfolio Construction: Quality is key Eliminate Companies: ● Free cash flow generators ● With long term debt not investment grade ● Correlation analysis to reduce ● That do not pay a dividend interdependencies ● With less than 3 years dividend history ● Cash p
Slide 9: Why Predict Dividend Growth?
Why Predict Dividend Growth? Although markets have been volatile over the last 20 years, investing in the best dividend growth companies each year would have resulted in the best risk-adjusted returns over the period. Annualized Total Return of Different Portfolios The chart above illustrates that i
Slide 10: Higher Dividend Growth
Higher Dividend Growth Since inception, the approach has consistently been focused on finding companies that can grow dividends substantially 19.7% per year Trailing Dividend Growth Average annual dividend growth since inception As at December 31, 2021 Source: Bloomberg. Median of the annual trailin
Slide 11: 10 Years of Outperformance – No FAANGs
10 Years of Outperformance – No FAANGs We have managed to outperform the S&P 500 over the last 10 years without ever owning any of the FAANGs Source: Bloomberg, Morningstar from Jan 1, 2011-December 31, 2021 in USD – please see slide 12 for full performance history and important disclosures on slide
Slide 12: Long Term Performance
Long Term Performance Cumulative total gross returns since inception in USD Gross Return Net Return S&P 500 TRI 850 800 750 700 650 600 550 500 450 400 350 300 250 200 150 100 Ince 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 p. Performance from May 15, 2009 to December 31, 2021
Slide 13: Annualized Performance
Annualized Performance Annualized total gross returns since inception in USD Gross Net S&P 500 TRI 35% 30% 25% 20% 15% 10% 5% 0% YTD 3 Month 1 Year 3 Year 5 Year 10 Year Since Inception Performance from May 15, 2009 to December 31, 2021 – in USD YTD 3 Month 1 Year 3 Year 5 Year 10 Year Since Incepti
Slide 14: Exposure and Characteristics
Exposure and Characteristics US Equity Strategy Sector Exposure vs S&P 500 at December 31, 2021 Inception: May 15, 2009. All figures in USD, Gross of Fees,. See important disclosures on slide 32 and 36 14
Slide 15: Bristol Gate Canadian Equity Strategy
Bristol Gate Canadian Equity Strategy
Slide 16: Concentration is a Result of Extreme Selectivity
Concentration is a Result of Extreme Selectivity The framework reflects a market reality: Quality companies with high dividend growth are uncommon. As at December 31, 2021 Source: Bloomberg 16
Slide 17: Higher Dividend Growth
Higher Dividend Growth Since inception, the approach has consistently been focused on finding companies that can grow dividends sustainably Trailing Dividend Growth 11.7%/yr 20% Average annual dividend growth 15% since inception 10% 5% 0% 2013 2014 2015 2016 2017 2018 2019 2020 2021 BG S&P TSX As at
Slide 18: Process Details
Process Details Start with the S&P/TSX Portfolio construction: Eliminate companies: Quality is key ● Free cash flow generators ● With weak and deteriorating balance sheets ● Correlation analysis to reduce ● That do not pay a dividend interdependencies ● With less than 2 years dividend history ● Up t
Slide 19: Long Term Performance
Long Term Performance Cumulative total gross returns since inception in CAD Gross Return Net Return S&P/TSX Total Return Index 250 225 200 175 150 125 100 Incep. 2013 2014 2015 2016 2017 2018 2019 2020 2021 Performance from July 1, 2013 to December 31, 2021 – in CAD 2013 2014 2015 2016 2017 2018 201
Slide 20: Annualized Performance
Annualized Performance Annualized total gross returns since inception in CAD Gross Net S&P/TSX Total Return Index 30% 20% 10% 0% YTD 3 Month 1 Year 3 Year 5 Year Since Inception Performance from July 1, 2013 to December 31, 2021 – in CAD YTD 3 Month 1 Year 3 Year 5 Year Since Inception Bristol Gate
Slide 21: Exposure and Characteristics
Exposure and Characteristics Canadian Equity Strategy Sector Exposure vs S&P/TSX at December 31, 2021 Inception: July 1, 2013. All figures in CAD, Gross of Fees,. See important disclosures on slide 33 and 37. 21
Slide 22: Different Markets – Same Focus on Dividend Growth
Different Markets – Same Focus on Dividend Growth Bristol Gate US Equity Strategy Bristol Gate Canadian Equity Strategy To build a portfolio of the very best To build a portfolio of the very best Objective dividend growers in the S&P 500 dividend growers in the S&P/TSX Index S&P 500 S&P/TSX Screen T
Slide 23: Data Science Appendix
Data Science Appendix ‘al BRISTOLGATE CAPITAL PARTNERS
Slide 24: Model Features
Model Features Leverage Company | (interest J) Dividends (per Info (sector, ~ coverage) share, estimates, Earnings | (adjusted EPS, | market cap, EV ratio, EPS” \ share count) Profitability estimates) (ROIC, ROE) growth) Cash Flow (eS 4 Economic Data share,growthh 7 Price > (bond rate, : |. unemploy
Slide 25: Predicting Dividend Growth
Predicting Dividend Growth Average Dividend Growth Prediction Error Tree-based algorithm • Input data–around 1000 features consisting of fundamental, price and economic data over 20 years of history • Gradient Boosting– average predictions from all trees results in more accurate predictions across t
Slide 26: How BG Uses Machine Learning
How BG Uses Machine Learning 26
Slide 27: Using Data Science to Construct Better Portfolios
Using Data Science to Construct Better Portfolios Sectors do not tell you much about risk • Price correlation of holdings is a better measure of portfolio diversification • Build a collection of independent risk vectors (W0-W11) and visualize the exposure of each stock to a specific risk factor • Me
Slide 28: Investment Committee
Investment Committee Richard Hamm, Chief Executive Officer Experience: 40 years. Formerly held senior roles with ScotiaMcLeod and Trimark (now Invesco); co- founded Plaza REIT. Also served on the boards of many charities including the Art Gallery of Ontario, North York General Hospital and most rece
Slide 29: Research Team
Research Team Izet Elmazi, CPA, CA, CFA, Chief Investment Officer Experience: 20+ years. Formerly Vice President and Portfolio Manager at Goodman & Company, Investment Counsel and Scotiabank. Education: Bachelor of Commerce, University of Toronto. Izet also holds the Chartered Financial Analyst (CFA
Slide 30: Relationship Management Team
Relationship Management Team Jamie Houston, CIM, Senior Relationship Manager Experience: 10+ years. Jamie joined Bristol Gate after working in Business Development and Sales Strategy roles at BMO and TD Bank. Education: BComm from McGill University. Jamie holds the Chartered Investment Manager (CIM)
Slide 31: Operations Team
Operations Team Marcus Spain, CA (CPA), Chief Financial Officer Experience: 20+ years. Prior to joining Bristol Gate he was Partner, Chief Financial Officer and Chief Compliance Officer at Maple Rock Capital Partners Inc.. He has previously held CFO or COO roles at Marret Asset Management, EFG Wealt
Slide 32: Important Disclosures
Important Disclosures Bristol Gate US Equity Strategy Gross returns in this report refer to the Bristol Gate US Equity Strategy Composite. No allowance has been made for custodial costs, taxes, operating costs or management and performance fees, which will reduce performance. The Net returns for the
Slide 33: Important Disclosures
Important Disclosures Bristol Gate Canadian Equity Strategy Gross returns in this report refer to the Bristol Gate Canadian Equity Strategy Composite. No allowance has been made for custodial costs, taxes, operating costs or management and performance fees, which will reduce performance. The Net ret
Slide 34: Composite Characteristics
Composite Characteristics Bristol Gate US Equity Strategy As at December 31, 2020 34
Slide 35: Composite Characteristics
Composite Characteristics Bristol Gate Canadian Equity Strategy As at December 31, 2020 35
Slide 36: GIPS Disclosures – Bristol Gate US Equity Strategy
GIPS® Disclosures – Bristol Gate US Equity Strategy The Investment Advisor’s objective is to select companies with The Bristol Gate US Equity Strategy Composite has had a positive dividend growth and which collectively will generate performance examination for the periods May 15, 2009 until over the
Slide 37: GIPS Disclosures – Bristol Gate Canadian Equity Strategy
GIPS® Disclosures – Bristol Gate Canadian Equity Strategy The Investment Advisor’s objective is to select companies from The Bristol Gate Canadian Equity Strategy Composite has the S&P/TSX universe with positive dividend growth and which had a performance examination for the periods July 1, 2013 col
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