Westwood Holdings Group Inc · NYSE:WHG
Westwood — William Blair & Co. Emerging Growth Stock Conference 2009
42 slides from Westwood's conference presentation, Oct 6, 2009
Slide 1: Westwood Holdings Group, Inc.
Exhibit 99.1 Westwood Holdings Group, Inc. William Blair & Co. Emerging Growth Stock Conference October 6, 2009 Brian O. Casey Susan M. Byrne President, Chairman, Chief Executive Officer Chief Investment 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 cash flows, as well as other statements including words such as “anticipate,” “believe
Slide 3: Agenda
Agenda I. Firm Overview II. Investment Process & Products III. Growth Opportunities IV. Financial Highlights V. Summary
Slide 4: Firm Overview
Firm Overview
Slide 5: 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 • $9.5 billion in assets unde
Slide 6: Westwood History
Westwood History Westwood • Registered Investment Advisor Management Corp. 1983 • Institutional focus SWS Provided: Acquired by • Capital Southwest Securities 1993 • Autonomy (SWS) • Technology • Distribution Westwood Funds 1994 • Distributed by Gabelli • Sub-advised by Westwood Westwood Trust 1996
Slide 7: Westwood Value Proposition
Westwood Value Proposition At our spin-off in July 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 • Increase shareholder value • Energize our employees Page 3
Slide 8: Westwood Results
Westwood Results Since our spin-off in July 2002 we have achieved these results: • Built out our research team Developed a talented, team-based research process, adding 22 professionals including 10 CFAs • Expanded our product offerings Launched six additional products • Delivered excellent performa
Slide 9: Product Distribution
Product Distribution • Separately managed portfolios • Enhanced Balanced TM asset • Capped expense ratios • Subadvisory allocation model • Institutional share class • Collective funds • Commingled funds • Defined contribution plans • Separately managed portfolios • Other institutions • A share class
Slide 10: Investment Process & Products
Investment Process & Products
Slide 11: 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 12: Peer Group Performance Comparison
Peer Group Performance Comparison Percentile Ranking as of June 30, 2009 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 76 27 7 33 10 SMidCap 23 1 1 3 N/A SmallCap 75 41 19 N/A N/A AllCap 73 5
Slide 13: S&P Quality Ratings: Russell 1000 Value Index Total Returns
S&P Quality Ratings Russell 1000 Value Index Total Returns High Quality led in 2008, Low Quality has led in 2009. 2008 2009 Thru Sept 30 A+ A+ A A A- A- B+ B+ B B B- B- C C Past performance is not a guarantee of future returns. Actual account performance attribution may differ from the representativ
Slide 14: Performance by Price/Earnings Ratio
Performance by Price/Earnings Ratio March 9 through Sept 30, 2009 Companies without earnings and the most expensive stocks have outperformed since the market bottomed. Westwood portfolios consist of low P/E, high quality companies Index: Russell 1000 Value Benchmark Data Source: © 2009 Mellon Analyt
Slide 15: 2003 Calendar Year Performance
2003 Calendar Year Performance Westwood LargeCap lagged in the last low quality rally as well... 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 are considered an i
Slide 16: LargeCap Value Portfolio Statistics
LargeCap Value Portfolio Statistics Five Years ended December 31, 2007 But Westwood outperformed substantially over the next four years as the recovery matured and risk appetites fell. Past performance is not a guarantee of future returns. Performance provided is gross of management fees. Please see
Slide 17: Westwood Has Historically Outperformed in a Rising Rate Environment
Westwood Has Historically Outperformed in a Rising Rate Environment • As interest rates go up, risk appetites decline and capital flows into higher quality securities. • Fed Funds rate currently at 0% and likely to rise as Fed moves away from quantitative easing. • Such an environment has historical
Slide 18: Growth Opportunities
Growth Opportunities
Slide 19: Growth Opportunities
Growth Opportunities • Significant capacity remains in seasoned products • Subadvisory mandates o Access to broad distribution infrastructure o Global market access o Support partner distribution network vs. building proprietary distribution network • WHG Funds o Three-year track record achieved in
Slide 20: Significant Product Capacity Remains
Significant Product Capacity Remains *Preliminary AUM estimate Seasoned Products Assets Under Estimated (>3 year track record & Management Maximum Capacity Asset Growth Product >$100 Million in assets) As of 9/30/09* AUM Potential Inception LargeCap Value $4.9 billion $25 billion $20.1 billion 1987
Slide 21: Seasoned Products & Capacity Available
Seasoned Products & Capacity Available Estimated Capacity – as of September 30, 2009 ($ millions) $25,000 $3,000 $1,500 $10,000 $2,000 $1,500 100% 90% 80% 80% 70% 60% 50% 40% 30% 20% 17% 20% 14% 13% 10% 2% 0% LargeCap SMidCap SmallCap AllCap Value Income MLP Value Value Value Opportunity Current AUM
Slide 22: 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 23: WHG Funds
WHG Funds WHG Funds • Five funds advised by Westwood Management • Strong asset growth – assets have grown to over $450 million from initial two fund launch in December 2005 • Targeted primarily to institutional and defined contribution markets Growth in WHG Funds Assets Morningstar Ratings WHG SMidC
Slide 24: Westwood Trust
Westwood Trust • Consistent asset growth – 15% compound annual growth rate of assets over the last five years • Enhanced Balanced™ – Asset allocation model – 7 asset classes managed by Westwood Management 4 asset classes managed by subadvisors – Consultative approach – Low cost, efficient solution –
Slide 25: Collective Funds
Collective Funds • Designed to accommodate large defined contribution plan sponsors • Westwood launched a SMidCap collective fund in Q3 2008 for a Fortune 100 client • Westwood has registered a LargeCap collective fund • Barriers to entry higher due to cost and administrative complexity • Less crowd
Slide 26: Financial Highlights
Financial Highlights
Slide 27: Growth in Assets Under Management
Growth in Assets Under Management Quarterly AUM Growth AUM Growth in a Challenging Environment • From Q1 2004 – Q3 2009, Westwood’s AUM has increased by 145%, or a compound annual growth rate of 18% • Over this same period, the level of the S&P 500 index has declined by 6% • Westwood achieved the hi
Slide 28: AUM Organic Growth Rate
AUM Organic Growth Rate* • Average organic growth rate for the period 2007 – 2009 (annualizedthrough Q2 2009) over 24% vs. peer group average growth rate of 5%** * Net flows for the period divided by beginning of period assets under management ** Peer group consists of AB, AMG, BEN, BLK, CLMS, CNS,
Slide 29: Revenue, Earnings and Dividend Growth
Revenue, Earnings and Dividend Growth Revenue Growth Cash Earnings Growth Dividend Growth • Compound annual growth rate from Q1 2004 – Q2 2009 • Revenue 14% • Cash earnings 22% • Performance-based fees • 2007 $3.0 million • 2008 $8.7 million • Dividend yield of 3.5% as of October 1, 2009 Page 22
Slide 30: Quarterly Revenue Growth
Quarterly Revenue Growth • Excluding performance-based fees, compound annual growth rate of fee revenues from Q1 2004 to Q2 2009 of 14% Note: excludes performance fees of $3.0 million, $80,000 and $8.6 million in Q4 2007, Q2 2008 and Q4 2008, respectively Page 23
Slide 31: WHG Stock Performance vs. NYSE Listed Companies
WHG Stock Performance vs. NYSE Listed Companies as of 6/30/09 Top Performer 23.2% Top Performer 51.8 Top Performer 145.1% Bottom Performer -77.4% Bottom Performer -86.1% Bottom Performer -86.8% 1-Year Percentile 3-Year Percentile 5-Year Percentile WHG 8.7% 10 157.75% 1 201.76% 4 Russell 2000 (25.03)
Slide 32: DeMarche 100 Best Companies in the United States
DeMarche 100 Best Companies in the United States DeMarche Associates Names Westwood Holdings Group, Inc. Among “100 Best” Companies August 26, 2009 Westwood Holdings Group, Inc. has been named one of the “100 Best Companies in the United States” by DeMarche Associates, Inc., a leading U.S. investmen
Slide 33: Summary
Summary
Slide 34: Summary of Strategic Objectives
Summary of Strategic Objectives Ongoing Objectives • Serve clients attentively • Generate competitive investment performance • Service consultant relationships • Leverage referral sources at Westwood Trust • Increase visibility of WHG stock Near Term Objectives • Match manufacturing capability with
Slide 35: Cash Earnings Reconciliation
Cash Earnings Reconciliation Cash Earnings Reconciliation ($ thousands) Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 GAAP net income $ 1,117 $ 988 $ 685 $ 896 $ 875 $ 937 $ 814 $ 1,010 $ 1,296 $ 986 $ 921 $ 1,305 Add: Restricted stock expense 202 20
Slide 36: LargeCap Disclosure Information
LargeCap Disclosure Information PERFORMANCE RESULTS: LARGECAP EQUITY COMPOSITE LARGECAP EQUITY LARGECAP EQUITY COMPOSITE RETURNS COMPOSITE RETURNS January 1, 1999 through June 30, 2009 Gross of Net of Russell 1000 S&P Gross of Net of Russell S&P Reporting Currency: USD Creation Date: January 1994 Fe
Slide 37: SMidCap Disclosure Information
SMidCap Disclosure Information PERFORMANCE RESULTS: SMIDCAP COMPOSITE SMIDCAP EQUITY January 1, 1998 through June 30, 2009 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 Percentage o
Slide 38: SmallCap Value Disclosure Information
SmallCap Value Disclosure Information PERFORMANCE RESULTS: SMALLCAP VALUE COMPOSITE SMALLCAP VALUE January 1, 2004 through June 30, 2009 COMPOSITE RETURNS Reporting Currency: USD Creation Date: January 2004 Gross of Net of Russell Fees Fees 2000 Value Percentage Gross Net of Total Assets Percentage
Slide 39: AllCap Value Disclosure Information
AllCap Value Disclosure Information PERFORMANCE RESULTS: ALLCAP VALUE COMPOSITE ALLCAP VALUE July 1, 2002 through June 30, 2009 COMPOSITE RETURNS Reporting Currency: USD Creation Date: August 2002 Gross of Net of Fees Fees Russell 3000 ANNUALIZED RETURNS Gross Net of Total Assets Percentage 1 Year (
Slide 40: Balanced Disclosure Information
Balanced Disclosure Information BALANCED BALANCED PERFORMANCE RESULTS: BALANCED COMPOSITE COMPOSITE RETURNS COMPOSITE RETURNS January 1, 1999 through June 30, 2009 Gross of Net of 60% S&P500 / Gross of Net of 60% Reporting Currency: USD Creation Date: January 1994 Fees Fees 40% BCG/C Fees Fees S&P50
Slide 41: 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 42: www.westwoodgroup.com
www.westwoodgroup.com 200 Crescent Court Suite 1200 Dallas, Texas 75201 (214)756-6900
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