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Rathbone Recovery Fund
Citywire Wealth Manager Retreat Conference Rathbone Recovery Fund - James Baker, Assistant Fund Manager
Greg Mullins, Sales Director
Helen van Heesewijk, Associate Director - Sales
2
Agenda
Introduction
Our definition of recovery
Key investment characteristics
Areas of investment
Historic performance
Appendix
3
Introduction
• Over 30 years’ equity market experience
on both the buy and sell-sides.
• Renown for his considerable expertise in
mid to small-cap stock selection.
• James works alongside co-managers of the
Rathbone Recovery Fund Julian
Chillingworth and Marina Bond
Marina Bond
Small and Mid-
cap specialist
Julian
Chillingworth
Large-cap specialist
James Baker Small and Mid-cap specialist:
Specialist mid and small-cap expertise
4
Our definition of recovery
Business transformation & management change
Macro/cyclical
Stock specific
Fashion
A focused fund with the freedom to invest across a wide universe
5
Key investment characteristics
Revenue growth & visibility
Margin & cashflow
Balance sheet
Management
“… finding a company whose potential recovery-value is not
appreciated by the market”
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Key investment characteristics
Valuation
Portfolio Construction
Company Meeting
Qualitative assessment of management
Fundamental Analysis
Top down/bottom up: Macro, Industry, Stock Forensic financial analysis
Idea Generation
Brokers Management Teams
BUY WATCHLIST
Reject?
Reject?
7
Areas of Investment Blinkx - £547m Market capitalisation
Business: Blinkx has developed an internet search engine, which sources online video clips
for websites like AOL and ASK. It monetises this service by attaching adverts to these video
clips, sharing the revenue with its content providers and the web publisher using its search engine.
Source: Internal.
Criteria:
Opportunity: Stock-specific - De-rated after two poorly explained acquisitions and a profits
warning in early 2012.
High growth, high margin
Data Source: Factset
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Areas of Investment SQS Quality Software - £118m Market capitalisation
Business: SQS is a software testing business. Recently it has repositioned itself from providing
ad hoc testing services to customers, to offering a managed testing service to major clients on
long term contracts. This new model has improved both revenue visibility and margins.
Furthermore it has begun partnering major software vendors like Siemens, testing their new
products and codes prior to sale. This strategy has enabled SQS to on-sell its services to Siemens
own customers and expanding out of its traditional European market into the USA.
Source: Internal
Criteria: Revenue growth and improved visibility
Opportunity : New management , business transformation
Data Source: Factset
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Areas of Investment Wilmington - £184m Market capitalisation
Business: Wilmington has transformed itself in recent years from an advertising dependent publisher
of business-to-business magazines, to a subscription based provider of online business information. It
provides business critical information into the Legal, Insurance, Compliance and Health markets.
Source: Internal
Criteria: Revenue visibility, high margin, management
Opportunity: Business transformation, management change
Data Source: Factset
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IMA sector
average
Rathbone
Recovery
10
30
50
70
90
10 12 14 3
yea
rs c
um
ula
tive
per
form
ance
(%
) 3 year annualised volatility (%)
IMA sector
average
Rathbone
Recovery
10
15
20
25
30
35
40
6 8 10 12
1 y
ear
cum
ula
tive
per
form
ance
(%
)
1 year annualised volatility (%)
Historic performance risk v return
Data Source – Financial Express. Data to 30/09/2013, net income reinvested.
*Rathbone Recovery Fund launched on 13 July 2009
Past performance should not be seen as an indication of future performance
One Year
Three Years
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Source: Data Source – Financial Express. Data as at 30/09/2013, net income reinvested. Based on R-class units
*Rathbone Recovery Fund launched on 13 July 2009
Past performance should not be seen as an indication of future performance
Historic performance
Performance % 6 mths 1 yr 3 yrs Launch*
Rathbone Recovery Fund 9.96 23.53 47.02 108.7
IMA UK All Companies Sector 6.26 22.49 36.48 91.5
Quartile 1 2 1 1
Rank 47/278 105/276 52/262 55/253
FTSE All Share -Index 3.84 18.93 33.36 85.74
The Rathbone Recovery Fund is a vehicle for all stages of the economic cycle
Sharpe Ratio 6 mths 1 yr 3 yrs Launch*
Rathbone Recovery Fund 1.62 2.22 1.08 1.25
IMA UK All Companies Sector 1.00 2.26 0.81 0.99
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Appendix
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Portfolio breakdown
Data source: Rathbones, data as at 30/09/2013
Top 5 FTSE 100 Top 5 FTSE 250
Top 5 Small-cap/AIM
Unilever 3.29
WPP 3.24
BG Group 2.92
Melrose 2.42
Aberdeen Asset Management 2.26
Booker 3.77
Senior 3.12
Hansteen Holdings 2.92
Synergy Health 2.43
Aveva Group 2.25
Clarkson 2.69
Sanofi 2.56
Daily Mail 2.26
GB Group 2.25
Advanced Medical Solutions 2.13
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FTSE 100, 24.15
FTSE 250, 28.74 FTSE Small Cap,
11.58
FTSE AIM and
other UK, 22.01
Europe, 3.67
Cash, 9.85
Oil & Gas, 9.71
Basic Materials, 5.98
Industrials, 18.49
Consumer Goods, 3.29
Health Care, 8.40 Consumer Services,
18.14
Telecommunications,
1.29
Financials, 14.40
Technology, 10.46
Cash, 9.85
Portfolio breakdown
Data Source: Rathbones. Data as at 30/09/2013
Capitalisation Split
Sector Split
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James Baker Assistant Fund Manager
James with over 30 years’ equity market experience on both the buy and
sell-sides joined Rathbones in October 2012.
Specialising in mid and small-cap stock selection, James was brought into
the Rathbone Recovery Fund team for his expertise to work alongside co-
managers Julian Chillingworth and Marina Bond.
He has worked for several organisations in this field including Capel-Cure
Myers, ABN Amro, and most recently, Collins Stewart.
James graduated from the University of Cambridge with a BA Honours
degree in History.
True mid and small cap expertise
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Julian Chillingworth Chief Investment Officer
Over 30 years’ experience managing equity and balanced portfolios -
both institutional and retail.
Co-Manager of the Rathbone Recovery fund working alongside Marina
Bond and James Baker.
Prior to joining Rathbones 10 years ago he ran the Pensions and
Charities subsidiary of Hambros/Investec.
Gross funds business, assets in excess of £6bn.
True large cap expertise
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Marina Bond Fund Manager, Investment Director
Co-Manager of the Recovery Fund, working alongside Rathbones CIO
Julian Chillingworth and James Baker.
Previously, she managed the Rathbone Smaller Companies Fund, and in
July 2009, undertook the merger of the Rathbone Special Situations Fund
into Smaller Companies Fund to form the Rathbone Recovery Fund.
Marina joined Rathbones in 2000, and has 12 years’ experience of
analysing small and mid-cap companies.
She holds the Investment Management Certificate and the Securities
Institute Diploma. She is also a Fellow of the Securities Institute.
True mid and small cap expertise
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Important Information
The information contained in this presentation is for use by investment
advisers and is not intended for circulation to clients or to the general public
Past performance should not be seen as an indication of future performance.
The value of investments and the income from them may go down as well as
up and you may not get back your original investment.
Rathbone Investment Management and Rathbone Unit Trust Management are authorised and regulated by the
Financial Conduct Authority and Rathbone Unit Trust Management is a member of the IMA.
Rathbone Unit Trust Management Limited : Registered Address 1 Curzon Street, London, W1J 5FB
Registered No. 02376568 - A Member of the Rathbone Group.
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For guidance, call:
0207 399 0399
Or email:
The Website: www.rutm.com
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