concentrated select equity/smid (cse)
TRANSCRIPT
Style Asset Class Strategy Vehicle Fulfillment Lead PM/Firm
Core Small-MID Separate Individual (SMID)
Concentrated Select Equity Account Securities
Edwin M. Johnston III Managing PartnerSandhill Investment Management
Services available are restricted securities, withdrawal plans, and cash buffers.
Top 10 Holdings - Excluding Cash Market Capitalization - Excluding Cash
Sandhill CSE Facts
At Sandhill, we adhere to a specific set of principles to generate superior return for our clients. This discipline creates a significant competitive advantage. We refer to this as "The Sandhill Edge." Edwin Johnston has been successfully investing using this strategy for over 13 years. We evaluate the operating and economic characteristics of the companies they purchase set against the broader themes the team has identified. Sandhill does its own research. We take the time to understand the business model and economics of the companies we purchase. We know what we own. We focus on risk adjusted returns, capital preservation and tax efficiency. Not only is it important to earn a superior rate of return for our clients over time, but we need to keep in mind how we earn that return. We pay careful attention to the quality of the assets. Many of the companies we select are global in nature either by their manufacturing, distribution or access to resources. Our portfolios have a multi-year investment horizon, low turnover, and are tax efficient.
Investment Philosophy
CSE Product Description
TM Data as of 9/30/2018
Edwin M. Johnston III, Managing Partner Sandhill Investment Management
Founded in 2003, Sandhill Investment Management is a boutique firm providing discretionary investment management services to private clients, foundations, endowments, retirement plans and institutions. Sandhill presently has over $1.24 Billion under management and is headquartered in Buffalo, New York.
Over the past decade, Sandhill has established a strong track record of out-performance. Sandhill constructs concentrated portfolios and has been conservative while generating total returns for our clients that have outperformed the benchmark for many of our products. Sandhill is a 100% employee owned and is a registered investment advisor with the Securities & Exchange Commission.
The CSE portfolio is designed to benefit from mid and small-cap stock selection. Mid-caps are more developed and more stable than small caps and have higher growth trajectories than large caps. Sandhill has built a core competency and knowledge base in the mid and small-cap universe over the past decade, as the majority of holdings in our All Cap core portfolio have been mid-cap for the past eight years. CSE has a target of 25-26 positions. We are targeting an approximate 80% percent weight for mid-caps and an approximate 20% weight for small caps. Mid-caps will have a market cap of $3.0-16.0 billion at time of purchase. Small-caps will have a market cap of $1.0-$3.0 billion at time of purchase.
63.8% Mid Cap
13.6 % Large Cap
Menger, Metzger, and Barr LLP
Address: 40 Fountain Plaza, Suite1300Buffalo, NY 14202
Inception of Sandhill: 2003
Inception of CSE (SMID): 3-18-2015
Firm Wide Assets: $1.24 Billion
CSE Assets: $2.03 Million
Style: Small and Mid-Cap and Blend/Core
Benchmark: S&P 400 Midcap
Currency: US Dollar
Number of Holdings: 22-25
GIPs Performance Exam: 12-31-2017
GIPs Verification Firm:
www.emergecm.com1-877-8EMERGE
CONCENTRATED SELECT EQUITY/SMID (CSE)
22.6% Small Cap
Holding %
Global Payments
US Foods
International Flavors & Fragrances
Armstrong World Industries Inc
Bio- Techne Corp
SiteOne Landscape
Avanos Medical
Acuity Brands
Glaukos Corp
ICU Med
6.76.05.35.0
4.7
4.74.64.4
4.95.0
Authorized distributor for Sandhill Investment Management
Performance Charts
Sandhill Investment Management is a Registered Investment Advisor registered with the Securities and Exchange Commission. Sandhill claims compliance with the Global Investment Performance Standards (GIPS®). The U.S. dollar is the currency used to express performance. Individual results may vary. Investments may not be suitable for all investors. Past performance may not be indicative of future results. Performance may be materially affected by market and economic conditions. Investment strategy has the potential for profit or loss. Performance presented net-of-fees is reduced by investment management fees, trading expenses, and administrative fees. Interest, dividends and capital gains in Sandhill Composites are not immediately reinvested. The Concentrated Select Equity Composite consists of all discretionary wrap fee paying accounts composed of primarily small and mid-cap stocks, ADR’s, Domestic (US) ETF’s, Sector ETF’s and cash. Portfolios in this composite may purchase equities of up to $12 billion in market capitalization. Accounts in the composite may continue to hold equities that increase in value as long as the position met the composite criteria at the time of purchase. The primary benchmark is the S&P 400 TR. The S&P Midcap 400 TR index is a float-adjusted market cap-weighted index of 400 mid-sized companies in various industries. Index is unmanaged and is not available for direct investment. The information in this report has been obtained from sources believed to be accurate; however, Sandhill Investment Management makes no guarantee as to the accuracy or completeness of the information. For a full GIPS ® compliant presentation and/or the Firm’s list of composite descriptions, please call 716-852-0279.
Portfolio Characteristics Comparison
Characteristics
Enterprise Value to Sales
Forward Price/ Earnings Ratio
Price to Cash Flow
Earnings - 5 Year Future Growth Rate
Debt/ Capital
Return on Capital - 5 Year Average
Average Market Cap
CSE
5.8x
23.7x
25.5x
16.0%
12.3%
7.7%
$9.4 B
S&P 400
13.1%
40.7%
5.5%
$6.0 B
S&P 400CSE
Sector Allocation Comparison
0.0% 5.3%
10.0% 6.8%
17.7% 14.9%
3.3%
9.9%
16.0%
16.6%
4.6%
SectorEnergy
Materials
Industrials
Consumer Disc.
Consumer Staples
Health Care
Financials
Information Tech
Utilities & Telecom
www.emergecm.com 1-877-8EMERGE
Inception (3/18/2015)
15.3% 65.4% Sandhill CSE Gross
Sandhill CSE Net 13.6% 57.0% S&P Midcap 400 TR 10.3% 41.5%
17.9%16.7%
7.5%
24.7%22.9%15.8%
1 year
30.8%
14.2%29.0%
Edwin M. Johnston III
Managing Partner and Lead Portfolio Manager
Born 6/30/60 in NYC. BA Yale University 1982. MBA Boston University 1991- Highest Honors. Joined investment adviser and broker-dealer Harold C. Brown & Co. in 1995 as Senior Equity Analyst. Promoted to Director of Research 1996. Named Vice President in 1998. Named Portfolio Manager in 2000. President of investment adviser and broker-dealer O'Keefe Shaw & Co. from 2002 to 2004. Main role at O'Keefe Shaw was to start and run investment advisory business. O'Keefe Shaw's advisory business was then spun off to become Sandhill Investment Management.Edwin serves/has served as a Trustee/Director of the Elmwood Franklin School, Nichols School, Zoological Society of Buffalo, Kaleida Health Foundation, Church Mission of Christ, Buffalo Squash Racquets Association, and the Saturn Club.
Source: Morningstar Direct*CSE inception date is 3/18/2015
21.8%20.1%15.7%
80.9%73.3%54.8%
Real Estate
Communication Services
8.9%
Sandhill CSE Performance Update as of 9-30-18
CONCENTRATED SELECT EQUITY
(CSE)
0.0%
0.0%
21.3%
0.0%
35.5%
4.5%
7.5%
0.0%
11.6%
2.1%
12.2x
16.5x
1.7x
Annualized Returns (Net Returns) As of Date: 9/30/2018 Source Data: Daily Return
YTD - Q3 1 Year 2 Years 3 Years Since Inception 3/31/15
0.02.04.06.08.0
10.012.014.016.018.020.022.024.026.028.030.0
16.7
29.0
22.9
20.1
13.6
7.5
14.215.9 15.7
10.0
Sandhill Concentrated Select Equity S&P MidCap 400 TR
Retu
rn
Investment Growth of $100,000 Net Returns Time Period: *3/19/2015 to 9/30/2018Source Data: Net Return
2015 2016 2017 201885,000.090,000.095,000.0
105,000.0110,000.0115,000.0120,000.0125,000.0130,000.0135,000.0140,000.0145,000.0150,000.0155,000.0160,000.0165,000.0
Sandhill Concentrated Select Equity156 939.9
S&P MidCap 400 TR139 956.9
100,000.0
SinceInception
Cumulative
SinceInception
Annualized
3 year
Cumulative
3 year
Annualized
2 year
Annualized1 yearYTD
2018
Data as of 9/30/2018