Layout 1 (Page 1) - Triad Investment Management

S T R AT E G Y P R O F I L E
Small-Cap Equity
December 31, 2014
ABOUT TRIAD
Triad offers equity and
balanced portfolio management for institutional and
high net worth investors.
Founded in 2008, Triad
has $138 million of assets
under management and is
owned by its investment
professionals.
Research
•
Behavior
•
Ethics
INVESTMENT PHILOSOPHY
BEHAVIOR BEATS BRAINS In our view, investor behavior is more important than
superior intellect. Emotionally-stable investors recognize the occasionally irrational nature of markets and maintain a disciplined focus on business value versus market price.
INDEPENDENT RESEARCH We don’t rely on “Wall Street” opinions. Doing our own
research increases our understanding and strengthens our conviction during volatile markets.
CURRENT SECTOR
ALLOCATION
LONG-TERM PERSPECTIVE Markets can provide systematic advantages to those
able to withstand short-term price fluctuations. Our willingness to accept short-term
uncertainty is one of the most important factors behind our long-term results.
ABSOLUTE VALUE INVESTORS We seek 15% or higher expected annual returns over
3-5 years for common stock investments. If the desired return isn’t there, we hold cash
until new opportunities arise.
VOLATILITY IS OPPORTUNITY We believe that market volatility is not risk to the rational
investor. Rather, we define risk as the probability of permanent loss of capital. Our intensive
research leads to increased understanding and confidence during volatile periods to buy
undervalued and sell overvalued securities.
30% Consumer
Discretionary
PARTNERSHIP MENTALITY We strive to invest in companies that treat shareholders
as partners. Similarly, we consider each client a partner and treat them as we’d like to
be treated if our roles were reversed. We communicate candidly and clearly. Furthermore, we invest the majority of our liquid net worth generally in the same securities as
clients. We eat our own cooking.
10% Materials
21% Industrials
6% Information
Technology
16% Financials
2% Cash
13% Energy
GROWTH
OF
$1 MILLION
INVESTMENT PERFORMANCE
$1,213,200
Triad
1.6%
4Q 14
$1,154,700
8/31/13 9/13
12/13
3/14
6/14
9/14
Russell 2000
9.7%
YTD
(1.1)
4.9
1 Year
(1.1)
4.9
Inception*
11.4
15.6
Net of fees
(See disclaimer below)
*August 31, 2013
12/14
Triad Investment Management, LLC (“Triad”) claims compliance with the Global Investment Performance Standards (GIPS®). Triad has been independently verified by Ashland
Partners & Company, LLP for the period April 30, 2008 to September 30, 2014. Triad is an SEC-registered investment advisor. The composite includes all fully discretionary
separately managed accounts that follow the firm’s Small-Cap Equity investment strategy, including those accounts no longer with the firm. Since its inception, the composite
has been comprised of one non-fee paying account. Results do not reflect the impact of fees because the account in the composite is not assessed a management fee. Triad’s
strategy is to invest in a concentrated portfolio (usually holding between 35 to 45 securities) of common stocks, with a market capitalization below $3 billion at time of purchase,
of both domestic and international companies. The U.S. Dollar is the currency used to express performance. Past performance is not a guarantee of future results. Results
include the reinvestment of all income. Investments made by Triad for its clients differ significantly in comparison to the referenced indexes in terms of security holdings, industry
weightings, and asset allocations. Accordingly, investment results and volatility will differ from those of the benchmarks. For more information or for a copy of the firm’s fully
compliant presentation and the firm’s list of composite descriptions, please contact us at (949) 679-3991.
S T R AT E G Y P R O F I L E
Small-Cap Equity
INVESTMENT PROCESS
Over years of study, we have established a universe of 250 companies. Companies within this universe must qualify based on our review of their business
and management. These companies typically have durable and stable competitive positioning with attractive profitability profiles. We seek “owner-operator”
cultures and incentives in our review of management. We continually review
the universe and companies are added and removed over time.
Universe of 250 Companies
Established for Detailed Analysis
of Business and Management
Intensive Study of Business
Strategies, Results, Management
Capability & Stock Ownership
We analyze company reports, SEC filings, industry and trade journals, company
presentations, competitors, suppliers, customers and other sources to assess
the business and management. We don’t rely on the opinions of “Wall Street”
analysts to make our investment decisions.
Value Companies – Invest
When Required Return
Potential Is Achievable
We compare our estimate of future value with the current stock price, and will
invest only when we believe a minimum return of 15% per year over 3 to 5
years is achievable. If current prices offer expected returns under 10% per year,
we will begin selling and wait until new opportunities develop.
Portfolio of 35 - 45 Best Ideas
When we find investments meeting our stringent criteria we concentrate in these
rare, compelling ideas. We seek a combination of high return and low permanent
loss potential.
A strict sell process is important. We reduce and sell positions when the gap
between market price and estimated business value closes or disappears. We
don’t hesitate to sell if fundamental business problems arise or if a materially
better investment idea appears.
Disciplined Sell Process
TOP 10 HOLDINGS *
Name
Business Description
%
St. Joe Company
Land Development
4.0
Pier 1 Imports
Specialty Retail
3.9
Patterson UTI Energy
Oil Drilling Services
3.7
White Mountains Insurance
Insurance
3.6
Remy International
Auto Parts
3.6
Overstock.com
Online Retailer
3.6
Clean Harbors
Environmental Services
3.5
Kennedy-Wilson Holdings
Real Estate Services
3.2
First Citizens Bancshares
Banking
3.2
Greenlight Capital RE
Reinsurance
3.2
Triad Top 10 Total
INVESTMENT PROFESSIONALS
John Heldman, CFA
President & Portfolio Manager
n 29 years of experience
at Neuberger Berman,
Deutsche Bank, Scudder and
Bank of America
n MBA & BS, California State
University, Long Beach
n Member, CFA Institute and
CFA Society Orange County
David Hutchison, CFA
Managing Director
n 21 years of experience
n MBA, University of Southern
California
n BA, Macalester College
n Member, CFA Institute and
CFA Society Orange County
35.5
*Supplemental information as of December 31, 2014.
Top 10 Holdings chart excludes cash and money market funds.
For more information, please contact David Hutchison at
office (949) 679-3991
email [email protected]
1301 Dove Street, Suite 1080
n
Newport Beach, CA 92660
n
office (949) 679-3991
n
web www.triadim.com