Westwood Holdings Group Inc · NYSE:WHG
Westwood — Investor Presentation (March 2011)
43 slides from Westwood's investor presentation, Mar 22, 2011
Slide 1: Westwood Holdings Group, Inc. Q1 2011 Investor Presentation
Exhibit 99.1 Westwood Holdings Group, Inc. Q1 2011 Investor Presentation Brian O. Casey William R. Hardcastle, Jr. President & Chief Financial Officer Chief Executive 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, preliminary estimates,results of operations or cashflows, aswell asother statements including words such as “anticipate,” “believe,” “p
Slide 3: Agenda
Agenda I. Firm Overview II. Investment Process & Products III. Growth Opportunities IV. Financial Highlights V. Summary
Slide 4: Firm Overview
WESTWOOD? Firm Overview
Slide 5: Westwood Overview
Westwood Overview • Asset management firm focused on Value & Income products • Serving institutional, private client and mutual fund investors since 1983 • Track record of providing strong long-term risk-adjusted returns • Client-centered culture; interests aligned with equity-based incentives • Pub
Slide 6: Product Distribution
Product Distribution Westwood Holdings Group, Inc. Westwood Management Westwood Trust WHG Funds • Separately managed portfolios • Enhanced Balanced™ asset • Capped expense ratios • Sub-Advisory allocation model • Institutional share class • Collective funds • Commingled funds • Defined contribution
Slide 7: Investment Process & Products
Investment Process & Products
Slide 8: 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 9: Investment Performance vs. Benchmark
Investment Performance vs. Benchmark Thru December 31, 2010 Our investment teams have delivered excess returns across Value & Income products 1-Year 3-Years 5-Years Since 4Q10 Trailing Trailing Trailing Inception Westwood LargeCap Value (Inception: 1/1/87) 10.6% 13.7% -4.2% 3.6% 11.8% Net of Fees 10
Slide 10: Performance accelerates following small cap/risk-oriented rallies
Performance accelerates following small cap/risk-oriented rallies Westwood LargeCap Equity vs. Russell 1000 Value Past performance is not a guarantee of future returns. Performance provided is gross of management fees. Please see appendix for full performance disclosures. The disclosures provided ar
Slide 11: Growth Opportunities
WESTWOOD? Growth Opportunities
Slide 12: Growth Opportunities
Growth Opportunities • Significant capacity remains in seasoned products • Subadvisory mandates o Access to broad distribution infrastructure & global market access o Support partner distribution network vs. building proprietary distribution network • WHG Funds o Three-year track record achieved in
Slide 13: Corporate Development Opportunities
Corporate Development Opportunities We seek to augment organic growth by pursuing strategic opportunities • Mutual fund asset acquisition opportunities o McCarthy Multi-Cap Stock Fund reorganized into WHG Dividend Growth Fund in 2010 o $68 million in assets; asset class extension for WHG Funds lineu
Slide 14: 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 12/31/10 AUM Potential Inception LargeCap Value $5.7 billion $25 billion $19.3 billion 1987 SMidCap Value $3.0+ billio
Slide 15: Seasoned Products & Capacity Available
Seasoned Products & Capacity Available EstimatedCapacity– asof December31,2010($ billions) 100% 23% 22% 15% 14% 2% Page 9
Slide 16: Subadvisory
Subadvisory Subadvisory opportunities attractive – means for enhanced distribution of scalable products • Access to established distribution channels • Generally lower average fee, but high profitability due to low incremental costs • Current Westwood Subadvisory mandates • UBS Pace • Pictet Funds •
Slide 17: Growth in Subadvisory Assets
Growth in Subadvisory Assets We have added 6 relationships and increased Subadvisory assets by $919 million since Q1 2008 Note: does not include Westwood Trust or GAMCO Westwood Funds assets Page 11
Slide 18: Pictet & Cie
Pictet & Cie • One of Europe’s oldest (founded in 1805) and largest ($383 B AUM) private banks • Selected Westwood to manage their first U.S. Value fund • 10-city European Marketing Tour with Pictet in Spring 2010 Cities Visited: Lugano, Milan, Paris, Zurich, Geneva, Lisbon, Madrid, Luxembourg, Fran
Slide 19: WHG Funds
WHG Funds WHG Funds • Six funds advised by Westwood Management • Strong asset growth –assets have grown to over $1 billion from initial two fund launch in December 2005 • Filed registration statement for seventh fund, WHG SMidCap Plus+, in Q1 2011 • Targeted primarily to institutional and defined co
Slide 20: WHG Funds – Morningstar Ratings
WHG Funds – Morningstar Ratings Proportion of Assets Rated Four or Five Star (Asset Weighted) Source: JPMorgan U.S. Asset Managers – North America Equity Research dated December 14, 2010; Strategic Insight. WHG Funds AUM as of 12/31/10 Page 14
Slide 21: Westwood Trust
Westwood Trust • Very high rate of client retention ™ • Enhanced Balanced – Asset allocation model 9 asset classes managed by Westwood Management 4 asset classes managed by subadvisors – Consultative approach – Low cost, efficient solution – Asset gathering platform – Private Client –“Best Ideas” •
Slide 22: Financial Highlights
WESTWOOD? Financial Highlights
Slide 23: Growth in Assets Under Management
Growth in Assets Under Management Total AUM at 12/31/10 = $12.5 Billion AUM Growth in a Challenging Environment • 5-year compound annual growth rate in AUM of 20% • Over this same period, the level of the S&P 500 index has risen by less than 1% • Trailing five years net inflows of $4.2 billion Page
Slide 24: Shift in Assets Under Management Mix
Shift in Assets Under Management Mix AUM ($ millions) Channel 2005 2010 5-Year CAGR • Strong organic growth has pushed mutual fund assets to meaningful share of total assets Institutional $3,674 $8,359 18% Private Wealth $1,246 $3,148 20% • Private wealth assets expanded with acquisition of Mutual F
Slide 25: Revenue Growth
Revenue Growth (excluding performance-based fees) • Consistent growth in asset-based fee revenue: 5-year CAGR of 21% • The value of the S&P 500 index is essentially flat over this time period • 2010 revenue was the highest in Westwood’s history Page 18
Slide 26: Economic Earnings, Dividends & Growing Cash Balances
Economic Earnings, Dividends & Growing Cash Balances 2005 –2010 Cash & Liquid Investments as of December 31, 2010 are 121% higher than at year-end 2005 Note: 2007 and 2008 economic earnings include impact of performance fees of $3.0 million and $8.7 million, respectively; cash & investments excludes
Slide 27: WHG Quarterly Dividend History
WHG Quarterly Dividend History • We seek to share excess cash with shareholders • Dividends declared since 2002: $68 million • 3.7% yield as of March 1, 2011 close at $1.40 annualized dividend rate Page 20
Slide 28: WHG Stock Performance vs. NYSE Listed Companies
WHG Stock Performance vs. NYSE Listed Companies as of 12/31/10 Top Performer 91.1% Top Performer 95.3% Top Performer 180.6% Bottom Performer -23.8% Bottom Performer -69.8% Bottom Performer -74.6% 1-Year Percentile 3-Year Percentile 5-Year Percentile WHG 15.02% 62 18.96% 34 172.99% 6 Russell 2000 26.
Slide 29: DeMarche "Best 100" Companies in the United States
DeMarche “Best 100”Companiesin the United States For the Second Year in a Row, DeMarche Associates, Inc. Names Westwood Holdings Group, Inc. Among “Best 100”Companies July 15, 2010 Westwood Holdings Group, Inc. has been named one of the“Best100Companiesinthe UnitedStates”by DeMarche Associates, Inc.
Slide 30: Ownership & Results
Ownership & Results Equity-based compensation is a critical part of our compensation program • Meaningfulequity ownershipalignsemployees’interests with clients andshareholders • Restricted stock awards used to attract and retain talented individuals and teams • Very high retention of key personnel •
Slide 31: Importance of Alignment
Importance of Alignment • We havelong believedthat our ownershipmodel and employeecompensationprogram provide effective alignmentof employees’interests with clients andshareholders. • A recentstudy by CaseyQuirkrevealsevidencethat employeeownershipandlow employee turnover are positivelycorrelated wi
Slide 32: Summary
WESTWOOD? Summary
Slide 33: Summary of Strategic Priorities
Summary of Strategic Priorities Ongoing Priorities • Serve clients attentively • Generate competitive investment performance • Service consultant relationships • Leverage referral sources at Westwood Trust • Increase visibility of WHG stock Near Term Priorities • Match manufacturing capability with
Slide 34: www.westwoodgroup.com
www.westwoodgroup.com 200 CrescentCourt Suite1200 Dallas,Texas 75201 T. 214.756.6900
Slide 35: Disclosures
WESTWOOD? Disclosures
Slide 36: Economic Earnings Reconciliation
Economic Earnings Reconciliation Economic Earnings Reconciliation ($ thousands) 2005 2006 2007 2008 2009 2010 GAAP net income $ 3,636 $ 4,508 $ 7,944 $ 10,543 $ 7,895 $ 11,280 Add: Restricted stock expense 2,114 4,500 5,316 6,735 7,666 9,269 Add: Stock option expense 250 126 - - - - Add: Intangible
Slide 37: LargeCap Value Disclosure Information
LargeCapValue Disclosure Information PERFORMANCE RESULTS: LARGECAP EQUITY COMPOSITE January 1, 2000 through December 31, 2010 LARGECAP EQUITY LARGECAP EQUITY Reporting Currency: USD Creation Date: January 1994 COMPOSITE RETURNS COMPOSITE RETURNS Gross of Net of Russell 1000 S&P Gross of Net of Russe
Slide 38: SMidCap Value Disclosure Information
SMidCap Value Disclosure Information* PERFORMANCE RESULTS: SMIDCAP COMPOSITE SMIDCAP EQUITY January 1, 2000 through December 31, 2010 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 P
Slide 39: SmallCap Value Disclosure Information
SmallCapValue Disclosure Information PERFORMANCE RESULTS: SMALLCAP VALUE COMPOSITE January 1, 2004 through December 31, 2010 Reporting Currency: USD Creation Date: January 2004 SMALLCAP VALUE Percentage COMPOSITE RETURNS Gross Net of Total Assets Percentage of Non-Fee of Fees Fees Russell Number of
Slide 40: AllCap Value Disclosure Information
AllCap Value Disclosure Information PERFORMANCE RESULTS: ALLCAP VALUE COMPOSITE ALLCAP VALUE July 1, 2002 through December 31, 2010 COMPOSITE RETURNS Reporting Currency: USD Creation Date: July 2002 Gross of Net of Gross Net of Total Assets Percentage Fees Fees Russell 3000 Value of Fees Fees Russel
Slide 41: Income Opportunity Disclosure Information
Income Opportunity Disclosure Information PERFORMANCE RESULTS: INCOME OPPORTUNITY INCOME OPPORTUNITY January 1, 2003 through December 31, 2010 COMPOSITE RETURNS Reporting Currency: USD Creation Date: January 2003 Gross of Net of 10 Yr Treas Fees Fees S&P 500 Nareit 3 Mo T-Bill Note Benchmark1 Total
Slide 42: Balanced Disclosure Information
Balanced Disclosure Information PERFORMANCE RESULTS: BALANCED COMPOSITE BALANCED BALANCED January 1, 2000 through December 31, 2010 COMPOSITE RETURNS COMPOSITE RETURNS Reporting Currency: USD Creation Date: January 1994 Gross of Net of 60% S&P500 / Gross of Net of 60% S&P500 / Fees Fees 40% BCG/C Fe
Slide 43: Core Fixed Income Disclosure Information
Core Fixed Income Disclosure Information PERFORMANCE RESULTS: FIXED INCOME COMPOSITE FIXED INCOME FIXED INCOME January 1, 2000 through December 31, 2010 Reporting Currency: USD Creation Date: January 1994 COMPOSITE RETURNS COMPOSITE RETURNS Gross of Net of Gross of Net of Total Total Fees Fees BCGC
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