FPA Queens Road Small Cap Value Fund Institutional Class · NASDAQ:QRSIX
FPA Queens Road Small Cap Value Fund Institutional Class — FPA Queens Road Small Cap Value Fund — Investor Presentation (July 2024)
24 slides from FPA Queens Road Small Cap Value Fund Institutional Class's investor presentation, Jul 31, 2024
Slide 1: FPA Queens Road Small Cap Value Fund Second Quarter 2024 Webcast Presentation
L P rs , is o d v FPA Queens Roadic A c if Small Cap Value Fund P a t Second Quarter 2024 Webcast Presentation i r s Presented by: Steve Scruggs and Ben Mellman F July 31, 2024 The FPA Funds are distributed by UMB Distribution Services (“UMBDS”), Follow us on: LLC, 235 W. Galena Street, Milwaukee, W
Slide 2: Performance
Performance Trailing Performance L P , As of Date: 6/30/2024 Inception 20 Years 15 Years 10 Years 5 Years 3 Years 1 Year YTD QTD rs FPA Queens Road Small Cap Value (%) 9.22 7.79 9.96 7.61 10.37 4.00 11.27 0.65 -2.62 Russell 2000 Value (%) 7.95 7.23 10.59 6.23 7.07 -0.53 10.90 -0.85 -3.64 o Performan
Slide 3: First Half 2024 Summary
First Half 2024 Summary L P , ■ The Fund outperformed its benchmark in the first half of 2024. We are pleased with this rs incremental outperformance in a flat market. o ■ We had no significant changes in the portfolio in the first half of 2024. Most of the activity was is portfolio management. d v
Slide 4: A Small Cap Eruption
A Small Cap Eruption For the five business days from July 10 through July 16 (post quarter end), small-caps erupted higher L P , with the Russell 2000 Value Index up 12.3%.1 ■ The Fund trailed and was up only 7.7%, a 63% upside participation rate. o rs v ■ This performance was in line with our expec
Slide 5: A Small Cap Eruption: Small Stocks Are Juiced
A Small Cap Eruption Below is the Russell 3000 divided into 50 buckets by market cap. There is a clear correlation between L P , size and performance, even within the 2,000 smallest stocks. Small Stocks Are Juiced o rs v Russell 2000 is Ad f i c Price Change (%) c i a SP500 t P F i rs Source: Wall S
Slide 6: 5-year rolling returns by market type since Fund inception
5-year rolling returns by market type since Fund inception 30% Down Market Normal Market Robust Market L P rs , Small Cap Value (Net) 20% FPA Queens Road is o 10% v 0% -10% -10% -5% 0% 5% Ad 10% 15% 20% 25% 30% f i c Russell 2000 Value c i Down Market Normal Market Robust Market a Russell 2000 Value
Slide 7: Downside capture – Historically less risk
Downside capture – Historically less risk ■ Since inception in 2002, the Fund has outperformed during every large drawdown. L P rs , o 20% or Larger Russell 2000 Value Index Drawdowns Since Fund Inception Jun-02 to v Jun-07 to Jun-15 to is Aug-18 to Nov-21 to Average of Each d Oct-02 Mar-09 Feb-16 M
Slide 8: Performance Since Inception
Performance Since Inception L P , FPA Queens Road Small Cap Value Fund & Russell 2000 Value: Growth of $10,0001 $80,000 o rs FPA Queens is Road Small Cap Value Fund v $70,000 $69,767 d $60,000 Russell 2000 A Value Index $50,000 $54,058 $40,000 if i c c $30,000 $20,000 P a rs t $10,000 i $0 F Jun-02
Slide 9: Trailing Twelve Months Contributors and Detractors
Trailing Twelve Months Contributors and Detractors Both contributors and detractors were diversified and idiosyncratic. L P rs , Contributors Performance Percent of GICS Sector Contribution Portfolio o TTM is Fabrinet 3.41% 4.9% Information Technology Sprouts Farmers Market 2.65% 2.8% Consumer Stapl
Slide 10: Top Five Portfolio Companies by Weight
Top Five Portfolio Companies by Weight L P Portfolio Percent of Year First Description Company Portfolio Purchased , InterDigital is a research organization that develops and acquires key wireless and video patents. rs 1 Earlier this year, InterDigital announced highly accretive licensing renewals w
Slide 11: Notable Sector Exposures
Notable Sector Exposures L P We do not target sector weights or invest thematically. We invest from the bottom up, one company at a , time. ors is ■ Financials v ̶ We own fewer financials than the benchmark and our exposure is heavily weighted towards insurance and away from banks. ■ Technology Ad i
Slide 12: What We Mean by Quality
What We Mean by Quality We have been writing about quality in our letters. We thought it would be helpful to give a couple of L P , examples of how we assess the quality of companies in our portfolio. Some additional context - ■ Our job is weighing quality and valuation o rs is ̶ It is rare to find
Slide 13: RLI Corporation
RLI Corporation RLI is a property and casualty insurer with a high percentage of excess and surplus lines. The company L P , finds profitable niches such as Hawaii homeowners, inland marine and small and medium sized rs contractor surety, and won’t commit capital at low rates of return. For the past
Slide 14: PVH Corporation
PVH Corporation PVH owns the Tommy Hilfiger and Calvin Klein brands globally. In America, these brands are fatigued L P , and the company needs to reinvest. Most of the company’s profits come from international, and Europe in rs particular, where Tommy and Calvin have significantly more brand value,
Slide 15: Opportunistic New Position – Advance Auto Parts
Opportunistic New Position – Advance Auto Parts Advance Auto Parts (AAP) is an aftermarket automotive parts supplier that serves both do it yourself L P , consumers and professional repair shops. Until 2023, AAP was consistently profitable although operating rs and financial metrics trailed competit
Slide 16: Earnings Consistency
Earnings Consistency Earnings consistency and returns on capital are some of the quality indicators that we care about most L P , when we make investments. rs ■ There are fewer quality companies in the small-cap indices than there are in the large-cap indices. o This is what we mean when we call the
Slide 17: Question & Answer
L P rs , is o d v c A f i Question & Answer i a c t P F irs 17
Slide 18: Appendix
L P rs , is o d v c A Appendix if i ac t P F irs 18
Slide 19: Sector allocation
Sector allocation L P , FPA Queens Road Russell 2000 Value rs Small Cap Value Information Technology 21.2% 6.4% is o Industrials 20.3% 14.4% v Financials 20.0% 26.2% d Consumer Discretionary 9.7% 10.5% A Consumer Staples 6.4% 2.2% c Communication Services 4.3% 2.4% fi i Utilities 4.2% 3.9% c Materia
Slide 20: Active stock selection has driven differentiated returns
Active stock selection has driven differentiated returns Fully Invested Long-equity Gross Performance vs. Benchmark L P QRSVX Fully Invested (Gross %) S.I. 12.23 20 Years 10.77 15 Years 13.72 10 Years 10.55 5 Years 13.45 3 Years 5.31 1 Year 13.62 rs , YTD 1.18 QTD -2.67 o Russell 2000 Value (%) 7.83
Slide 21: Holdings as of June 30, 2024
Holdings as of June 30, 2024 L P Communication Services 4.3% Industrials 20.3% Real Estate 0.9% IAC 2.6% Oshkosh 3.0% Equity Commonwealth 0.9% , Scholastic 1.8% MSC Industrial Direct 2.9% Utilities 4.2% rs CSW Industrials 2.1% Consumer Discretionary 9.7% UGI 2.2% John Bean Technologies 2.0% PVH Corp
Slide 22: Important disclosures
Important disclosures L P These slides are intended as supplemental material to the Second Quarter 2024 FPA Queens Road Small Cap Value Fund (“Fund”) audio presentation and transcript that will be or is posted on FPA's website at fpa.com. This presentation is for informational and discussion purpose
Slide 23: Important disclosures (continued)
Important disclosures (continued) L P The reader is advised that Adviser’s and Sub-Adviser’s investment strategy includes active management of its client portfolios with corresponding changes in allocations from one period of time to the next. Therefore, any data with respect to investment allocatio
Slide 24: Important disclosures (continued)
Important disclosures (continued) Index / Benchmark / Category Definitions L P , Indices are unmanaged and index returns do not reflect transactions costs (e.g., commissions), investment management fees or other fees and expenses that would reduce performance for an investor. It is not possible to i
FPA Queens Road Small Cap Value Fund — Investor Presentation (July 2024) on 6ix