FPA Queens Road Small Cap Value Fund Institutional Class · NASDAQ:QRSIX
FPA Queens Road Small Cap Value Fund Institutional Class — FPA U.S. Value Fund — Investor Day (2018)
15 slides from FPA Queens Road Small Cap Value Fund Institutional Class's investor day presentation, 2018
Slide 1: FPA U.S. Value Fund, Inc. (FPPFX)
L L C FPA U.S. Value Fund, Inc.o(FPPFX)r s , v i s A d if i c a c s t P Gregory R. Nathan, Portfolio Manager F i r
Slide 2: Fund highlights
Fund highlights Investment objective ■ The primary objective is long-term growth of capital. Current income is a secondary consideration L L C Goal rs , o ■ Generate returns in excess of the S&P 500 Index over full market cycles Investment philosophy ■ Avoid permanent capital impairment d v is A ■ I
Slide 3: Portfolio Manager: Gregory R. Nathan
Portfolio Manager: Gregory R. Nathan Professional background ■ 16 years investment experience L L C rs , ■ Was most tenured senior analyst of FPA Contrarian Value ■ Key contributor for FPA Contrarian Value o ■ Deep expertise: the skill and experience to identify quality companies selling for a disco
Slide 4: Investment philosophy
Investment philosophy Seek to avoid permanent capital impairment ■ An investment discipline on business quality, valuation and financial leverage L L C rs , ■ Diversification by number of investments and industry exposure is o Invest in quality companies at attractive valuations v ■ Typically lookin
Slide 5: Portfolio construction parameters
Portfolio construction parameters Broad market capitalization ■ The Fund will generally invest in companies with market caps of $2 billion or more at time of initial purchase L L C rs , ■ Allows us to invest wherever the best opportunities arise is o U.S. companies v ■ At least 80% of net assets wil
Slide 6: Portfolio construction process
Portfolio construction process Create a diversified portfolio seeking above average risk-adjusted returns over the long-term ■ The world is dynamic with change taking place seemingly faster than ever before L L C rs , ‒ Therefore it is important to have a diversified portfolio to mitigate unforeseen
Slide 7: Portfolio construction process (continued)
Portfolio construction process (continued) Portfolio construction process changed in Q4’17 ■ During the first two years, the portfolio was constructed in a much more concentrated manner by sector and company L L C rs , ■ Over this time, the portfolio was significantly underweight two of the largest,
Slide 8: Portfolio characteristics as of March 31, 2018
Portfolio characteristics as of March 31, 2018 L L C , FPA U.S. Value Fund S&P 500 rs Large Capitalization exposure 86.9% 97.6% is o Top 5 Holdings exposure 21.3% 13.9% v Top 10 Holdings exposure 32.1% 20.3% d Foreign Securities exposure 7.3% 0.0% A 12-Month Forward P/E 16.4x 17.1x ic Price/Book 3.3
Slide 9: Sector breakdown as of March 31, 2018
Sector breakdown as of March 31, 2018 L L C , Sector FPA U.S. Value Fund S&P 500 rs Information Technology 24.2% 24.9% is o Industrials 18.6% 10.2% v Financials 16.1% 14.7% d Consumer Discretionary 14.5% 12.7% A Health Care 12.2% 13.7% ic Materials 3.5% 2.9% if Consumer Staples 0.0% 7.7% c Energy 0.
Slide 10: Holdings as of March 31, 2018
Holdings as of March 31, 2018 Portfolio holdings highlights ■ The Fund’s holdings generally operate within secularly growing industries L L C rs , ■ In our view, the Fund’s holdings have strong competitive positions due to advantages stemming from having large scale/low cost structure, superior prod
Slide 11: Largest IT investments vs. S&P 500's largest household and beverage companies
FPA U.S. Value’s largest IT investments vs. S&P 500’s largest household and beverage products companies L L C , Information Technology Household & Beverage rs Products o Procter & Coca- is Apple Alphabet Facebook Gamble Cola PepsiCo v ROE Forward 46.1% 17.4% 25.1% 21.3% 49.8% 69.8% d Forward P/E 13.
Slide 12: Performance – net of fees
Performance – net of fees L L C rs , Trailing Performance (%) As of Date: 3/31/18 1 Year YTD QTD 10 Years* 5 Years* is o FPA U.S. Value Fund, Inc. 1.82 -1.92 -1.92 7.71 6.64 v S&P 500 13.99 -0.76 -0.76 9.49 13.31 d US OE Large Blend 12.82 -0.98 -0.98 8.58 11.72 A Russell 2500 12.31 -0.24 -0.24 10.28
Slide 13: Appendix
L L C rs , is o Appendix d v ic A c if “I have changed like the wind…and maybe that’s why I’m still coaching.” P a t - University of Michigan Head Basketball Coach, John Beilein F i r s 13
Slide 14: Important Disclosures
Important Disclosures L C These views may differ from other portfolio managers and analysts of the firm as a whole, and are not intended to be a forecast of future events, a guarantee of future results or investment advice. Any mention of individual securities or sectors L should not be construed as
Slide 15: Important Disclosures (continued)
Important Disclosures (continued) L C Index / Category Definitions L The Standard & Poor's 500 Stock Index (S&P 500) is a capitalization-weighted index which covers industrial, utility, transportation and financial service companies, and represents approximately 75% of the New York Stock Exchange (N