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Large Cap – Value 50

Description

Objective

To provide attractive risk adjusted returns versus the Russell 1000 Value over a full market cycle.

Investment Merits

1. Long-term capital appreciation and total return

Performance has exceeded peers and benchmark since inception

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

Focuses on stocks in our proprietary Fair Value Model that have produced the strongest risk adjusted returns over time

4. Concentrated portfolio with high active share

Portfolio encompasses 50 of our most compelling ideas

Video Introduction

Value 50 Strategy

Process

Determine Reasonableness of Inputs

  • Verify valuation inputs
  • Preference towards companies with low operating, financial leverage and low P/TBV
  • Eliminate companies with declining earnings

Fundamental review process is designed to eliminate flawed candidates

Valuation is a launch point for fundamental review

Characteristics of an ideal candidate:
Industry Leader
History of Success
Manageable Financial Leverage
Sensible Capital Allocation
Operational Consistency
Reasonable Growth Rate
Conservative Inputs
Competitive Edge

Most compelling 50 stocks chosen

Positions typically start at 2% with a maximum of 5%
Portfolio is equal weighted:
  • Positions rebalanced when they exceed tolerance bands
Sector weights unconstrained

Performance

Cornerstone
Gross Returns
Cornerstone
Net Returns
Russell
1000 Value
QTD -2.36% -2.50% -2.17%
1 Year 16.65% 16.03% 13.06%
3 Year 8.98% 8.41% 5.52%
5 Year 14.57% 13.96% 9.00%
7 Year 12.65% 12.01% 8.61%
10 Year 11.70% 10.97% 8.23%
Since Inception* 14.14% 13.33% 11.08%

Annual compounding rates of return ending 6/30/2024
*Composite inception date is 12/31/2011

Cornerstone
Pure Gross Returns**
Cornerstone
Net Returns
Russell 1000 Value Net

Composite
3yr St Dev

R1000V 
3yr St Dev
Composite assets $millions Accounts at period end Percent of firm assets Firm assets $millions Net Composite

Dispersion

% of bundled fees
2023 19.14% 18.49% 11.46% 17% 17% 0.55 5 of fewer 0.03% 1,896.9 N.A.* 0.0
2022 -6.26% -6.80% -7.54% 23% 21% 0.31 5 of fewer 0.02% 1,703.9 N.A.* 0.0
2021 27.74% 27.14% 25.16% 21% 19% 0.47 5 or fewer 0.02% 1,932.1 N.A.* 0.0
2020 13.03% 12.39% 2.80% 22% 20% 0.36 5 or fewer 0.02% 1,813.1 N.A.* 0.0
2019 32.98% 32.29% 26.54% 13% 12% 0.23 5 or fewer 0.01% 2,300.8 N.A.* 0.0
2018 -10.02% -10.63% -8.27% 13% 11% 1.30 5 or fewer 0.06% 2,169.9 N.A.* 0.0
2017 21.07% 20.25% 13.66% 12% 10% 1.60 5 or fewer 0.06% 2,458.6 N.A.* 7.5
2016 16.97% 15.91% 17.34% 13% 11% 1.55 5 or fewer 0.06% 2,609.7 N.A.* 6.5
2015 -1.30% -2.16% -3.83% 12% 11% 1.63 5 or fewer 0.05% 3,480.2 N.A.* 23.9
2014 9.27% 8.34% 13.45% 13% 9% 1.74 5 or fewer 0.02% 9,154.3 N.A.* 23
2013 46.86% 45.66% 32.53% N.R. N.R. 1.65 5 or fewer 0.02% 8,210.6 N.A.* 22.4
2012 12.13% 10.90% 17.51% N.R. N.R. 1.15 5 or fewer 0.02% 5,725.4 N.A.* 22.2

*Composite inception date is 12/31/2011
N.R. – Not Required
**Pure gross returns are presented as supplemental information as they do not reflect the deduction of any expenses, including trading costs.

Characteristics

June 30, 2024

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

Characteristics V50 Russell 1000 Value
5 Yr Hst. EPS Growth(Ex-Zeros) 14.3% 11.3%
LT Est. EPS Growth—Wtd Avg 10.2% 11.2%
Price/Earnings (TTM)—Wtd HAvg 15.6x 16.7x
Price/Cash Flow—Wtd Avg 11.9x 11.2x
LT Debt to Equity—Wtd Avg 0.3x 0.2x
Dividend Yield—Wtd HAvg 1.8% 2.2%
Market Cap—Wtd Avg 169.3B 158.1B

Sector Weights

June 30, 2024

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

Disclaimer

Value 50 Composite contains fully discretionary accounts that are comprised of around 45-55 securities derived from our valuation work highlighting attractive companies based on their risk reward profile and have reasonable assumptions around growth and balance sheet strength. For comparison purposes the composite is measured against the Russell 1000 Value Index. **Pure gross returns are presented as supplemental information as they do not reflect the deduction of any expenses, including trading costs. Cornerstone Investment Partners is an independent, employee owned investment advisory firm. 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 an entire year. The U.S. Dollar is the currency used to express performance. The composite includes both bundled fee and non-bundled fee accounts. Returns are presented gross and net of management fees and include the reinvestment of all income. For non-bundled fee accounts, gross returns were reduced by transaction costs, and the net of fee performance was calculated using actual management fees. For bundled fee accounts gross returns are shown as supplemental information and have not been reduced by transaction costs, net of fee performance has been reduced by the entire bundled fee. The bundled fee includes brokerage commissions, administrative, and custodial services, and in some cases the investment management fee.  Some of the bundled fee accounts included paying the investment management fee separately from the bundled fee.  For these accounts, the net of fee performance has been reduced by both the bundled fee and the investment management fee.  For non-fee paying accounts, a model fee based on the standard investment advisory schedule was applied. The Value 50 composite was created and incepted on December 31, 2011. 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 September 30, 2001 thru December 31, 2023. The verification and performance examination reports are available upon request. A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. Verification does not provide assurance on the accuracy of any specific performance report. The firm maintains a complete list and description of composites. Policies for valuing investments, calculating performance, and preparing GIPS Reports are available upon request. Benchmark returns are not covered by the report of independent verifiers. To receive a list of composite descriptions and/or additional information, contact Cornerstone Investment Partners at 3438 Peachtree Rd, NE; Suite 900; Atlanta, GA 30326, 404-751-3850 or marketing@cornerstone-ip.com. The general fee schedule for accounts is as follows: 0.55% on the first $20,000,000; 0.45% on the next $20,000,000 and 0.35% on the balance. Actual investment advisory fees incurred by clients may vary. GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. Due to the marketing rule that went into effect on 11/4/22, the net returns were updated to comply with this regulation.  Additional information is available upon request.