HomeMy WebLinkAbout1st Quarter and 4th Quarter ReviewAs of Q4 2023 & Q1 2024 Preliminary
SMID Growth Review
This presentation is for informational purposes and should not be
considered a solicitation to buy, or an offer to sell, a security. Please
refer to Important Disclosures at the end of this presentation.
City of Sebastian Police Officer’s
Retirement System
April 2024
2
SMID Cap Growth Strategy Profile
Investment Objective
Our mission is to deliver significant
capital appreciation over multiple
market cycles for our clients while
providing them with stability
during market downturns
Competitive Edge
Proprietary investment process combines
bottom-up fundamental stock selection with
top-down global secular trends
Portfolio construction consists of a dynamic
combination of Stable and Emerging Growth
companies
Clients benefit from disciplined, consistent and
repeatable process over multiple economic cycles
There is no guarantee that investment objectives will be achieved..
Benchmark Russell 2500 Growth Index
Track Record >22 years
Orientation Intersection of bottom-up analysis
and top-down secular trends
Portfolio Construction Dynamic combination of Stable and
Emerging Growth companies
Annual Turnover 35.7%
Investment Horizon 3+ Years
Typical Active Share > 90%
Target Number
of Holdings 60-90
Strategy AUM US $5.48 billion
(As of December 31, 2023)
The Fiera Apex Team
3
Sunil M. Reddy, CFA
Head of Apex Team,
Lead Portfolio Manager
Technology, Consumer
Discretionary, Financials
In the industry since 1990
David Cook, CFA
Equity Analyst
& Portfolio Manager
Healthcare, Biotech
In the industry since 1987
Bhavik Kothari, CFA
Equity Analyst & Portfolio Manager
Consumer Discretionary
Consumer Technology
In the industry since 2000
Collaborative Culture
Focus on top -down secular
growth trends and bottom-
up business drivers
Deep sector expertise
Alignment of interests
Experienced team averaging
23 years in the industry
As of March 31, 2024
Michael Carrier, CFA
Equity Analyst
& Portfolio Manager
Financials, Industrials
In the industry since 2002
Michael Yoo, CFA
Equity Research Analyst
Energy, Materials
In the industry since 2012
Audrey Le, Ph.D.
Equity Analyst
& Portfolio Manager
Healthcare, Biotech
In the industry since 2013
Rick Vallieres, CFA
Equity Analyst
& Portfolio Manager
Technology
In the industry since 2000
Portfolio Update
Q4 2023
4
Performance
Account Performance
City of Sebastian Inception date: 07/19/2017
City of Sebastian YTD as of December 31, 2023
*Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. Gross performance results are presented before
management fees and expenses , but after all trading commissions.
**Weights have been rescaled to add up to 100 and exclude any bond or other categories to provide attribution on the equity component of the portfolio
only.5
Q4 2023 YTD 1 YR 3 YR 5 YR
INCEPTIION TO DATE
(ANNUALIZED)
City of Sebastian Gross Return 14.38 26.12 26.12 5.53 17.78 13.82
City of Sebastian Net Return 14.09 24.85 24.85 4.46 16.59 12.66
Russell 2500 Growth Index 12.58 18.91 18.91 -2.69 11.41 6.10
4th Quarter Gross Performance Attribution
Composite Performance (gross*) Fiera Capital 14.34% vs. Russell 2500 Growth Index 12.58%
*Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. Gross performance results are presented before management fees and expenses , but after all trading
commissions. Fiera performance (net of fees and expenses) 14.07%. See important disclosures regarding performance data. The holdings identified do not represent all of the securities purchased, sold or
recommended. Information on the calculation methodology and a listing of every holding's contribution to the strategy's performance during the period is available upon request.6
Representative Portfolio (%)Russell 2500 Growth (%)Variation (%)Attribution Analysis (%)
Port. Average
Weight
Port. Total
Return
Port. Contrib.
To Return
Bench.
Average
Weight
Bench. Total
Return
Bench.
Contrib. To
Return
Average
Weight
Difference
Total Return
Difference
Contrib. To
Return
Difference
Allocation
Effect
Selection +
Interaction Total Effect
Communication Services 3.66 12.73 0.49 2.08 9.62 0.20 1.58 3.10 0.28 -0.06 0.08 0.02
Consumer Discretionary 14.89 32.55 4.79 13.31 16.49 2.29 1.58 16.05 2.50 0.00 2.21 2.22
Consumer Staples ------3.87 9.39 0.36 -3.87 -9.39 -0.36 0.13 --0.13
Energy 2.46 -12.29 -0.40 4.56 -8.21 -0.53 -2.10 -4.08 0.13 0.47 -0.13 0.34
Financials 5.57 8.55 0.45 8.58 9.80 0.85 -3.01 -1.25 -0.39 0.05 -0.10 -0.05
Health Care 26.26 12.47 3.07 19.95 14.65 2.83 6.31 -2.18 0.24 -0.02 -0.40 -0.42
Industrials 19.36 8.75 1.72 19.88 13.70 2.79 -0.53 -4.95 -1.06 0.01 -0.99 -0.98
Information Technology 24.42 16.97 4.22 21.49 13.27 2.86 2.93 3.71 1.36 0.00 0.90 0.91
Materials 0.75 18.47 0.13 3.61 13.73 0.51 -2.86 4.74 -0.38 -0.03 0.04 0.00
Real Estate ------1.52 21.37 0.34 -1.52 -21.37 -0.34 -0.13 ---0.13
Utilities ------1.15 9.97 0.12 -1.15 -9.97 -0.12 0.03 --0.03
Cash 2.64 1.34 0.04 ------2.64 1.34 0.04 -0.16 ---0.16
Total 100.00 14.51 14.51 100.00 12.61 12.61 --1.90 1.90 0.29 1.62 1.04
Leading Contributors Weight %Return %Contribution Leading Detractors Weight %Return %Contribution
Karuna Therapeutics, Inc.1.56 87.18 1.15 Lattice Semiconductor Corporation 1.86 -19.71 -0.69
GoDaddy, Inc. Class A 2.56 42.53 1.04 argenx SE ADR 2.60 -22.62 -0.62
TopBuild Corp.2.15 48.75 1.00 Sarepta Therapeutics, Inc.1.18 -20.45 -0.46
Entegris, Inc.3.01 27.74 0.81 Paycom Software, Inc.0.77 -26.78 -0.44
PulteGroup, Inc.2.05 39.67 0.79 ChampionX Corporation 1.36 -17.78 -0.35
Apellis Pharmaceuticals, Inc.1.57 57.36 0.77 AtriCure, Inc.0.93 -18.52 -0.26
Wingstop, Inc.1.85 42.81 0.77 RenaissanceRe Holdings Ltd.1.11 -11.46 -0.18
Royal Caribbean Group 1.87 40.54 0.75 Outset Medical, Inc.0.10 -50.28 -0.12
Gitlab, Inc. Class A 2.01 39.23 0.73 Shockwave Medical, Inc.1.52 -4.29 -0.11
MongoDB, Inc. Class A 3.05 18.21 0.59 Lantheus Holdings Inc 1.06 -10.77 -0.11
Mirati Therapeutics Inc.0.34 29.13 0.56 Guardant Health, Inc.0.80 -8.74 -0.10
Hyatt Hotels Corporation Class A 2.22 23.10 0.51 Jacobs Solutions Inc.1.41 -5.50 -0.10
JFrog Ltd.1.39 36.47 0.50 EQT Corporation 1.08 -4.36 -0.05
A. O. Smith Corporation 1.89 25.24 0.49 Cognex Corporation 1.07 -1.45 -0.05
HubSpot, Inc.2.85 17.88 0.49 Inari Medical, Inc.1.13 -0.73 -0.03
December 2023
YTD Gross Performance Attribution
Composite Performance (gross*) Fiera Capital 26.11% vs. Russell 2500 Growth Index 18.91%
*Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. Gross performance results are presented before management fees and expenses, but after all trading
commissions. Fiera performance (net of fees and expenses) 24.88%. See the “Performance and Fees” section in the final “Important Disclosures” slide for important information regarding net performance data.
The holdings identified do not represent all of the securities purchased, sold or recommended. Information on the calculation methodology and a listing of every holding's contribution to the strategy's
performance during the period is available upon request.7
Leading Contributors Weight %Return %Contribution Leading Detractors Weight %Return %Contribution
MongoDB, Inc. Class A 2.54 107.71 2.10 Etsy, Inc.1.83 -32.33 -0.74
HubSpot, Inc.2.74 100.79 1.99 Citizens Financial Group, Inc.0.66 -25.35 -0.72
Entegris, Inc.2.77 83.53 1.80 Arrowhead Pharmaceuticals, Inc.0.24 -35.13 -0.65
TopBuild Corp.1.83 139.16 1.78 Paycom Software, Inc.1.59 -38.66 -0.61
Royal Caribbean Group 1.61 161.97 1.71 Sarepta Therapeutics, Inc.0.65 -25.02 -0.53
PulteGroup, Inc.1.58 94.81 1.47 Outset Medical, Inc.0.31 -79.05 -0.43
Hyatt Hotels Corporation Class A 2.56 44.76 1.31 Lantheus Holdings Inc 0.50 -26.56 -0.35
EMCOR Group, Inc.2.48 46.03 1.19 Devon Energy Corporation 0.78 -14.16 -0.29
Ares Management Corporation 1.71 79.43 1.10 AtriCure, Inc.1.02 -19.58 -0.25
GoDaddy, Inc. Class A 2.27 41.89 1.02 Invesco Ltd.0.70 -9.41 -0.19
Deckers Outdoor Corporation 1.66 67.46 1.01 Harley-Davidson, Inc.0.36 -17.30 -0.19
Karuna Therapeutics, Inc.1.53 61.07 0.95 RenaissanceRe Holdings Ltd.0.27 -11.46 -0.18
Arista Networks, Inc.2.00 49.65 0.94 Cognex Corporation 1.31 -10.83 -0.18
Wingstop, Inc.1.45 49.14 0.92 Lattice Semiconductor Corporation 2.28 6.33 -0.08
A. O. Smith Corporation 1.81 46.66 0.82 Nexstar Media Group, Inc.0.95 -7.46 -0.07
Representative Portfolio (%)Russell 2500 Growth (%)Variation (%)Attribution Analysis (%)
Port.
Average
Weight
Port. Total
Return
Port.
Contrib. To
Return
Bench.
Average
Weight
Bench. Total
Return
Bench.
Contrib. To
Return
Average
Weight
Difference
Total Return
Difference
Contrib. To
Return
Difference
Allocation
Effect
Selection +
Interaction Total Effect
Communication Services 3.64 22.04 0.82 2.05 7.76 0.17 1.59 14.29 0.65 -0.08 0.42 0.35
Consumer Discretionary 15.46 56.71 8.26 13.19 26.96 3.55 2.27 29.75 4.71 0.12 4.04 4.16
Consumer Staples ------3.94 28.02 1.05 -3.94 -28.02 -1.05 -0.34 ---0.34
Energy 2.76 -7.61 -0.19 4.81 0.73 -0.40 -2.04 -8.35 0.21 0.53 -0.18 0.35
Financials 5.46 9.75 0.25 8.56 13.99 1.12 -3.10 -4.24 -0.87 -0.12 -0.52 -0.63
Health Care 24.96 7.49 1.71 19.85 6.43 1.18 5.12 1.06 0.54 -0.63 0.52 -0.11
Industrials 19.21 24.04 4.27 19.81 24.98 4.77 -0.60 -0.95 -0.50 -0.01 -0.07 -0.08
Information Technology 25.38 46.99 10.64 20.33 34.40 6.60 5.05 12.58 4.04 0.71 2.61 3.31
Materials 0.84 26.32 0.21 4.25 11.08 0.47 -3.41 15.23 -0.26 0.32 0.14 0.45
Real Estate ------2.01 20.05 0.37 -2.01 -20.05 -0.37 0.05 --0.05
Utilities ------1.19 6.60 0.09 -1.19 -6.60 -0.09 0.16 --0.16
Cash 2.29 5.16 0.13 ------2.29 5.16 0.13 -0.53 ---0.53
Total 100.00 26.11 26.11 100.00 18.96 18.96 --7.15 7.15 0.19 6.96 7.15
Annualized Performance
8
4th Quarter 2023
SMID Growth Composite Performance
Source: Fiera Capital
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. Performance results include the reinvestment of dividends and interest. Dividends received from ADRs are
included net of foreign withholding taxes. Trade date valuation is used for all portfolios within the composite. Use of time-weighted rates of return, valued monthly and geometrically linked. Gross performance
results are presented before management fees, but after all trading commissions. Actual investor returns will vary and will be reduced by investment advisory fees and other expenses that may be incurred in the
management of the account. Net of fee performance includes all fees and expenses except custody fees and was calculated using the highest applicable annual management fee of 1%, applied monthly.
Performance <1 year is not annualized
4Q23 YTD 1YR 3YR 5YR 7YR 10YR 15YR SINCE
4/1/00Fiera SMID Growth (Gross)14.34 26.11 26.11 5.40 17.63 14.81 11.38 16.53 10.30
Fiera SMID Growth (Net)14.07 24.88 24.88 4.35 16.47 13.67 10.28 15.39 9.21
Russell 2500 Growth 12.58 18.91 18.91 -2.69 11.41 10.22 8.76 13.63 6.10
-5%
0%
5%
10%
15%
20%
25%
30%
4Q23 YTD 1YR 3YR 5YR 7YR 10YR 15YR SINCE 4/1/00
Fiera SMID Growth (Gross)Fiera SMID Growth (Net)Russell 2500 Growth
9
Source: Fiera Capital
*Returns for 2000 represent the time period April 1, 2000 – December 31, 2000.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. Performance results include the reinvestment of dividends and interest. Dividends received from ADRs are
included net of foreign withholding taxes. Trade date valuation is used for all portfolios within the composite. Use of time-weighted rates of return, valued monthly and geometrically linked. Gross performance
results are presented before management fees, but after all trading commissions. Actual investor returns will vary and will be reduced by investment advisory fees and other expenses that may be incurred in the
management of the account. Net of fee performance includes all fees and expenses except custody fees and was calculated using the highest applicable annual management fee of 1%, applied monthly.
4th Quarter 2023
SMID Growth Composite Performance
Calendar Performance (%)
Gross Net
Russell 2500
Growth
Index
2000*-10.86 -11.54 -27.12
2001 -9.48 -10.39 -10.83
2002 -30.45 -31.17 -29.08
2003 54.07 52.59 46.31
2004 20.34 19.16 14.56
2005 11.94 10.84 8.14
2006 17.70 16.54 12.21
2007 34.88 33.57 9.65
2008 -44.03 -44.62 -41.53
2009 50.08 48.64 41.61
2010 33.41 32.11 28.81
2011 -1.48 -2.46 -1.57
2012 22.45 21.25 16.17
2013 39.88 38.53 40.64
2014 9.19 8.11 7.05
2015 -1.26 -2.25 -0.19
2016 3.65 2.62 9.70
2017 27.83 26.58 24.44
2018 -8.68 -9.60 -7.49
2019 32.55 31.26 32.62
2020 45.01 43.60 40.46
2021 18.03 16.87 5.03
2022 -21.36 -22.16 -26.22
2023 26.11 24.88 18.91
-60.00%
-40.00%
-20.00%
0.00%
20.00%
40.00%
60.00%
SMID Cap Growth (Gross)SMID Cap Growth (Net)Russell 2500 Growth Index
SMID Growth Performance & Statistics
Capture Ratios (3 year)*
*Based on gross performance.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. See Performance Disclosures for additional information.
Characteristics are subject to change. Representative portfolios are selected for being constructed most in line with the composite’s guidelines.
10
Supplemental – Rep Portfolio Characteristics
FIERA
CAPITAL
RUSSELL 2500
GROWTH INDEX
GROWTH STATISTICS
Long Term future EPS growth (%)11.0 13.0
5 year historic EPS growth (%)20.5 20.4
PEG (PE/Growth)1.8 1.3
ROE (%)10.0 13.7
VALUATION MEASURES
P/E 24.3 23.9
Price/Book 4.7 4.9
Price/Sales 2.9 2.0
Price/Cash Flow 19.0 14.5
Yield (%)0.5 0.6
MARKET CAP
Weighted average market cap $12.8B $6.5B
Performance Statistics 3 Year 5 Year
Alpha 8.04 6.23
Information Ratio 1.42 1.13
R-squared 0.93 0.95
Correlation Coefficient 0.96 0.97
Sharpe Ratio 0.15 0.69
146%
-83%
100%
-100%-150%
-100%
-50%
0%
50%
100%
150%
200%
Upside Downside
Fiera SMID Growth Russell 2500 Growth Index
SMID Growth Representative Portfolio Holdings
Stock holdings and sector weightings are subject to change. References to specific stocks and sectors are for informational purposes and do not represent recommendations. Representative portfolios are selected
for being constructed most in line with the composite’s guidelines.
11
% PORT
RUSSELL 2500
GROWTH
INDEX % PORT
RUSSELL 2500
GROWTH
INDEX % PORT
RUSSELL 2500
GROWTH
INDEX
Communication Services Health Care Information Technology
NEW YORK TIMES CO-A 1.9 MOLINA HEALTHCARE INC 2.4 ENTEGRIS INC 3.0
NEXSTAR MEDIA GROUP INC 0.8 KARUNA THERAPEUTICS INC 2.3 HUBSPOT INC 2.8
ROKU INC 0.7 AMICUS THERAPEUTICS INC 2.2 MONGODB INC 2.7
3.4 2.1 NEUROCRINE BIOSCIENCES INC 2.0 GODADDY INC - CLASS A 2.6
Consumer Discretionary BIOMARIN PHARMACEUTICAL INC 1.9 TYLER TECHNOLOGIES INC 2.5
TOPBUILD CORP 2.5 ARGENX SE - ADR 1.9 GITLAB INC-CL A 2.4
HYATT HOTELS CORP - CL A 2.3 IMMUNOCORE HOLDINGS PLC-ADR 1.8 LATTICE SEMICONDUCTOR CORP 2.1
ROYAL CARIBBEAN GROUP 2.1 APELLIS PHARMACEUTICALS INC 1.7 JFROG LTD 2.0
PULTEGROUP INC 2.0 SHOCKWAVE MEDICAL INC 1.4 DOLBY LABORATORIES INC-CL A 1.7
WINGSTOP INC 2.0 IRHYTHM TECHNOLOGIES INC 1.2 POWER INTEGRATIONS INC 1.5
LITHIA MOTORS INC 1.9 INARI MEDICAL INC 1.1 COGNEX CORP 1.5
ETSY INC 1.7 SAREPTA THERAPEUTICS INC 1.1 BRAZE INC-A 1.4
TAPESTRY INC 1.6 ATRICURE INC 1.0 ACI WORLDWIDE INC 1.1
DECKERS OUTDOOR CORP 1.2 LANTHEUS HOLDINGS INC 0.9 27.3 21.4
17.3 13.4 SPRINGWORKS THERAPEUTICS INC 0.9 Materials
Consumer Staples XENON PHARMACEUTICALS INC 0.8 AVIENT CORP 0.8
0.0 3.8 GUARDANT HEALTH INC 0.7 0.8 3.6
Energy OPTION CARE HEALTH INC 0.7 Real Estate
CHAMPIONX CORP 1.2 VERACYTE INC 0.5 0.0 1.5
EQT CORP 0.9 OUTSET MEDICAL INC 0.1 Utilities
2.1 4.0 26.6 21.0 0.0 1.1
Financials Industrials Cash
ARES MANAGEMENT CORP - A 1.9 BWX TECHNOLOGIES INC 2.1 2.5 0.0
RAYMOND JAMES FINANCIAL INC 1.5 SMITH (A.O.) CORP 1.9 Total
RENAISSANCERE HOLDINGS LTD 1.1 EMCOR GROUP INC 1.8 100 100
STIFEL FINANCIAL CORP 1.0 NORDSON CORP 1.8
5.5 8.3 HUBBELL INC 1.4
GRACO INC 1.3
LINCOLN ELECTRIC HOLDINGS 1.3
REGAL REXNORD CORP 1.3
NVENT ELECTRIC PLC 1.2
CURTISS-WRIGHT CORP 1.1
KNIGHT-SWIFT TRANSPORTATION 0.8
RB GLOBAL INC 0.6
16.6 19.8
*Company examples are for illustrative purposes only. Stock holdings are subject to change. References to specific stocks and sectors are for informational purposes and do not represent recommendations.
Representative portfolios are selected for being constructed most in line with the composite’s guidelines. Investors/potential investors should not assume that investment decisions identified and discussed were or will be
profitable.
SMID Cap Growth Representative Portfolio Positioning
Thematic Positioning
Identifying Today’s Changes, Seeking Tomorrow’s Growth
Stable Growth*Emerging Growth*
TECHNOLOGY AND CONSUMER
Ubiquitous Computing: Cloud, Mobile and Edge GoDaddy, Lattice Semiconductor GitLab, Jfrog
Artificial Intelligence and Evolution
of Computing Tyler Technologies Braze
Cyber Security GitLab, Jfrog
Digital Transformation and Digital
Infrastructure
Cognex, Dolby Laboratories, Entegris, Lattice Semiconductor, New York
Times, Power Integrations, Tyler Technologies Braze, Hubspot, Jfrog, MongoDB
Platform-based Business Models Etsy Hubspot
eCommerce Companies, Media and Gaming Etsy, GoDaddy, Nexstar, RB Global, Roku, Tapestry Wingstop
HEALTHCARE AND BIOTECH
Healthcare Cost Containment Molina Healthcare, Option Health Care Guardant Health, Outset Medical, Veracyte
Therapeutic Breakthroughs BioMarin Pharmaceuticals, Lantheus, Neurocrine Biosciences
Amicus Therapeutics, Apellis Pharmaceuticals, Argenx, Immunocore,
Karuna Therapeutics, Sarepta Therapeutics, Springworks
Therapeutics, Xenon Pharmaceuticals
Advances in Life Science and Medical
Technology AtriCure, Lantheus Guardant Health, Inari Medical, iRhythm Technologies, Outset
Medical, Shockwave Medical, Veracyte
OTHER KEY THEMES
Demographic and Lifestyle Changes Ares Management, Deckers Outdoor, Etsy, Insperity, Raymond James
Financial, RB Global, Royal Caribbean Group, Stifel Financial
Fintech (incl. Payments and Processing)ACI Worldwide
Emerging Market Consumer
The New Industrial Age
(including Automation, Reshoring,
Environmental Initiatives, etc.)
BWX Technologies, Cognex, Curtiss-Wright, Emcor Group, Graco,
Hubbell, Hyatt, Knight Swift, Lincoln Electric, Nordson, nVent, Regal
Rexnord, AO Smith
Catalyst Driven Avient, EQT, Lithia Motors, Pulte Homes, Raymond James Financial,
RenaissanceRe, TopBuild ChampionX
12
4th Quarter Portfolio Transactions
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.13
PURCHASES
SYMBOL COMPANY
POSITION SIZE
AFTER
TRANSACTION
RATIONALE
RNR Renaissance Re 1.50%
Renaissance Re (RNR) is a reinsurer of Property (45%) and Casualty and Specialty (55%). Given elevated weather and
catastrophic risks, reinsurance remains in high demand, which benefits RNR. Due to the rising demand and similar
capital levels in the industry, pricing continues to be favorable, which we expect to continue. RNR has a strong balance
sheet and uses capital for organic growth, accretive acquisitions, buybacks, and a modest dividend. With attractive
growth and returns expected to continue, the valuation remains attractive at below or average levels
BRZE Braze 0.75%Braze (BRZE) is an emerging leader in real-time customer engagement with strong barriers to entry and a growing
ecosystem. Over 20% growth with high leverage supported by sub-1% penetration of $35B TAM.
KNX Knight Swift 0.75%
Knight Swift (KNX) is one of the best trucking operators in the industry with a long track record of running an efficient
operation, despite near term cyclical pressures. KNX announced the acquisition of US Express, another trucking entity
that was poorly run, with meaningful upside to margins as synergies are realized. KNX has a fairly strong balance sheet
with cash flow for growth, buybacks, and dividend. Estimates are pricing in a good deal of the cyclical downturn, with
meaningful upside as the cycle turns.
ROKU Roku 0.75%
Roku has a leading device share and a large installed base of connected TVs used for consumption of digital content.
Roku profiles as having strong ongoing potential to monetize ad supported content and channels thus capturing a
meaningful part of a large total addressable market. Focus on achieving positive EBITDA in 2024 and positive FCF on an
ongoing basis. Company is already delivering on that promise in the second half of 2023. Roku has shown a rapid ramp
up in EBITDA and FCF expected in the next 3 years. Considering this, the valuation of 30x 2025 EBITDA is not too high
and doesn’t fully account for the LT potential.
TPR Tapestry 1.50%
Tapestry shows ongoing fundamental strength which is at the core of TPR with AUR expansion and digital penetration
in the Coach brand. TPR has shown expense discipline and a cost rationalization plan on which management is already
executing. Accretive acquisition in CPRI with expected benefits by bringing best practices to CPRI. TPR has been de-
levering the balance sheet over time leading to strong overall growth in FCF accruing to equity holders. Highly
attractive valuation at 8x PE and 8.5x P/FCF that doesn’t fully account for the brand strength and near/ midterm
growth potential.
4th Quarter Portfolio Transactions
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.14
SALES
SYMBOL COMPANY
POSITION SIZE
AFTER
TRANSACTION
RATIONALE
MRTX Mirati
Therapeutics 0.00%MRTX is being acquired by Bristol-Myers for a 52% premium to previous 30-day moving average.
PAYC Paycom 0.00%Sell discipline
J Jacobs
Engineering 0.00%Better opportunities elsewhere
NSP Insperity 0.00%Better opportunities elsewhere
Portfolio Update
PRELIMINARY - Q1 2024
15
*Preliminary Performance
Account Performance
City of Sebastian Inception date: 07/19/2017
City of Sebastian as of March 31, 2024
*The financial information and performance data contained on this slide represents preliminary, unaudited financial information and may be subject to
future adjustment and revision. Past performance is not a guarantee of future performance.16
CURRENT QUARTER YTD 1 YR 3 YR 5 YR
INCEPTIION TO DATE
(ANNUALIZED)
City of Sebastian Gross Return 8.31 8.31 29.96 6.00 15.56 14.63
City of Sebastian Net Return 8.03 8.03 28.65 4.93 14.39 13.47
Russell 2500 Growth Index 8.50 8.50 21.11 -0.80 9.40 9.44
Review and Outlook
17
Review
The first quarter was punctuated by the effects of Fed tightening in 2022 and the higher interest rates taking a toll on the banking sector – particularly the regional banks. Unlike
past banking crises (which were caused due to credit issues), this crisis was rooted in volatility of deposits as the short-term rate environment shifted. This environment resulted
in unrealized losses in the investment portfolios of regional banks. In the extreme case of a couple of regional banks (Silicon Valley Bank & Signature Bank) the Asset-Liability Risk
management was lacking and resulted in FDIC takeover of the banks. The speed at which events unfolded resulting in these bank failures was alarming and unexpected.
The second quarter was highlighted by the dramatic difference in styles – Growth outperformed Value by a wide margin. Russell 1000 Growth (+14.7%) outperformed Russell
1000 Value (+5.4%) by approximately 930 bps. The recognition that the Fed is in the eighth or ninth inning of its tightening cycle may have driven the equity strength. Many
indicators point to inflation rolling over and a hawkish Fed is giving markets confidence that the Fed could engineer a soft landing. In fact, the yield curve (2s & 10s) inversion of
almost 100 bps is signaling a potential recession in the later part of the year or in the beginning of 2024. The concerns around the regional banking sector that stoked fears in the
first quarter of the year seem to have abated.
Equity markets took a breather in the third quarter after strong runs through the first half of 2023. Finally, the impact of higher rates is being felt on risk assets. The narrative
around an anticipated slowdown in the latter part of the year has altered course. The market expectation of a big slowdown (based on the inverted yield curve) in the final
quarter of 2023 has shifted to a higher probability of soft landing. The Equity market weakness for the quarter was mild – S&P 500 returned -3.3%, Tech-heavy NASDAQ returned
- 3.9% while the smaller capitalization indices such as the Russell 2000 was off -5.1%. The dramatic style difference from the second quarter, where anything related to Artificial
Intelligence were bolstered by the frenzy around the technology, was not as evident as investors weigh the impact of higher rates on longer duration equities. During the
quarter, the narrative of Fed ending its tightening cycle shifted from a “looking forward” to easier conditions to a slightly hawkish message from the Fed during the last FOMC
meeting of a “higher for longer” rate environment.
Equity returns in the fourth quarter were very strong with most indices returning double digits for the quarter. The broader S&P 500 returned 11.7% trailing the smaller indices
like the Russell Midcap Growth, which advanced +14.5% and the Russell 2500 Growth that grew 12.6% over the quarter. The quarter was punctuated by the broader
participation of stocks in contrast to the outsized influence of the Magnificent Seven large cap stocks until now. The signals from the Federal Reserve that tightening of monetary
policy has ended and a view that inflation is headed down contributed to the expansion of multiples in the market.
A significant portion of equity returns were a function of market dynamics in 2023 that were driven by (1) the impact of inflationary pressures and the associated rise in real and
nominal rates and (2) the euphoria about a paradigm shifting revolution due to Artificial Intelligence. The bulk of the returns in larger cap indices such as the S&P 500, Nasdaq
and Russell 1000 Growth were attributable to narrow market in the form of Microsoft, Apple, Nvidia, Amazon, Alphabet, Netflix, and Tesla. The ripple effect from this was also
felt in smaller companies which had varying flavors of AI and technology related impact and is reflected in the year’s contribution from companies like MongoDB (+111%),
HubSpot (+102%) and Entegris (+86%).
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. Performance results include the reinvestment of dividends and interest. Dividends received from ADRs are
included net of foreign withholding taxes. Trade date valuation is used for all portfolios within the composite. Use of time-weighted rates of return, valued monthly and geometrically linked. Gross performance
results are presented before management fees, but after all trading commissions. Actual investor returns will vary and will be reduced by investment advisory fees and other expenses that may be incurred in the
management of the account. See the “Performance and Fees” section in the final “Important Disclosures” slide for important information regarding net performance data.
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Review (Contd.) & Outlook
The SMID Cap Growth strategy outperformed the Russell 2500 Growth Index, on a net of fees basis, for the fourth quarter of the year. The portfolio’s stock selection accounted
for more than 85% of the outperformance during the quarter. Consumer Discretionary and Information Technology were the two sectors which had the greatest contribution
towards the active return. Notably, the entirety of the alpha generated for both sectors was a function of security selection. Conversely, Health Care and Industrials weighed on
the return.
The SMID Cap Growth strategy offered investors a better than benchmark return on a net of fees basis over the course of the year. The portfolio’s stock selection was the leading
contributor towards the overall return with the strongest stock selection coming from the Consumer Discretionary and Information Technology sectors. Stock picks in Financials
and Energy faced challenges. Sector allocation represented a much smaller effect to the portfolio’s alpha that was generated in 2024. The overweight in Information Technology
and underweight in Energy were most the beneficial while the underweight to Consumer Staples, where the portfolio had no exposure, was the only consequential allocation
that was detrimental to the portfolio’s performance.
OUTLOOK
The pervasive Fear Of Missing Out (FOMO) has been replaced by the shifting narrative related to interest rates. The market is slowly realizing that the favorable dynamics of the
last decade in terms of low real rates is behind us. Odds are now in favor higher real rates in the next few years. The structural dynamics of the last two decades seem to justify
higher rates – due to labor market being structurally tighter, potential for de-globalization and higher budget deficits.
Equities have been resilient even though real rates have risen +200 basis points since the beginning of the year. In the medium to long-term, stocks have favorable inflation
passthrough characteristics. The forward multiple of the market and level of profit margins are closer to the pre-pandemic 2019 levels. The free cash flow yield of the large-cap
market is below that offered by ten-year treasury note for the first time since 2007. The resilience of the economy despite seven quarters of monetary tightening is remarkable.
If the rise in real rates proves to be transitory, we could be looking at above average equity returns from current levels.
This environment presents opportunities to invest in companies with secular growth characteristics at attractive levels. From a bottom-up perspective, we are finding plenty of
opportunities to invest in companies with strong good cash generation characteristics and benefitted by secular growth at reasonable multiples.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. Performance results include the reinvestment of dividends and interest. Dividends received from ADRs are
included net of foreign withholding taxes. Trade date valuation is used for all portfolios within the composite. Use of time-weighted rates of return, valued monthly and geometrically linked. Gross performance
results are presented before management fees, but after all trading commissions. Actual investor returns will vary and will be reduced by investment advisory fees and other expenses that may be incurred in the
management of the account. See the “Performance and Fees” section in the final “Important Disclosures” slide for important information regarding net performance data.19
Eleni Southworth
Assistant Vice President, Relationship Manager
Eleni is a member of the Fiera Capital Inc. Institutional Markets team, where she supports institutional client relationships and
business development opportunities.
Prior to joining Fiera Capital in 2022, Eleni spent ten years at State Street. There, she focused on consultant relations within
State Street Global Advisor’s institutional client team and supported strategic partnerships for larger consultants across the US.
Eleni received her B.A. in Finance and Operations Management from the Isenberg School of Management at the University of
Massachusetts Amherst.
Stephen Malone, MBA
Institutional Portfolio Manager, Product Specialist
Stephen is a member of the Fiera Capital Inc. - Institutional Markets team, where he supports the Fiera Apex team and is
charged with communicating, positioning, and educating around the team’s equity strategies and market conditions.
Stephen has more than six years industry experience. In prior roles within the firm Stephen had experience as a RFP Analyst as
well as Business Development Associate.
Stephen earned his Bachelor of Arts in Journalism as well as Masters in Business Administration degrees from the University of
Dayton.
Biographies
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Disclosures
21
Performance Disclosure
As of December 31, 2022
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Definition of Firm: Fiera Capital Inc. (FCI), is an investment adviser registered with the U.S. Securities Exchange Commission (the “SEC”). Registration with the SEC does not imply a certain level of skill or training. Fiera Capital Inc. is indirectly wholly-owned by Fiera Capital Corporation (FCC), which is listed on the Toronto Stock Exchange. FCC does not provide investment advisory services in the United States or to U.S persons. Investment advisory services in the U.S. or to U.S. persons are provided though FCC's US affiliates including FCI. The foundation for the U.S. division was created in 2015, with the combination of Samson Capital Advisors LLC, Wilkinson O’Grady & Co., Inc. and Fiera Capital Corporation’s U.S. institutional business development team. Wilkinson was purchased by FCC in 2013 and its name was changed to Fiera Capital Inc. in 2015. Samson was purchased by FCC and became part of FCI in 2015. In 2016, FCI acquired Apex Capital Management and added the team and strategies of Larch Lane Advisors; both of which began operating under FCI as of 2017. On December 1st 2018, Wilkinson Global Asset Management separated as an independent and distinct subsidiary of FCI and was sold to Wilkinson Global Capital Partners LLC on December 31, 2020. Compliance Statement: The Fiera Capital Inc. claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS® standards. Fiera Capital Inc. has been independently verified for the periods January 1, 1997 through December 31, 2022. 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. The Small/Mid Cap Growth composite has been examined for the periods April 1, 2000 through December 31, 2022. The verification and performance examination reports are available upon request. 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.Composite Description: The Small/Mid Cap Growth composite was incepted and created on April 1, 2000, and includes all portfolios invested in U.S. equities (including ADRs) with strong earnings and growth characteristics and mid to small capitalizations. The product is benchmarked against the Russell 2500 Growth Index. The Russell 2500 Growth Index offers investors access to the small to mid-cap growth segment of the U.S. equity universe. The Russell 2500 Growth Index is constructed to provide a comprehensive and unbiased barometer of the small to mid-cap growth market. Based on ongoing empirical research of investment manager behavior, the methodology used to determine growth probability approximates the aggregate small to mid-cap growth manager’s opportunity set. The Russell 2500 Growth Index is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small-cap opportunity set and that the represented companies continue to reflect growth characteristics. Typically, the Small/Mid Cap Growth portfolio is similar in composition to the benchmark except to the extent that the firm utilizes ADRs that are not included in the domestic index. Portfolios are generally comprised of individual stocks and cash equivalents.FTSE Russell(“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of FTSE Russell. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and / or Russell ratings or underlying data and no party may rely on any Russell Indexes and / or Russell ratings and / or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication.Significant Flows: Composite policy requires the temporary removal of any portfolio incurring a client initiated significant cash inflow or outflow of more than 20% of portfolio assets. The temporary removal of such an account occurs at the beginning of the month in which the significant cash flow occurs and the account re-enters the composite the month after the cash flow. The significant cash flow policy applies to periods shown.Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. Performance results include the reinvestment of dividends and interest.Dividends received from ADRs are included net of foreign withholding taxes. The Firm’s complete lists of composite descriptions, pooled fund descriptions for limited distribution pooled funds and broad distribution pooled funds are available upon request. Additional information regarding policies and procedures for calculating performance, valuing portfolios, and preparing GIPS® report is available upon request. Actual returns will be reduced by investment advisory fees and other expenses that may be incurred in the management of the account. Gross performance results are presented before management fees, but after all trading commissions. Net of fee performance is calculated by deducting the model management fee of 0.083%, 1/12th of the highest management fee of 1.00%, from the monthly gross composite return. The minimum asset size, below which portfolios are excluded from the composite is $100,000. Dispersion is calculated using the asset-weighted standard deviation.Valuations and returns are computed and stated in U.S. Dollars.Fiera Capital Inc. has linked the composite’s historical performance to the composite’s ongoing performance based on the performance record portability guidance of the GIPS® standardsPrior to 2017, percentage of firm assets was calculated using the total of Apex Capital Management’s assets.
Year
ASSETS (USD-MILL)ANNUAL PERFORMANCE ANN. 3-YR STD. DEV.
FIRM COMPOSITE NO. OF
PORTFOLIOS
COMPOSITE RUSSELL 2500
GROWTH INDEX
COMPOSITE
GROSS
RUSSELL 2500
GROWTH
INDEXGROSSNETDISPERSION
(GROSS)
2012 1,999 580.7 93 22.45%21.25%0.16%16.13%21.32%19.82%
2013 3,939 947.2 93 39.88%38.53%0.31%40.65%18.07%16.48%
2014 5,604 1243.9 92 9.19%8.11%0.08%7.05%13.08%12.54%
2015 7,126 1038.5 75 -1.26%-2.25%0.16%-0.19%12.81%13.29%
2016 13,290 993.8 60 3.65%2.62%0.17%9.73%14.78%14.67%
2017 20,649 1109.7 68 27.83%26.58%0.09%24.46%13.51%13.04%
2018 19,336 971.1 82 -8.68%-9.60%0.16%-7.47%15.39%15.33%
2019 24,294 1005.8 69 32.55%31.26%0.16%32.65%15.86%15.85%
2020 28,606 1509 68 45.10%43.69%0.54%40.46%23.51%23.93%
2021 27,284 1504 52 18.05%16.89%0.23%5.03%21.15%21.97%
2022 21,649 1134.4 50 -21.36%-22.16%0.16%-26.22%24.33%25.18%
** Calculation not meaningful. There were fewer than five accounts in the composite for the entire year.
n/a= less than three full years since inception of composite
Important Disclosures
PERFORMANCE AND FEES
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.
Charts and graphs herein are provided as illustrations only and are not meant to be guarantees of any return.
FIERA GROUP OF COMPANIES
Each member of the Fiera group of companies only provides investment advisory services or offers investment funds in the jurisdictions where such member and/or the relevant product is registered or authorized to
provide such services pursuant to an exemption from such registration. These include the entities listed below. Where an entity operates under an exemption from registration (the “exempt entities”), only its
jurisdiction of incorporation is listed. Details on the particular registration and offering exemptions for the exempt entities’ activities are available upon request.
Fiera Capital Inc. – United States, registered as (i) an investment adviser with the U.S. Securities and exchange commission (the “SEC”) and (ii) a commodity pool operator with the U.S. Commodity futures trading
commission. Registration with the SEC does not imply a certain level of skill or training.
FORWARD-LOOKING STATEMENTS
Certain information contained in this document may constitute “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” anticipate,”
“project,” “estimate,” “intend” “continue,” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or the actual
performance of the strategy may differ materially from those reflected or contemplated in such forward- looking statements.
ALLOCATIONS AND HOLDINGS
Portfolio details, holdings and allocations, and characteristics are as of the date noted and subject to change.
REPRESENTATIVE PORTFOLIO
Representative portfolios are selected for being constructed most in line with the composite’s guidelines.
GENERAL DISCLOSURES
This presentation is privileged and confidential and it is intended solely for the use of the person to whom it has been delivered (or persons within the recipient’s organization) for the purpose of evaluating Fiera Capital
Inc.’s business and is not to be reproduced or distributed to any other persons (other than persons in the recipient’s organization) without the prior written consent of Fiera Capital Inc. This presentation is not a
complete summary of the terms of the investment management services offered by Fiera Capital Inc. and is qualified in its entirety by, and must be read in conjunction with, more detailed information regarding Fiera
Capital Inc., including Part 2 of its Form ADV.
Any opinions expressed in this presentation may be subject to change without notice. Although statements of fact and data contained in this presentation have been obtained from, and are based upon, sources that
Fiera Capital Inc. believes to be reliable, Fiera Capital Inc. does not guarantee their accuracy, and any such information may be incomplete or condensed. No representation is made that the information contained
herein is accurate or complete, and it may not be relied upon as such.
There can be no assurance nor should it be assumed that future investment performance will conform to any performance examples set forth in this presentation. The investment results and portfolio compositions set
forth in this presentation are provided for illustrative purposes only and may not be indicative of the future investment results and portfolio compositions of the investment programs conducted by FCI. The
composition, size of, and risks associated with future investment portfolios may differ substantially from the examples set forth in this presentation. There can be no assurance that future investments will perform in
accordance with the investments described in this presentation or that the investments will be able to avoid losses. An investment in any investment vehicle or security described in this presentation can lose value.
This presentation is for informational purposes and should not be taken as a recommendation to invest in any specific funds. FCI closely monitors its positions and may make changes to the portfolio’s investment
strategy when warranted by changing market conditions. If a position’s underlying fundamentals or valuation measures change, FCI will reevaluate its position and may sell part or all of its position. There is no
guarantee that, should market conditions repeat, these investments will perform in the same way in the future. There is no guarantee that the opinions expressed herein will be valid beyond the date of this
presentation. There can be no assurance that the portfolio will continue to hold the same position in securities described herein, and the portfolio may change any portfolio position at any time.
Certain economic and market information contained herein has been obtained from published sources prepared by other parties, which in certain cases has not been updated through the date of the distribution of this
letter. While such sources are believed to be reliable for the purposes used herein, FCI does not assume any responsibility for the accuracy or completeness of such information. Further, no third party has assumed
responsibility for independently verifying the information contained herein and accordingly no such persons make any representations with respect to the accuracy, completeness or reasonableness of the information
provided herein. Unless otherwise indicated, market analysis and conclusions are based upon opinions or assumptions that FCI considers to be reasonable.
It is not possible to invest directly in an index. Investors pursuing a strategy similar to an index may experience higher or lower returns and will bear the cost of fees and expenses that will reduce returns.
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