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    Tom Russo Powerpoint

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    SteveMasters
    The document summarizes Thomas Russo's presentation on "Global Value" equity investing. It discusses investing with a long-term horizon, positioning capital globally to benefit from currency gains, focusing on companies with a strong "capacity to reinvest" profits and a "capacity to suffer" short-term losses. Specific companies highlighted include Nestle, Pernod Ricard, SABMiller, and Berkshire Hathaway. Performance tables show Russo's fund outperforming indexes over the long-term while taking on more risk through exposure to emerging markets.

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    Tom Russo Powerpoint

    Uploaded by

    SteveMasters
    340 views31 pages
    The document summarizes Thomas Russo's presentation on "Global Value" equity investing. It discusses investing with a long-term horizon, positioning capital globally to benefit from currency gains, focusing on companies with a strong "capacity to reinvest" profits and a "capacity to suffer" short-term losses. Specific companies highlighted include Nestle, Pernod Ricard, SABMiller, and Berkshire Hathaway. Performance tables show Russo's fund outperforming indexes over the long-term while taking on more risk through exposure to emerging markets.

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    The document summarizes Thomas Russo's presentation on "Global Value" equity investing. It discusses investing with a long-term horizon, positioning capital globally to benefit from currency gains, focusing on companies with a strong "capacity to reinvest" profits and a "capacity to suffer" short-term losses. Specific companies highlighted include Nestle, Pernod Ricard, SABMiller, and Berkshire Hathaway. Performance tables show Russo's fund outperforming indexes over the long-term while taking on more risk through exposure to emerging markets.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    340 views31 pages

    Tom Russo Powerpoint

    Uploaded by

    SteveMasters
    The document summarizes Thomas Russo's presentation on "Global Value" equity investing. It discusses investing with a long-term horizon, positioning capital globally to benefit from currency gains, focusing on companies with a strong "capacity to reinvest" profits and a "capacity to suffer" short-term losses. Specific companies highlighted include Nestle, Pernod Ricard, SABMiller, and Berkshire Hathaway. Performance tables show Russo's fund outperforming indexes over the long-term while taking on more risk through exposure to emerging markets.

    Copyright:

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    You are on page 1of 31

    Thomas A.

    Russo

    CFA Society of Nebraska Dinner


    May 3, 2012

    Musings on Global Value Equity Investing


    Value Investing 50 Cent Dollar Bills
    Stanford Business and Law School, 1982

    Capacity to Reinvest
    2008 market collapse

    Capacity to Suffer
    Berkshire Hathaway
    Nestl 35 year planning horizon
    Pernod Ricard credit default swap mayhem
    SABMiller emerging market beer specialist

    Invest for the long term


    White space
    Position capital globally
    Currency gains
    Circle of competence
    Tax efficiency
    Virtues of low expectations!
    Market volatility is long-term investor friend

    Capacity to Suffer
    BERKSHIRE HATHAWAY INC.
    GEICO
    Equity index put options

    Extraordinarily cautious short-term deposits,


    fiscal year, 2007
    6

    Nestl S.A.
    Capacity to Reinvest

    YE 2008 Billionaire Brands Presentation

    Nestl Capacity to Reinvest


    YE 2011 Billionaire Brands Presentation

    10

    Nestle Capacity to Suffer


    Russian Ruble crisis (1998)

    Nespresso
    China and India

    Alcon (1970s through 2010)


    Novartis payment/DiGiorno acquisition (2010)

    2011 Chinese acquisitions in confectionary (Hsu Fu Chi International )


    and beverage (Yinlu.)

    11

    Pernod Ricard
    Capacity to Reinvest

    12

    13

    Pernod Ricard Capacity to Suffer


    China (early 2000s)
    Addressable market -- over 500 million cases local spirits
    Absolut (2009) global leader & premium vodka
    India (2012)
    Addressable market -- over 100 million cases of India made
    Scotch Whiskey currently consumed
    Leading premium priced local Scotch Whiskey brand

    14

    SABMiller
    Capacity to Reinvest

    15

    SABMiller Capacity to Suffer

    16

    Credit Default Mayhem, 2008-2009

    17

    SABMiller Capacity to Suffer


    China
    50% interest in Snow, Chinas leading brewer
    Sub-Saharan Africa
    Addressable market -- 400 million barrels beer consumption
    Indian Market
    Addressable market current consumption 1 liter per capita
    Recently completed Fosters acquisition
    Strategic partnership with Efes to coordinate Russian operations
    and expand together in Turkey, Efes home market
    18

    Market Volatility is a Friend of the Long-term


    Global Value Investor
    1. Permits more effective reinvestment.
    2. Offers merger and acquisition opportunity.

    3. Enhances return from share repurchase.

    19

    Capacity to Suffer

    20

    Semper Vic Partners, L.P., Annual Return


    Year
    2012
    2011
    2010
    2009
    2008
    2007
    2006
    2005
    2004
    2003
    2002
    2001
    2000
    1999
    1998
    1997
    1996
    1995
    1994
    1993
    1992
    1991
    1990
    1989
    1988
    1987
    1986
    1985
    1984

    (Thru 3/31)

    Compound Annual Return

    Semper Vic
    Partners
    12.2%
    6.7%
    21.5%
    25.8%
    -31.5%
    7.7%
    20.8%
    3.2%
    11.9%
    33.5%
    -1.0%
    0.1%
    15.6%
    -2.1%
    23.8%
    24.7%
    19.0%
    23.6%
    12.4%
    22.1%
    13.4%
    27.4%
    5.3%
    24.6%
    19.8%
    37.1%
    24.8%
    43.9%
    13.6%

    Dow Jones
    Industrials
    8.8%
    8.4%
    14.0%
    22.7%
    -31.9%
    8.9%
    19.1%
    1.7%
    5.3%
    28.3%
    -15.1%
    -5.4%
    -4.7%
    27.2%
    18.1%
    24.9%
    28.8%
    36.9%
    5.0%
    16.7%
    7.4%
    24.5%
    -0.7%
    31.8%
    16.2%
    5.5%
    27.2%
    33.6%
    1.0%

    S&P
    500
    12.6%
    2.1%
    15.1%
    26.5%
    -37.0%
    5.5%
    15.8%
    4.9%
    10.9%
    28.7%
    -22.1%
    -11.9%
    -9.1%
    21.0%
    28.6%
    33.4%
    23.0%
    37.5%
    1.3%
    10.1%
    7.6%
    30.5%
    -3.1%
    31.7%
    16.5%
    5.2%
    18.8%
    31.7%
    6.2%

    15.3%

    11.7%

    10.6%

    21

    22

    23

    24

    25

    Semper Vic Partners, L.P.


    Geographic Revenue Analysis
    2011 Summary

    Company
    Phillip Morris International
    Nestle
    Berkshire Hathaway
    Compagnie Financiere Richemont
    SABMiller
    Heineken
    Pernod Ricard
    Mastercard
    Wells Fargo
    British American Tobacco
    Altria
    Unilever
    Anheuser-Busch InBev
    Brown-Forman
    Diageo
    Martin Marietta Materials
    Comcast
    Scripps Networks Interactive
    Washington Post
    Hasbro
    Berner Gruppen
    Norges Handels

    Developed
    Markets

    Emerging
    Markets

    54%
    59%
    100%
    67%
    33%
    44%
    65%
    79%
    100%
    31%
    100%
    50%
    63%
    88%
    65%
    100%
    100%
    100%
    100%
    88%
    100%
    100%

    Portfolio
    Weight

    46%
    41%
    0%
    33%
    67%
    56%
    35%
    21%
    0%
    69%
    0%
    50%
    37%
    12%
    35%
    0%
    0%
    0%
    0%
    12%
    0%
    0%

    11.6%
    10.4%
    10.2%
    7.1%
    6.7%
    6.1%
    6.3%
    5.2%
    5.0%
    4.3%
    4.2%
    4.1%
    3.9%
    3.0%
    3.0%
    2.5%
    2.1%
    1.4%
    1.0%
    0.5%
    0.8%
    0.1%
    99.5%

    Weighted Average
    Emerging Markets
    Exposure
    5.3%
    4.3%
    0.0%
    2.3%
    4.5%
    3.4%
    2.2%
    1.1%
    0.0%
    3.0%
    0.0%
    2.1%
    1.4%
    0.4%
    1.1%
    0.0%
    0.0%
    0.0%
    0.0%
    0.1%
    0.0%
    0.0%
    31.0%

    Notes:
    Analysis excludes cash held in portfolio, which is generally less than 2% of portfolio.
    Data from company reports, Capital IQ and GRG estimates.

    26

    Semper Vic Partners, L.P.


    Annual Summary of Limited Partner Returns
    Currency Effects Highlights

    Year
    2012
    2011
    2010
    2009
    2008
    2007
    2006
    2005
    2004
    2003
    2002
    2001
    2000
    1999
    1998
    1997
    1996
    1995
    1994
    1993
    1992
    1991
    1990
    1989
    1988
    1987
    1986
    1985
    1984

    (Thru 3/31)

    Compound Annual Return

    Semper Vic
    Partners
    12.2%
    6.7%
    21.5%
    25.8%
    -31.5%
    7.7%
    20.8%
    3.2%
    11.9%
    33.5%
    -1.0%
    0.1%
    15.6%
    -2.1%
    23.8%
    24.7%
    19.0%
    23.6%
    12.4%
    22.1%
    13.4%
    27.4%
    5.3%
    24.6%
    19.8%
    37.1%
    24.8%
    43.9%
    13.6%

    Dow Jones
    Industrials
    8.8%
    8.4%
    14.0%
    22.7%
    -31.9%
    8.9%
    19.1%
    1.7%
    5.3%
    28.3%
    -15.1%
    -5.4%
    -4.7%
    27.2%
    18.1%
    24.9%
    28.8%
    36.9%
    5.0%
    16.7%
    7.4%
    24.5%
    -0.7%
    31.8%
    16.2%
    5.5%
    27.2%
    33.6%
    1.0%

    S&P
    500
    12.6%
    2.1%
    15.1%
    26.5%
    -37.0%
    5.5%
    15.8%
    4.9%
    10.9%
    28.7%
    -22.1%
    -11.9%
    -9.1%
    21.0%
    28.6%
    33.4%
    23.0%
    37.5%
    1.3%
    10.1%
    7.6%
    30.5%
    -3.1%
    31.7%
    16.5%
    5.2%
    18.8%
    31.7%
    6.2%

    15.3%

    11.7%

    10.6%

    27

    Semper Vic Partners, LP


    Analysis of Currency Contribution
    From December 31, 1999 through March 31, 2012

    Year

    Foreign Currency
    Portfolio Effect1

    2012 YTD
    2011
    2010
    2009
    2008
    2007
    2006
    2005
    2004
    2003
    2002
    2001
    2000

    2.0%
    -0.7%
    1.6%
    3.4%
    -2.6%
    3.3%
    3.8%
    -4.2%
    2.8%
    4.8%
    5.4%
    -1.0%
    -2.2%

    Semper Vic Partners,


    (Q.P.) L.P. Total
    Return

    Semper Vic Partners,


    L.P. Total Return

    11.8%
    6.8%
    21.2%
    26.9%
    -30.5%
    7.1%
    19.8%
    3.7%
    10.0%
    na2
    na2
    na2
    na2

    12.2%
    6.9%
    21.5%
    25.8%
    -31.5%
    7.7%
    20.8%
    3.2%
    11.9%
    33.5%
    -1.0%
    10.0%
    15.6%

    Dow Jones
    Industrial
    Average
    8.8%
    8.4%
    14.1%
    22.7%
    -31.9%
    8.9%
    19.1%
    1.7%
    5.3%
    28.3%
    -15.1%
    -5.4%
    -4.7%

    S&P 500
    12.6%
    2.1%
    15.1%
    26.5%
    -37.0%
    5.5%
    15.8%
    4.9%
    10.9%
    28.7%
    -22.1%
    -11.9%
    -9.1%

    Comparison of Contribution for the Semper Vic Partnerships

    Foreign Currency
    Portfolio Effect1
    1 Year
    3 Year
    5 Year
    10 Year

    1) Based on a weighted average


    2) QP commenced 10/15/2003

    -1.8%
    4.0%
    4.6%
    17.57%

    Semper Vic Partners,


    (Q.P.) L.P. Total
    Return

    Semper Vic Partners,


    L.P. Total Return

    15.5%
    117.0%
    33.3%
    na2

    15.8%
    116.6%
    31.7%
    132.26%

    Dow Jones
    Industrial
    Average
    10.2%
    78.9%
    22.7%
    63.05%

    S&P 500
    8.5%
    87.8%
    23.5%
    49.63%

    28

    29

    30

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