Global

Description

Objective

To provide attractive risk adjusted returns versus the MSCI World over a full market cycle.

Investment Merits

1. Long-term capital appreciation and total return
2. Opportunity derived from market emotion

Timeless investment philosophy with a disciplined process designed to eliminate behavioral biases

3.  Focus on companies with proven track records trading at a discount to fair value

Cornerstone’s proprietary Fair Value Model has successfully identified attractively valued companies for over 30 years

4.  Concentrated portfolio with high active share

Portfolio encompasses the 50 most compelling ideas

Process

Conduct fundamental review

  • Confirm relevance of historical track record
  • Eliminate fundamentally flawed companies
  • Build investment case, run sensitivity analysis, stress test assumptions
  • Identify what the market is mispricing

Determine whether past fundamentals are repeatable

Investment Team members assess the merits of companies independently before collaborating for final review

1. Verify Valuation and Dissect Financials

Assess company financials and valuation case

2. Evaluate Business Model

Identify embedded characteristics and keys to success

3. Appraise Management

Measure success of management over time

4. Assess Competitive Threats

Monitor competitors, substitutes and new entrants

5. Understand Operating Environment

Legislation, Regulations, and Exogenus inputs

Portfolio of 50 Stocks Assembled

Positions based on 1% to 6% based on:
  • Discount to our Fair Value
  • Confidence in Investment Thesis
Sector weights range from 0 – 30%
Country weights are unconstrained except U.S.

Performance

December 31, 2019

global bar graph
Cornerstone
Gross Returns
Cornerstone
Net Returns
MSCI World Net
QTD 10.12% 9.86% 8.56%
1 Year 28.85% 27.82% 27.67%
3 Year 13.42% 12.52% 12.57%
5 Year 7.44% 6.57% 8.74%
7 Year 9.87% 8.89% 10.57%
Since Inception* 10.01% 9.30% 9.44%

Annual compounding rates of return ending 12/31/2019
*Composite inception date is 4/30/2010

Cornerstone
Gross Returns
Cornerstone
Net Returns
MSCI World Net Composite
3yr St Dev
MSCI World Net
3yr St Dev
Composite assets $millions Accounts at period end Percent of firm assets Firm assets $millions Net Composite dispersion % of non fee paying clients % of bundled fees
2019 28.85% 27.82% 27.67% 12% 11% 9.42 12 0.41% 2,300.8 N.A. 2.4 64.5
2018 -8.62% -9.36% -8.71% 11% 10% 5.02 10 0.23% 2,169.9 0.4 4 46.6
2017 23.93% 22.96% 22.40% 11% 10% 3.76 10 0.15% 2,458.6 0.5 6.9 13.7
2016 9.83% 9.03% 7.51% 12% 11% 2.94 8 0.11% 2,609.7 0.5 15 15.7
2015 -10.69% -11.49% -0.87% 12% 11% 8.17 13 0.23% 3,480.2 0.4 4.9 24.4
2014 4.19% 2.91% 4.94% 11% 10% 8.46 12 0.09% 9,154.3 0.8 5 35
2013 29.59% 28.32% 26.68% 12% 14% 2.96 6 0.04% 8,210.6 N.A. 28.8 72.1
2012 14.55% 14.55% 15.83% N.A. N.A. 0.67 5 or fewer 0.01% 5,725.4 N.A. 100 0
2011 3.95% 3.95% -5.54% N.A. N.A. 0.59 5 or fewer 0.02% 3,466.7 N.A. 100.0 0.0
2010* 9.38% 9.38% 8.24% N.A. N.A. 0.56 5 or fewer 0.02% 2,394.8 N.A. 100 0

*Composite inception date is 04/30/2010

Characteristics

December 31, 2019

The end result of the investment process is a portfolio comprised of companies with solid growth prospects trading at compelling valuation levels

Characteristics Global MSCI World
5-Year Historical Earnings Growth 11.0% 11.8%
Long-Term Estimated Earnings Growth 8.5% 9.8%
Price to Earnings (TTM) 14.0x 18.2x
Price to Cash Flow 8.2x 11.6x
Return on Equity 19.2% 20.2%
Long-Term Debt to Equity 0.0x 0.0x
Dividend Yield 2.5% 2.3%
Market Cap ($ wtd) 180.6B 19.8B

Sector Weights

December 31, 2019

bar graph

Sector weights can be materially different from the benchmark as a result of our bottom-up investment process

Disclaimer

Global Composite contains fully discretionary accounts that are typically comprised of 45-55 securities that may or may not pay dividend and are suitable for those clients with an emphasis on long-term capital appreciation and have above average risk tolerance.  The MSCI World Net Index measures the performance of 1,500 companies that have global presence excluding emerging market countries. Cornerstone Investment Partners’ has constructed a universe of 1,100 large, liquid securities, including non-US companies, traded on US exchanges.  **Starting 2Q13 pure gross returns are presented as supplemental information as they do not reflect the deduction of any expenses, including trading costs. Cornerstone Investment Partners, LLC is an independent, employee owned investment advisory firm.  The firm maintains a complete list and description of composites, which is available upon request.  Results are based on fully discretionary accounts under management, including those accounts no longer with the firm.  Past performance is not indicative of future results. N.A.- Information is not statistically meaningful due to an insufficient number of portfolios in the composite for the entire year.  The U.S. Dollar is the currency used to express performance. Returns are presented gross and net of management fees and include the reinvestment of all income.  The composite includes both bundled fee and non-bundled fee accounts. Gross returns for non-bundled fee accounts were reduced by transaction costs and gross returns for bundled fee accounts are shown as supplemental information and have not been reduced by transaction costs.  Net of fee performance for these accounts have been reduced by the entire bundled fee. Other than brokerage commissions the bundled fee includes administrative and custodial services, and in some cases the investment management fee.  Some of the bundled fee accounts included pay the investment management fee separately from the bundled fee.  For these accounts, net of fee performance has been reduced by both the bundled fee and the investment management fee.  Net of fee performance for non-bundled fee accounts was calculated using actual management fees.  The Global Composite was created on April 30, 2010.  The annual composite dispersion is an asset-weighted standard deviation calculated for the accounts in the composite the entire year.  Cornerstone Investment Partners claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards.  Cornerstone Investment Partners has been independently verified for the periods beginning September 30, 2001 thru September 30, 2019.  Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. The Global Composite has been examined for the periods April 30, 2010 thru December 31, 2018.  The verification and performance examination reports are available upon request. Benchmark returns are not covered by the report of independent verifiers.  Additional information regarding the policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request.  Submit requests to Cornerstone Investment Partners: 3438 Peachtree Rd, Suite 900.  Atlanta, GA 30326; Phone: 404-751-3850; Email: marketing@cornerstone-ip.com.   The general fee schedule for equity accounts is as follows: 0.75% on the first $10,000,000; 0.55% on the next $10,000,000 and 0.35% on the balance.  Actual investment advisory fees incurred by clients may vary.