Value Equity Strategy

Investment Philosophy:

Temporary information and liquidity inefficiencies in the equity universe provide the active manager with opportunities to invest in companies at valuations below their long-term intrinsic value.

Investment Objectives:

Achieve long-term capital appreciation by investing in mid and large capitalization companies with a focus on absolute return.

Portfolio Construction:

Portfolio is constructed using a bottom-up process, with each individual position targeting a 50% return potential over a business cycle. Positions become source of funds for new investments once they are within 10% of their estimated intrinsic value.

Portfolio consists of companies with the following characteristics:

• Companies earning a positive economic margin, with stable to improving returns
• Companies valued at a discount to their asset value
• Companies with an attractive dividend yield, and minimal basis risk

Valuation Methodology:

Intrinsic value is estimated based on the fundamental economic characteristics of the company or its respective assets. The companies fundamental characteristics are used to estimate a valuation range for each company based on the following valuation methodologies:

• Discounted valuation model based on positive economic margin earned and reinvestment opportunities available to the company
• Three stage discounted cash flow model
• Historical relative and absolute trading multiples
• Market implied growth rate