Artisan Partners Asset Management Inc. · NYSE:APAM
Artisan Partners Asset Management — International Small-Mid 2024 Forum
33 slides from Artisan Partners Asset Management's conference presentation, 2024
Slide 1: Ignoring the Noise: Focusing on Through-Cycle, Normalized Returns
Ignoring the Noise: Focusing on Through-Cycle, Normalized Returns Rezo Kanovich, Portfolio Manager | Artisan Non-U.S. Small-Mid Growth Strategy For Institutional Investors Only—Not for Onward Distribution
Slide 2: Artisan Non-U.S. Small-Mid Growth Strategy
Artisan Non-U.S. Small-Mid Growth Strategy Portfolio Manager Years of Investment Industry Experience Rezo Kanovich 25 Analysts Andres Avalos Vitiello 12 Samir Mainthia 16 Matthew Trusz 10 Anastasia Karpova 11 ARTISAN PARTNERS 1
Slide 3: Time-Tested Investment Philosophy
Time-Tested Investment Philosophy We are long-term oriented investors in high-quality businesses exposed to structural growth themes. We seek high returns on capital, sensible valuations and excellent management teams. The team believes success can be achieved through: Investing with Tailwinds Ide
Slide 4: Key Messages
Key Messages Staying nuanced in frenzied markets Contrarian view and a long-term orientation The search for idiosyncratic drivers The long-term journey of small companies into large, global industry leaders The opportunity in international small-cap equities amid a flight to perceived safety ARTISAN
Slide 5: Reflections on Current Environment
Reflections on Current Environment Challenges Opportunities Volatility in interest rates and expectations Changes create opportunities for new winners to emerge Shifts in FX market Share prices dislocate on short-term noise Inflation Real business progress continues Ongoing technological progress cr
Slide 6: Staying Nuanced during Market Frenzies: AI
Staying Nuanced during Market Frenzies: AI Focusing on sustainable winners with reasonable valuations Market chased “AI winners” AI Hype Cycle Drives Narrow Market Returns 2023’s “Magnificent 7” rally resulted in one of the narrowest 700 performance years in market history 600 Investors chased
Slide 7: Staying Nuanced during Market Frenzies: Health Care
Staying Nuanced during Market Frenzies: Health Care Focusing on sustainable winners with reasonable valuations Market crowded into GLP-1 weight loss drugmakers GLP-1 Weight Loss Drugs: Viewed as a Panacea Exuberance over ability to cure most medical ailments 220 Unrealistic implications of cur
Slide 8: Separating Signal from Noise: Japan
Separating Signal from Noise: Japan Deep local knowledge guides select Japanese investments Yen Exchange Rate (JPY/USD) Investor interest lifted Japan’s market to all-time 170 high 160 150 Yen depreciation, inflation, governance reform, China weakness 140 Market: Short-term focus on low P/B st
Slide 9: Investing for a Sustainable Future: Energy Transition
Investing for a Sustainable Future: Energy Transition Progress continues despite the pendulum swing in sentiment Clean Energy Sentiment Waxes and Wanes… S&P Global Clean Energy Index $1.8 trillion invested in global clean energy in 2023 2500 Convergence of technology innovations, government 2000
Slide 10: Spotting Opportunities amid Dislocation: Ophthalmology
Spotting Opportunities amid Dislocation: Ophthalmology Short-term dislocations create long-term opportunities Large Markets, Steady Growth 12 8% Industry Sales, $bn Innovation, an aging world and higher disposable income 2023-28E CAGR 10 6% 8 drive demand in ophthalmology 6 4 4% 2% 2 Premium vis
Slide 11: Transformational Businesses, Idiosyncratic Drivers
Transformational Businesses, Idiosyncratic Drivers Current Market cap Market cap holdings 2014 (USD) 2024 (USD) Idiosyncratic Growth Drivers Industry Quality simulators and advanced software to capitalize on trend to outsource CAE $3.5b $6.6b Aerospace & Defense training of pilots & maintaining lice
Slide 12: Case Study—Journeys Take Time: CyberArk
Case Study—Journeys Take Time: CyberArk Continuous innovation and business transformation Projected Growth in Global Cyber Security Spending 600 Global cybercrime costs ~$10 trillion annually CAGR = 10.8% 500 Cybersecurity spend growing rapidly (>10% p.a.) 400 Privilege Access Management is th
Slide 13: Case Study—Journeys Take Time: Ambu
Case Study—Journeys Take Time: Ambu Patience as company enters new markets with new products Ambu’s Rapid Growth in Pulmonology 35% Global disposable endoscopy market 30% 25% 2.5x faster growth vs total endoscopy market Market Share 20% 15% 2022 No cross-contamination 10% 5% Improved workflo
Slide 14: International Small Caps: A Strategic Asset Class
International Small Caps: A Strategic Asset Class Global Universe ($300mn+) Institutional Equity Portfolios per Invested Dollar Superior long-term risk-adjusted return <1% vs international large caps and EM 16% equities Total Ex-Foreign Foreign Large Highly inefficient, leading to opportunity Foreig
Slide 15: Our Differentiated Approach to This Universe
Our Differentiated Approach to This Universe Annualized Return since Jan 2019 Unknown companies a decade ago, recognized 10.43% global leaders today 10% 7.22% 6.43% Idiosyncratic opportunities backed by structural trend, not macro cycles 5% Ongoing transformation driven by future 0% opportunities Ar
Slide 16: US Large Caps Dominated Market Returns
US Large Caps Dominated Market Returns S&P 500 Index, Price vs Earnings MSCI EAFE Small Cap Growth Index 5,500 250 Price vs Earnings 2,200 70 5,000 200 65 2,000 60 55 4,500 150 1,800 50 EPS, $ EPS, $ 1,600 45 4,000 100 40 1,400 35 3,500 50 30 1,200 25 3,000 0 1,000 20 Dec 2020 Dec 2021 Dec 2022 Dec
Slide 17: Fundamental Progress Continues Despite Share Price Volatility
Fundamental Progress Continues Despite Share Price Volatility Top 10 Portfolio Companies, Equal Weight 100 1.2 1.0 80 0.8 EPS LTM, $ Price, $ 0.6 60 0.4 0.2 40 0.0 Dec 2020 Dec 2021 Dec 2022 Dec 2023 NICE 20 Jet2 3 Metso 350 6 15 0.7 2 0.6 13 300 5 15 1 0.5 EPS LTM, $ EPS LTM, $ EPS LTM, $ Price, $
Slide 18: A Note on Relative Valuation
A Note on Relative Valuation MSCI ACWI ex USA Small-Mid Index relative to S&P 500 Index (P/E, NTM) 1.3 1.2 1.1 1.0 0.9 0.8 0.7 MSCI AC World ex USA Small Mid—PE— 0.6 NTM Relative to S&P 500 Sep 2004 Sep 2005 Sep 2006 Sep 2007 Sep 2008 Sep 2009 Sep 2010 Sep 2011 Sep 2012 Sep 2013 Sep 2014 Sep 2015 Se
Slide 19: Conclusion
Conclusion ARTISAN PARTNERS 18
Slide 20: Questions?
Questions?
Slide 21: Appendix
\ Appendix
Slide 22: Investment Results—Average Annual Total Returns (USD)
Investment Results—Average Annual Total Returns (USD) Source: Artisan Partners/MSCI. Past performance does not guarantee and is not a reliable indicator of future results. Gross- and net-of-fees performance shown for the Composite. Current performance may be lower or higher than that shown. Returns
Slide 23: Investment Results
Investment Results 15% 10% 5% 0% -5% -10% -15% Average Annual Total Returns CumulativeReturns (%) asof 31Mar2024 YTD 1Yr 3Yr 5Yr Inception Inception Artisan Non-U.S. Small-Mid Growth Composite: Gross 4.13 8.65 -1.42 8.94 11.55 77.52 Artisan Non-U.S. Small-Mid Growth Composite: Net 3.88 7.57 -2.4
Slide 24: Performance Statistics (USD)
Performance Statistics (USD) Artisan Non-U.S. Small-Mid Growth Composite vs. Benchmarks Since Inception (1 Jan Since Inception (1 Jan 2019) 2019) Composite Return (net) 10.43% Composite Return (net) 10.43% MSCI All Country World ex USA SMID Index 7.22% MSCI EAFE Small Cap Growth Index Return 6.43% R
Slide 25: Investment Process
Investment Process ARTISAN PARTNERS 24
Slide 26: Structural Growth Theme Identification
D E V E L O P I N V E S TA B L E U N I V E R S E Structural Growth Theme Identification Identify investable themes at the intersection of growth and change with the objective of investing in companies having meaningful exposure to these trends Examples include: Next-Generation Health Care New Techno
Slide 27: Portfolio Construction and Risk Management
Portfolio Construction and Risk Management Portfolio Construction Diversified with typically 100-150 holdings Maximum position size of 5%, rarely exceeding 3%* Minimum of 65% in non-US companies* Market capitalization range generally similar to the constituents of the MSCI All Country World
Slide 28: Top 10 Holdings
Top 10 Holdings Company Initial Purchase % of total portfolio Nice Ltd A developer of cloud-based contact center software and advanced analytics. Oct 2018 5.0 (Israel) ConvaTec Group PLC A global provider of medical products and technology in the areas of ostomy, continence, wound and infusion care.
Slide 29: ESG Alignment
ESG Alignment We invest on the right side of history with great leaders and management teams who continuously evolve their business and align with prevailing customer Theme Spotlight— Energy Transition preferences Green taxonomy efforts Notable Portfolio Themes and carbon taxation have made it clear
Slide 30: Portfolio Holdings—By Sector (% of total portfolio)
Portfolio Holdings—By Sector (% of total portfolio) Source: GICS. As of 30 Jun 2024. Cash represented 1.4% of the total portfolio at 30 Jun 2024. Securities of the same issuer are aggregated to determine the weight in the portfolio. ARTISAN PARTNERS ARTISAN PARTNERS 29
Slide 31: Portfolio Holdings—By Sector (% of total portfolio)
Portfolio Holdings—By Sector (% of total portfolio) ARTISAN Source: GICS. As of 31 Mar 2024. Cash represented 2.7% of the total portfolio at 31 Mar 2024. Based on a representative portfolio. Securities of the same issuer are aggregated to determine the weight PARTNERS in the portfolio. 30
Slide 32: Notes and Disclosures
Notes and Disclosures This section of this presentation contains information important to a complete understanding of the material presented. Please review it carefully. Artisan Partners Limited Partnership (APLP) is an investment adviser registered with the U.S. Securities and Exchange Commission (
Slide 33: Notes and Disclosures
Notes and Disclosures Security Examples: The security examples provided do not constitute recommendations to buy or sell investments. The examples present information about the companies believed to be accurate and are the views of the portfolio managers as of the date indicated. Portfolio Holdings:
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