conner management group, investment management, april 2014

Value & Momentum Investing At Its Best

Proprietary Algorithms At Work

Conner Management Group, LLCInvestment Management

Contents

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1. Business Overview

2. Philosophy

3. People

4. Process

5. Performance

6. What Sets Us Apart

We are an investment manager serving the interests of: Individuals & Families

Fund Managers

Financial Advisors

Businesses

Institutions

We are a Separately Managed Accounts (SMA) Money Manager.

We invest and manage accounts. The client remains in control. The client grant us discretionary investing authority. The client can view their holdings 24/7.

We use our self-developed proprietary algorithms, emphasizing value and momentum, to uncover opportunities for our 4 distinct strategies.

Conner Management GroupBusiness Overview

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Conner Management GroupPhilosophy – People – Process - Performance

Value & Momentum Investing: Large institutional investment managers move stock prices. They

consistently look for medium to long term investment opportunities. Therefore think like them – invest like

them – move faster than them. Use their tools – and then some. Their primary tool is VALUATION. Using

historical data CMG can see historic views on valuation. Using conventional and proprietary quantitative tools,

coupled with a deep understanding of accounting and finance, CMG identifies those stocks that are likely to be

soon discovered as attractive candidates by the market at large.

The theories of value investing are the drivers behind CMG’s proprietary algorithms. (1)We developed our

approach from the review of numerous research and white papers from the past 40 years, (2) combined broad

conclusions, (3) used statistics to develop parameters, and (4) applied experience as both an analyst and equity

investor, then (5) developed algorithms to scale the approach.

Concentrated Portfolios: CMG believes in the use of concentrated investment portfolios. The average

mutual fund has holdings of approximately 150 companies. We believe that a rewarding portfolio that exhibits

the strengths of our analysis can be formed with as little as 10 to 20 names. Our belief is that if you are going

to invest in a fund with 150 or more holdings, then a low cost index fund is a likely safer and cheaper

alternative.

We only consider stocks that trade on the major exchanges for at least 5 years. We do not consider IPO’s,

penny stocks, or thinly traded stocks.

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Conner Management GroupPhilosophy – People – Process – Performance Clear Client Communication: We sincerely believe that today’s typical investment management

experience is quite poor. There is often no or little explanation about a portfolio’s quarterly performance. In the rare instances when reports are often given, they are usually presented (1) within the context of very high level generalities that can apply to the description of most investment portfolios, and/or (2) use scholarly jargon that has little or no meaning to the average non-industry person.

Since CMG uses concentrated portfolios with much fewer holdings than the typical mutual fund, we believe that it is an easy matter to relay the news to our clients of what has driven the returns of their portfolios. Consequently, our client’s then get to really know us and our thinking.

There have been many advances in communication and information technologies over the past decade that can improve the service experience – emails, blogs, videos, audio recordings. After all, it is our client’s hard earned money – why shouldn’t they know how well it is being invested. We have found that many people feel as though they are simply depositing money into a little more than a savings account, that might go up in price. They are almost numb to believing that there are alternative choices that can make a real difference.

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Conner Management GroupPhilosophy – People - Process - Performance

CMG was founded in February 2013 by G. Mathis Conner

• Bachelor of Science – Rensselaer Polytechnic Institute

• Master of Engineering – Cornell University

• MBA – University of Chicago

Career Experience (Financial Analyst, Business Developer, Engineer)

• Mr. Conner has an exceptionally deep level of understanding of accounting and finance, as well as thorough experience constructing complex financial models. His experience was gained through his career work in the alternative investment space as a financial analyst and equity investor. He participated in the equity and debt financings for over $15 Billion of power, pipeline, mining, oil & gas projects around the world.

• As an analyst and investor for world-wide large scale infrastructure projects, Mr. Conner regularly performed the same valuation and risk assessment activities shared by institutional scale investment management companies.

Noteworthy Accomplishment

• Solely created and tested proprietary algorithms that reviews, analyzes and ranks nearly 4,000 stocks weekly based on appreciation potential. Algorithms incorporates both fundamental and technical measures in addition to its purely proprietary developments.

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Conner Management GroupPeople – Philosophy - Process - Performance

We Use A Bottom-Up Approach –We Begin With Individual Stocks

CMG’s rigorous assessment of an individual stock investment opportunity begins first with an assessment of value. Using our algorithms, we review, analyze, and rank nearly 4,000 stocks, weekly, based on appreciation potential.

Our algorithms evaluate historical and forward valuations measures, using up to four different valuation approaches across differing timeframes. Using multiple methods of valuation across a universe of nearly 4,000 stocks we believe builds a cushion / moat in our investment selections, and substantially increases the probability of our calls.

For all of our investments, we determine what we believe are above average probability target prices and dates before we enter a position – giving us a benchmark to measure against over time.

While we consider the consensus earnings estimates of third party financial analysts, our algorithms allow us to make timely calls on the prudence of an investment opportunity based on present prices – not analyst reports that were possibly written weeks ago when market conditions differed.

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We Use Separately Managed Accounts

The separately managed account arrangement is the result of continued advances in

information technology.

The most obvious differences compared to traditional investment management offerings are

(1) the account is opened and completely controlled by the client, (2) the client merely grants

discretionary investing authority to its investment manager, and (3) the investment manager

cannot withdraw funds from your account.

Clients open an account with a third-party custodian shared by the investment manager.

Transaction costs decline because transactions are shared across clients in the same strategy.

Today’s technology allows the automatic preparation of all necessary tax related documents in

a single place, something especially helpful if you have more than one account and/or using

more than one strategy.

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Our Client Strategies

1. Equity Income Strategy Invests in dividend paying stocks with appreciation potential.

A long only (buy and hold) strategy, with minimal turnover.

There is no use of derivates.

There is no shorting of stocks

Invests in 10 to 20 positions at one time.

2. Value Strategy Invests in undervalued stocks with high price appreciation potential.

A long only (buy and hold) strategy.

There is no use of derivatives.

There is no shorting of stocks.


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Our Client Strategies

3. Value & Momentum Strategy Invests in undervalued or overvalued AND are exhibiting recent favorable price movement

and sentiment.

Takes both long and short positions as opportunities arise.

Pursues maximum profit with expected holding periods of 3 to 6 months.

Actively looks for better investment opportunities every 3 to 6 months.


4. Option Portfolio Strategy A high-risk high-return potential strategy that invests in a portfolio of call and put options.

Positions based on undervalued or overvalued AND are exhibiting favorable movement and sentiment.

Purchases in-the-money call or put options with expiration to maturity of 5 to 9 months.

There is no shorting of stocks.

Portfolio consists of 5 to 10 positions.

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Option Portfolio Performance Calculation

Initial Investment 100,000$

Starting Bal Position1 Position2 Position3 Position4 Position5 Ending Bal

Jan-12 100,000$ 60.4% 14.8% 9.6% 5.7% 118,100$

Feb-12 118,100$ 141.4% -37.7% 142,594$

Mar-12 142,594$ -4.5% 59.8% 105.4% 188,424$

Apr-12 188,424$ -100.0% 150,739$

May-12 150,739$ 23.6% 7.7% 160,175$

Jun-12 160,175$ 160,175$

Jul-12 160,175$ -2.8% 31.8% 169,465$

Aug-12 169,465$ 169,465$

Sep-12 169,465$ 0.0% 169,465$

Oct-12 169,465$ -21.9% 162,043$

Nov-12 162,043$ 162,043$

Dec-12 162,043$ 162,043$

Jan-13 162,043$ 162,043$

Feb-13 162,043$ 89.2% 190,951$

Mar-13 190,951$ 165.9% 254,309$

Apr-13 254,309$ -40.5% 233,710$

May-13 233,710$ 21.7% 93.6% 287,603$

Jun-13 287,603$ 287,603$

Jul-13 287,603$ -100.0% 230,083$

Aug-13 230,083$ 230,083$

Sep-13 230,083$ 230,083$

Oct-13 230,083$ 230,083$

Nov-13 230,083$ 27.2% 242,599$

Dec-13 242,599$ 242,599$

Summary

2012 Return: 62%

2013 Return 50%

2 Year Average Return: 56%

Our Actual Option Portfolio

Performance: 2012-2013

2012 Return: 62%

2013 Return: 50%

Average Return: 56%

A $100,000 investment would

have grown to $242,000.


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Long/Short Paper Trades

6 Months: Nov. 2013 to April 2014

Average Return: 10.8%

Average Excess S&P 500 Return: 5.9%

Average % of Potential Achieved: 54.4%

Conner Management GroupWhat Sets Us Apart

Self-Developed Multi-Purpose Proprietary Algorithms

Managed Account Solution Provider

Value & Momentum Investment Management Firm• Think Warren Buffet with engineering degrees raised in the computer age

– benefiting from the discovered success of value investing and amplifying it with technology, and leveraging data not previously available just 10 years ago.

Concentrated Investment Portfolios

Risk Management Experience

Service Experience

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3221 East Broadway, PMB37

Pearland, Texas 77581

281-947-2201

[email protected]

Conner Management Group, LLCInvestment Management

conner management group, investment management, april 2014

Economy & Finance

llc investment management

performance cmg

concentrated portfolios

alternative investment

cmgs proprietary algorithms

developed algorithms

thorough experience

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