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BlueAlpha

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Duncan Greenwood

on 3 October 2012

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Transcript of BlueAlpha

Morningstar Rating Disclaimer. Copyright © 2012 Morningstar UK Limited. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. MET BLUEALPHA ALL SEASONS FUND OCTOBER 2012 CONTACTS BLUEALPHA 2000 2010 2005 Firm - Inception 2003 2003 Formally called BlueBay Uys Meyer founded Mayflower Fund Launched - Oct 2003 MET All Seasons Fund Launched - Nov 2005 Richard Pitt joined the firm - 2004 Participation in Momentum Best Blend Specialist Equity Fund - Sep 2007 2007 Polar Star Fund - Launched Nov 2008 BlueAlpha Global Equities Fund - Launched Oct 2008 2012 Polar Star Fund New Managers - Jan 2010 BlueAlpha Strategic Equity Fund - Launched Dec 2010 BlueAlpha Equity Hedge Fund - Launched Apr 2012 Regulated by the Financial Services Authority (FSA license number: 482458) Regulated by the Financial Services Board (FSB license number: 118) Source: Bloomberg; BlueAlpha Investment Advisory Limited Returns
Annualised return 12.4%
Annualised alpha 4% BLUEALPHA GLOBAL EQUITY FUND PLC US$ 50 million
Irish UCITS – highly regulated
Track record – 3 ½ years Share Classes Sean Peche
Portfolio Manager Richard Pitt
Portfolio Manager BLUEALPHA STRATEGIC EQUITY FUND SA Collective Investments Global Collective Investments BLUEALPHA EQUITY HEDGE FUND POLAR STAR FUND (ZAR) POLAR STAR FUND LTD (USD) Alternative Investments BLUEALPHA participation in MOMENTUM BEST BLEND SPECIALIST EQUITY FUND Source: Money Mate; Bloomberg; Met Collective Investments; BlueAlpha Investment Management BlueAlpha Analytics Investment Philosophy Member INVESTMENT METHODOLOGY Long term bias Individual stock selection applying a “common sense” approach within a framework of assessing global and local risk appetite Pragmatic value investing Position size reflects conviction and risk evaluation Sean Peche
Director Richard Pitt
Director Uys Meyer
Director Richard Pitt
Director Murray Derksen
Portfolio Manager Casper Groenewald
Portfolio Manager Uys Meyer
Portfolio Manager Tony da Silva
Portfolio Manager Murray Derksen
Portfolio Manager Casper Groenewald
Portfolio Manager Ulf Brinkmann
Portfolio Manager Uys Meyer
Portfolio Manager Tony da Silva
Portfolio Manager Uys Meyer
Portfolio Manager Tony da Silva
Portfolio Manager Relative value commodity fund Relative value commodity fund Equity derivative hedge fund Equity long/ short hedge fund SA equity mandate Flexible Asset Allocation Sector Risk adverse options trading strategy uncorrelated to the ALSI
Stock selection via fundamental and technical research with a focus on the JSE top 20 shares
Sector focus of mining and financials due to volatility and liquidity
Multiple options strategies are built around the equity positions to lower risk and offer upside gearing on a group of stocks
The Fund trades 90-day contract SAFEX options and also makes use of index and single stock futures INVESTMENT PHILOSOPHY The investment objective of the Fund is to deliver attractive real returns above the STeFI 3 month + 2%.
The Investment Manager will seek to achieve this objective through a bottom up investment approach. Stocks are selected using fundamental analysis with specific focus on cash generation and underlying value. There is no bias toward any sector or theme. Substantial attention and focus on capital preservation throughout all market conditions is integral in the portfolio construction. INVESTMENT PHILOSOPHY Understand fundamental and statistical relationships between relevant commodities.
Quantify and identify cyclical and structural relative value anomalies within this universe.
Exploit trading strategies that are recurring, quantifiable, scalable and well defined.
All strategies are relative value trades (twin or multiple component). Statistical and structural trading discipline – directional views not core to success.
Enabled through sophisticated domestic and international exchanges – listed instruments only.
Sustainable return generation engine. Understand fundamental and statistical relationships between relevant commodities.
Quantify and identify cyclical and structural relative value anomalies within this universe.
Exploit trading strategies that are recurring, quantifiable, scalable and well defined.
All strategies are relative value trades (twin or multiple component). Statistical and structural trading discipline – directional views not core to success.
Enabled through sophisticated domestic and international exchanges – listed instruments only.
Sustainable return generation engine. INVESTMENT PHILOSOPHY INVESTMENT PHILOSOPHY BLUEALPHA HISTORY Process
Bottom up, one investment idea at a time
No reference to index weightings

Portfolio allocation
High conviction stocks: 5-7% of fund individually
Medium conviction stocks: 4% of fund individually
As such, our portfolio is expected to comprise approximately 20 stocks at any given time

Portfolio universe
JSE Top160
Small caps below R2bn market cap on a specific basis.

Portfolio monitoring
Attendance of results presentations
Monitoring of SENS announcements and related news items
Management interaction via conference calls or meeting with management
Detailed company specific fundamental analysis
Portfolio screening tools/ database We employ a fundamentally based stock picking methodology whereby stocks are selected based on:
Low PE multiples
Low price to cash flow multiples
Discounts to NAV
Consistent generation of Free Cash Flow
Conservative use of leverage
Hidden assets potential
Management that have rational capital allocation mindset
Growing Markets /Good and stable margins / Concurrent products
The existence of value catalysts
Contrarian stocks or equities not followed by analysts
Discipline/patience
The Existence of an Adequate Margin Of Safety
Understanding of Risk Investment Process Portfolio Management Portfolio Construction
High dividend yielding stocks which implies that free cash flow generating stocks are focal points in our selection process.
Defensive growth stocks are our preference at present with respect to the current macro scenario
Limited resource exposure in current macro environment.
Stringent focus on high cash generating companies with management teams that have a assertive focus on metrics such as return on capital
Focus on delivering on our investment process regarding stock selection for the long term Current Positioning
Sustained levels of heightened volatility
Printing of money - Europe and USA
Emerging market dependence

Our strategy focuses on companies that:
Demonstrate growth in real terms
Preserve capital for opportunities
Have key advantages over their competitors in terms of product and/or region
Have a solid financial position.
Target return on capital Macro Picture This promotion is provided by BlueAlpha Investment Management (Pty) Ltd “BlueAlpha”. BlueAlpha is a registered investment manager with the Financial Services Board. The content of this promotion is provided for information purposes only. It does not constitute or form part of any offer to issue or sell, or any solicitation of any offer to subscribe or purchase, shares, units or other interests in investments referred to herein. Applications to invest in any product referred to in this presentation must only be made on the basis of the documentation relating to the specific investment and you should refer to your investment adviser. Past performance is not necessarily a guide to future performance or returns. BlueAlpha have taken all reasonable care to ensure that the information contained in this promotion is accurate at the time of publication, no representation or warranty, express or implied, is made as to the accuracy, reliability or completeness of such information.

Collective Investments are generally medium to long term investments. The value of participating interests may go down as well as up and past performance is not necessarily a guide to the future. Collective Investments are traded at ruling prices and can engage in scrip lending. Forward pricing is used. A schedule of fees and charges and maximum commissions is available on request from company/scheme. Commission and incentives may be paid and if so, are included in the overall cost. This fund may be closed to new investors. *Graphs and performance figures are sourced from MoneyMate for lump sum investments including income distribution, at NAV to NAV basis and does not take any initial fees into account. Income is reinvested on the ex-dividend date. Actual investment performance will differ based on the initial fees applicable, the actual investment date and the date of reinvestment of income. Collective Investment prices are calculated on a net asset value basis and auditor’s fees, bank charges and trustee fees are levied against the portfolio. The portfolio manager may borrow up to 10% of portfolio NAV to bridge insufficient liquidity. The performance fee FAQ document is kept as a public document at Met Collective Investments Head office. MET Collective Investments Ltd is a Full member of the Association for Savings & Investments SA (ASISA).

BlueAlpha Investment Management (Pty) Limited FSP number 118 DISCLAIMER CONTACT Web Address: www.bluealphafunds.com Cape Town: BlueAlpha Investment Management Tel: +27 21 409 7100
Fax: +27 21 425 6560
Email: info@bluealphafunds.com Physical Address Postal Address
23rd floor ,Triangle House PostNet Suite 33
22 Riebeeck Street Private Bag X3
Cape Town  8001 Roggebaai
South Africa 8012 London: BlueAlpha Investment Advisory Ltd Tel: +44 19332 864651
Email: info@bluealphafunds.com Physical Address
Coveham House
Downside Bridge Road
Cobham
KT11 3EP BlueAlpha Defined Source: Money Mate; Bloomberg; Met Collective Investments; BlueAlpha Investment Management Boutique Enviroment
Investment performance of utmost importance:
-Survival
-Asset growth
-Performance fees

A strong competitive nature and desire to perform

Low staff turnover at portfolio management level as owner is the manager

No brand for many years that may bring new money irrespective of performance

Do not have marketing and relationship staff

The absence of central decision making by committee or team of people

Influence of house views

Managing less institutional mandates that have lots of reporting obligations and influences by asset consultants – deviations from benchmark and index tracking

However, this is not a guarantee against poor investment decision making
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