Longleaf Partners Small Cap Fund · NASDAQ:LLSCX
Longleaf Partners Small Cap Fund — Southeastern Asset Management — Reg A Offering (June 2010)
23 slides from Longleaf Partners Small Cap Fund's offering presentation, Jun 8, 2010
Slide 1: Memorandum: Meeting with Southeastern Asset Management
MEMORANDUM TO: File No. S7-02-10 FROM: Michael E. Coe Office of Commissioner Luis A. Aguilar DATE: June 8, 2010 SUBJECT: Meeting with Representatives of Southeastern Asset Management, Inc. On June 8, 2010, Commissioner Aguilar, along with Zachary S. May and Michael E. Coe, Counsel to the Commissione
Slide 2: Comments & Analysis on Equity Market Structure
· -. SOUTHEASTERN ASSET MANAGEMENT, INC~ ................ ® Comments & Analysis on Equity Market Structure Presentation to the Securities and Exchange Commission Commissioner Luis A. Aguilar Summer 2010
Slide 3: Southeastern Representatives
Southe'astern Representatives » O. Mason Hawkins, CFA Chairman, Chief Executive Officer, and Founder B.A. (Finance) University of Florida, 1970 M.B.A. (Finance) University of Georgia, 1971 Southeastern since 1975 » Richard Hussey Chief Operating Officer and Principal B.S. (Applied Economics and Busi
Slide 4: Southeastern's Motivation
Southeastern's Motivation Southeastern asserts that: 1. The intent of the Securities Exchan.ge Act of 1934 as provided for in its preamble is being twisted and abused for the benefit of gamblers and to the detriment of investors. 2. The markets are not "fair and honest.lIl 3. Securities prices are p
Slide 5: US Equity Market Concern
US Equity Market Concern ~ The US equity markets are meant to facilitate investors' allocation of capital to businesses, thus e~panding production and improving the quality of life in America. ~ The markets have strayed from this social purpose, and presently resemble casinos more than orderly marke
Slide 6: About Southeastern
About Southeastern ~ Investment advisor founded in 1975; independent and employee owned • No affiliated broker/ dealer, bank, or other financial institution ~ 57 employees in Memphis, TN (Headquarters), London, Tokyo & Singapore • 740,603 employees at our US portfolio companies ~ Research-driven tea
Slide 7: Southeastern Invests for the Long-Term
Southeastern Invests for the Long-Term ~ Philosophy • We are value investors. The funds seek to achieve superior long-term performance by acquiring equity securities of financially strong, well-managed companies run by capable managements at market prices significantly below our assessment of their
Slide 8: Southeastern's Investors
Southeastern's Investors Mutual Funds ($13.28 as of 3/31/2010) ~ 2009 US Mutual Fund Statistics 1 • 87 million Americans hold $12 trillion in assets through US mutual funds. • Individual investors hold 84% of mutual fund assets; 94% say that saving for retirement is their primary goal. • 66% of indi
Slide 9: High-Frequency Trading Misconceptions
High-Frequency Trading Misconceptions • HFTs add and cancel quotes in milliseconds (ms). HFTs provide valuable These quotes are not real and accessible. • HFTs hold positions briefly and end the day uflat." liquidity to an otherwise WRONG1 This is a mirage, not true liquidity. fragmented marketplace
Slide 10: Unnecessary Liquidity - Only When Convenient
Unnecessary Liquidity - Only When Convenient 02 350% Avg Order Book Size I Market Capl • The red line represents 0.18 liquidity weighted by how 300% heavily a stock is traded. The 0.16 . I more trading action in a ~ 250% 0.14 stock, the more it will be .."... 0- 0 a weighted. This is measured J 0.12
Slide 11: HFT Volume Has Not Helped the Market
HFT Volume Has Not Helped the Market Average Daily Volatility of Mid Quote for Dow Jones Stocks 1 Average Daily Number of Quotes for Dow Jones Stocks 1 1.0 ~------------------, 600,000 ~-----------------, CIl 0.9 ~ 500,000 _ _. ~ _ ---------1 a.> 0.8 <5 -----.----------.-----------.--.-----------..
Slide 12: Other Empirical Data
Other Empirical Data ~ 70% of the market is high-frequency trading! ~ 71 exchange messages to 1 execution in 2009 vs. 9 to 1 in 2000 2 ~ More than 30 cancellations for each exchange execution 3 ~ Only 13% of trading volume was blocks in 2009 4 vs. 43% in 2000 5 ~ Citadel reaped $lbln from high-frequ
Slide 13: Requested SEC Action
Requested SEC Action ~ Forbid and prosecute the theft of trading decisions, which represent the actionable cumulative value of a manager's intellectual property by stating that: • The creator of trading information is the owner of such information. • Brokers have a fiduciary obligation to protect su
Slide 14: Fat Tails
Fat Tails » In statistics, fat tails (kurtosis) describe how often "outlier" events occur. The cliche "a once-in-a-lifetime catastrophe seems to occur every other week," is a commonplace reference to fat tails - extraordinary, unexpected events occurring more often than predicted. » Fat tails are im
Slide 15: Media Coverage
Media Coverage ~ "But on the afternoon of May 6, as the stock market began to plunge in the 'flash crash,' someone [at Tradeworx] walked up to one of those computers and typed the command HF STOP: sell everything, and shutdown...The founder of Tradebot, in Kansas City, Mo., told students in 2008 tha
Slide 16: Media Coverage (continued)
Media Coverage (continued) ~ wlf you have no contractual obligation to make a market, and something happens, as a trader, you step away until things trade themselves out ...You just know these markets, you just internalize these markets: How do I know that guy over there is sitting on pocket aces? B
Slide 17: Wall Street Journal, June 4, 2010
Wall Street Journal, June 4, 2010 The ability to estimate price moves ahead of the national best bid and offer price, which is consolidated electronically from exchanges, can give traders an advantage of about 100 to 200 milliseconds over investors who use standard market tools, according to a Novem
Slide 18: Addendum A: Securities Exchange Act of 1934
Addendum A: Securities Exchange Act of 1934 ~ For the reasons hereinafter enumerated, transactions in securities as commonly conducted upon securities exchanges and over-the-counter markets are affected with a national public interest which makes it necessary to provide for regulation and control of
Slide 19: Addendum B: Intellectual Property Theft Trade
Addendum B: Intellectual Property Theft Trade Public Data Feed Direct Exchange Data Feed Buyers Sellers Buyers Sellers Quantity Price Price Quantity Accumulated l Order 10 Quantity Price Price Quantity Order 10 Accumulated l $24.03 200 shrs $24.03 200 shrs #285 123,000 shrs $24.02 100 shrs $24.02 10
Slide 20: Addendum C: NYSE Email Exchange (part 1)
Addendum C: NYSE Email Exchange (part 1) May 21, 2010 Janet Kissane Corporate Secretary NYSE 11 Wall Street #7 New York, NY 10005-1974 Email: ikissane@nyse.com Re: Data Feeds Dear Ms. Kissane Southeastern Asset Management, Inc. is a $33 billion asset manager which invests in equities globally. In th
Slide 21: Addendum C: NYSE Email Exchange (part 2)
Addendum C: NYSE Email Exchange (part 2) 1 From: Andy McCarroll To: Janet Kissane 2 Date: OS/21/201004:01 PM Subject: Letter from Southeastern Asset Management, Inc. From: Janet Kissane Sent: Wednesday, May 26,201010:03 AM Dear Ms. Kissane: To: Andy McCarroll Subject: Re: Letter from Southeastern As
Slide 22: Addendum D: False Liquidity Trade
Addendum D: False Liquidity Trade Pre High-Frequency Trading Currently (with HFT) Buyers Sellers Buyers Sellers Participant Quantity Price Price Quantity Participant Participant Quantity Price Price Quantity Participant $24.07 200 shrs Charity #2 $24.04 100 shrs Mutual Fund #2 $24.05 300 shrs Retail
Slide 23: Disclosure
Disclosure This material has been prepared by Southeastern Asset Management, Inc. for discussion purposes only and is not designed to market its services or solicit investors for the Longleaf Partners Funds. For additional information, however, please call 1-800-445-9469 or view Longleaf's website (
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