Elite East West Value Fund

Elite LWM East-West Value Fund

© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc

Introduction

• Founder and MD of LWM

• LWM is a boutique investment company

• Just launched a UK-authorized fund

• Will talk about the fund but before that…


Background

• Set up what is now the largest IP in Beijing• Many investment products incorporate

conflicts of interest• Established LWM Investment Team 2005• Marcos Dando Head of Research• We’ve tried to align our interests with those of

our clients wherever possible• Built up a great international team


Value Investment

• Value Investment – buying for less than its worth

• Our interpretation of value – classical view focused on controlling risk – housing example

• Short Term inefficiency – Long Term efficiency• Intrinsic Value vs. Market Cap• Look for undervalued companies offering a

significant Margin of Safety• Wm. Morrisons


Case Study

Wm. Morrison• 100+ years of profitability• Struggling with acquisition of Safeways• End 2005 loss due solely to takeover related costs• Nearly 200 city centre properties• Listed on balance sheet at purchase price• Entire company worth less than net property assets

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Value Investment

The Value Pedigree• Benjamin Graham• Warren Buffett

Looks at companies from an ownership perspectiveContrarian by nature Research intensiveProduces superior returns over the longer termDiligent research reduces riskHistorically-proven

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The Value Premium

Example: Value vs. Growth Investing

Between 1963 and 1990, the average returns for growth and value stocks in the US were:

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Average Returns Growth Stocks Value StocksPer year 11.4% - 12.3% 16.2% - 18.7%Over a five-year period 71.7% - 81.8% 138.8% - 143.4%

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Over the period, value stocks outperformed growth stocks by around5%-6% per year

Source: Josef Lakonishok, Andrei Shleifer, Robert Vishny, “Contrarian Investment, Extrapolation and Risk”, Journal of Finance 48 (1994): 1541-1578

More than 40 studies have demonstrated the “value premium”

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Exploiting the Current Market

• Great companies at phenomenal prices

• Strategy is not to chase high returns but to reduce risk

• Long term buy and hold strategy

• Holding 25/35 stocks at any one time


Elite LWM East-West Value Fund

• UK-authorised fund

• Investment advice provided by LWM

• Global investment mandate

• Focused portfolio of only 25-35 stocks

• Beijing – London perspective

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LWM 3-Year Performance History

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-60

-40

-20

0

20

40

60

Total Returns

LWM

FTSE

MSCIW

DJIA

S&P 500

Nikkei

DAX

CAC

1 Year 2 Years 3 Years

LWM 6.75% 7.49% 46.65%

FTSE -40.09% -37.19% -25.72%

MSCIW -46.45% -38.40% -25.84%

DJIA -38.73% -30.91% -19.00%

S&P 500 -42.16% -36.35% -26.41%

Nikkei -53.24% -54.42% -42.90%

DAX -45.13% -31.24% -12.35%

CAC -43.72% -40.91% -27.62%


Daily Returns & Volatility

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-0.06%

-0.04%

-0.02%

0.00%

0.02%

0.04%

0.06%

0.80% 0.90% 1.00% 1.10% 1.20% 1.30% 1.40% 1.50% 1.60% 1.70%

Daily Returns vs. Risk

LWM

MSCIW

DJIADAX

S&P 500

FTSE

CAC

N225

Higher Returns ?

Higher Risk ?

"Risk" in this graph is measured by the standard deviation of total daily returns from October 27th 2005 to October 26th 2008 for each index. The standard deviation is a measure of statistical dispersion that

shows the variability of returns earned by an investment portfolio.

© Copyright 2008 – Lowes Wealth Management Consulting Co. Inc 13

LWM Research Process

1. Multiple screens for global

markets using value metrics

designed to uncover classic

value and turnaround stocks

2. Remaining companies

assigned amongst analysts to

eliminate unsuitable

companies3. Analysts write full reports on

all remaining companies,

eliminating those that emerge

as unsuitable

4. Reports are presented and

each member of the

investment management team

has the right to veto any

company they deem

unsuitable

5. Companies graded – only

companies achieving a certain

average grade are put forward

for inclusion

6. Remaining companies

sorted for diversification and

only accepted if superior to

existing portfolio holdings

LWM Global

Portfolio

Stage 1

Stage 2

Stage 3

Stage 4

Stage 5

Stage 6


What Are We Looking For?

• Well established companies from around the world

• Trading substantially below their real value

• Minimum market value of GBP £100M

• Good dividend record

• Substantial trading volume

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Fund Availability

• Platforms available:• Transact, Hargreaves Lansdowne, Self Trade,

Ascentric & Direct Investment• ISAs• SIPPs• Onshore &Offshore Bonds• Minimum Investment £5K

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To Conclude

The Fund offers:

Proven philosophy & rigorous process

Global investment mandate

Focused portfolio

3-year performance track record

Ideal for the current conditions

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Stocks Under Consideration

ConocoPhillips

Disney

Dow Chemical

AiphoneJapanese telecom infrastructure

Bukwang Pharmaceutical IndustrialKorean pharmaceutical / personal care

Grupo Modelo SAB de CVMexican brewer / beverage distributor


Current Market Conditions

• Systemic risk has been alleviated

• Still plenty of bad news to come

• De-leveraging still to work though the market

• Companies prices being marked down across the board

• Fantastic opportunity for value investors looking to benefit in the medium-long term


Elite LWM Portfolio Fund Prospectus/Structure

Authorised Corporate DirectorWAY Fund Managers Ltd (FSA Regulated)3 Cedar ParkCobham RoadWimborneDorsetBH21 7SBAuthorised and regulated by the FSA

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Elite LWM Value Portfolio Fund/Structure

Investment Adviser

Lewis Jarrett & Co (FSA Regulated)62a Spixworth RoadNorwichNR6 &NF

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Elite LWM Value Portfolioi Fund/Structure

Investment Sub-Adviser

Lowes Wealth ManagementA-407 Tian Shui Yuan Centre2 Tian Shui Yuan Dong JieBeijing 100026China

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Company Registered Head officeC/O WAY Fund Managers LtdCedar HouseCobham RoadWimborneBH21 7SB

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DepositoryState Street Trustees LtdOne Canada SquareLondonE14 5AFAuthorised and regulated by the FSA

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SolicitorsBurges Salmon LLPNarrow Quay HouseNarrow QuayBristolBS1 4AH

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AuditorsGrant Thornton UK LLP30 Finsbury SquareLondonEC2P 2YU

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AdministratorNorthern Trust International Fund Admin Services50 Bank StreetLondonE14 5NT

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RegistrarWAY Fund ManagersCedar HouseCobham RoadWimborneBH21 7SBAuthorised and regulated by the FSA

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RegistrarWAY Fund ManagersCedar HouseCobham RoadWimborneBH21 7SBAuthorised and regulated by the FSA

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Elite East West Value Fund

Economy & Finance

Transcript of Elite East West Value Fund