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CBL Asset Management
Equity Funds
Q2 2017
CBL Asset Management
2
*Data as of 31/03/2017
Established track record since 2002
MiFID and UCITS compliant
Three integrated business lines
Fund management
Portfolio management
Pension Fund Management
Assets under management EUR 678M*
Experienced investment team of 14 specialists
Dedicated equity and bond picking strategy in Eastern Europe and the CIS
Award winning internationally recognized mutual funds
First in Latvia to receive a license to manage Alternative Investment funds
CBL Asset Management Shareholder Structure
3
* In 2014, the government of Latvia decided to sell its
shares in Citadele Bank to a group of international
investors, represented by the founder of the US investment
holding company Ripplewood Holding LLC, Tim Collins.
The transaction will be completed upon regulator’s
approval, which is expected during Q1 2015.
The 12 co-investors include:
Paul Volcker: served as Undersecretary of the Treasury for
Monetary Affairs from 1968-1972, and two terms as
Chairman of the Board of Governors of the Federal
Reserve System from 1979 to 1987. Mr. Volcker will act as
Senior Advisor for Citadele.
James D. Wolfensohn: the Chairman of Wolfensohn Fund
Management. From 1995 to 2005, Mr. Wolfensohn was
President of the World Bank. Mr. Wolfensohn will act as
Senior Advisor for Citadele.
James E. Staley: the Managing Partner of BlueMountain
Capital. Prior to that, Mr. Staley spent over 30 years at J.P.
Morgan where he was the CEO of J.P.M’s Investment Bank
and CEO of J.P.M Asset Management.
James Balsillie: the Chairman of the Board of Sustainable
Development Technology Canada. Co-founder of Research
In Motion (BlackBerry) Mr. Balsillie will join the Supervisory
Board of Citadele.
Graham T. Allison: the Director of the Belfer Center for
Science and International Affairs and Douglas Dillon
Professor of Government at Harvard's John F. Kennedy
School of Government. Dr. Allison has served as Special
Advisor to the Secretary of Defense under President
Reagan and as Assistant Secretary of Defense for Policy
and Plans under President Clinton. Mr. Allison will act as
Senior Advisor for Citadele.
** On December 22,2014 Citadele Asset Management
changed its name in CBL Asset Management
75% 25%
100%
Ripplewood
Holding LLC and
Private
Investors*
EBRD
Citadele Bank
CBL Asset
Management**
Equity Fund Management We focus on what we know best
4
Combining Western business practices with local insight
Specialists in the evolving Eastern European and CIS equities
Independent, benchmark unaware investment process
Disciplined team-based approach
Bottom-up stock picking based on in-depth in-house research
Two UCITS IV compliant equity funds:
CBL Russian Equity Fund
CBL Baltic Sea Equity Fund
International recognition
Experienced management team with established track record
5
Equity Fund Management Investment Philosophy
Eastern European markets are rapidly evolving, but market inefficiencies are still present.
Therefore, we can add value based on our local expertise and internal research. The most
appropriate investment process to achieve superior returns over medium term is built on
bottom-up, benchmark-unaware, and disciplined team-based decision making.
Equity Fund Management Investment Process
Fundamental Research and
Valuation
In-depth fundamental analysis
• financial strength
• growth outlook
• corporate governance
• management
• business risk profile
Valuation analysis
• relative valuation including
industry-specific metrics
• absolute valuation tools
• market environment analysis
(fund flows, market sentiment,
etc.)
Portfolio Construction and
Monitoring
Portfolio Construction Guidelines
• not structured around benchmark;
positions sized on conviction
• low to medium portfolio turnover
• continuous portfolio monitoring
Sell discipline
• achieved investment objective
• undesirable changes in
fundamentals and corporate
governance practices
• changing sector dynamics
• relatively more attractive security
identified
Risk Controls
• implemented on all levels of Fund
management process
• regular performance and risk
attribution analysis
Market Screening and
Monitoring
Equity Universe screening
• Locally and foreign listed
companies with core business in
the respective region
• Liquidity screening, focus on
stocks with sufficient liquidity
Qualitative Market Screening
• news, financial reports
• industry contacts
• senior management meetings
• 3rd party research
• new equity issues
Short-list of Investment Ideas
6
7
Equity Fund Management Risk Management: an integral part of fund management process
• Liquidity risk, market risk
• Industry and company specific risks, e.g. corporate governance Portfolio management
• Daily compliance control
• Independent compliance reporting Fund administration
• Deals with credit and settlement risks
• Double layer: Citadele Bank and CBL Asset Management Custodian
• Operational risk controls
• Operational risk data processing and reporting Operations department
• Monthly aggregated market, credit and liquidity reporting
• Including individual VaR contributors and VaR cross tables Risk department
8
Equity Fund Management Our Team
Igor Lahtadir, CFA
Portfolio Manager
10 years in industry, 6 years with the company
BSc in Economics and Business from the Stockholm School of Economics in Riga
Earned his Chartered Financial Analyst designation in 2011
Elchin Jafarov Senior Portfolio Manager
12 years in industry, 8 years with the company
MA in Eonomics and Business from the Stockholm University
Assistant professor and lecturer in Latvian top business schools
Lecturer at Swiss Business School and Stockholm School of Economics in Riga
9
CBL Russian Equity Fund Pure Russian equity exposure
Source: CBL Asset Management
Targets long term growth from capital
appreciation and dividend income
Bottom-up stock picking based on in-house
research
Regular meetings with company representatives
Diversified portfolio of ca. 30 holdings
Actively managed not constrained by benchmark
No restrictions on industry and tracking error
More than 10 years of proven track record
CBL Russian Equity Fund Fund Performance and Structure (April 30, 2017) ISIN LV0000400190
Source: CBL Asset Management
10
Sberbank Financials 8.9%
X5 Retail Group Retail 8.6%
Lukoil Energy 7.8%
Novatek Energy 6.9%
Yandex IT 5.1%
Rosneft Energy 5.0%
Alrosa Materials 4.7%
Gazprom Energy 4.4%
Moscow Exchange Financials 4.4%
Megafon Telecoms 4.0% 2.0%
1.0%
1.9%
8.4%
13.2%
13.3%
14.2%
18.8%
27.2%
Cash
Industrials
Utilities
Telecommunication Services
Consumer Staples
Information Technology
Financials
Materials
Energy
-100%
-50%
0%
50%
100%
150%
200%
250%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Cumulative gross return since inception (%)
EAA Fund Russia Equity
CBL Russian Equity
MSCI Russia
CBL Baltic Sea Equity Fund Fund Overview
11
Targets long-term capital growth from equity
investments in the Baltic Sea region
Diversified portfolio of 40-50 holdings
Active management, no benchmark
Reflects our in-house top-down views on markets
and sectors
Seeks qualitative companies with long-term growth
potential and attractive valuation within our preferred
segments
Focused on investments in German and
Scandinavian blue-chips
Pure bottom-up stock picking in the Baltics
Regional currency exposure, no FX hedging
12
CBL Baltic Sea Equity Fund Investment Process
Investment Committee Macro research team
Top-down allocation by
sector
Top-down allocation by
country, FX
Baltic Sea Equity Fund portfolio
Fund management team: in-depth sector and
company analysis 3rd party research
Bottom-up investment idea generation and
evaluation
Focus on top-down asset allocation
CBL Baltic Sea Equity Fund Fund Performance and Structure (April 30, 2017) ISIN LV0000400794
13
Siemens GE 6.1%
Bayer GE 5.7%
Allianz GE 4.9%
SAP GE 4.5%
Deutsche Telekom GE 3.6%
Infineon Technologies GE 3.5%
Investor AB SE 3.5%
Daimler GE 3.2%
Tallink Group EE 3.2%
Assa Abloy SE 3.0%
6.9%
37.4%
16.4% 8.3%
-55.8%
38.8% 26.6%
-22.3%
19.8% 9.3%
-3.0%
2.2% 1.4% 6.3%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD
0
10
20
30
40
50
60
70
NA
V
4.6%
3.8%
6.1%
7.2%
8.6%
9.1%
10.7%
50.0%
Cash
Poland
Finland
Norway
Denmark
Baltics
Sweden
Germany
4.6%
1.2%
2.9%
3.0%
6.0%
7.2%
12.8%
13.2%
13.9%
16.3%
19.0%
Cash
Utilities
Consumer Staples
Energy
Telecommunication…
Materials
Information Technology
Consumer Discretionary
Health Care
Industrials
Financials
Source: CBL Asset Management
The information contained in this review was obtained in good faith from sources believed to be reliable. No guarantee, explicit or
implicit, is provided with respect to completeness and accuracy of the information. The opinions expressed represent the current
opinion of the authors and do not represent the opinion of CBL Asset Management or any of its affiliates, subsidiaries or
representatives. The opinions are subject to change without prior notice. Neither CBL Asset Management nor any of its affiliates,
subsidiaries or representatives accepts the liabilities arising from the possible use of the information contained in this review. This
material is provided for informational purposes only and should not be construed as advice to buy, hold or sell a particular security or
investment. Any investment you make shall be based solely on your own evaluation of your financial circumstances and investment
objectives.
Past performance is not a guide to future performance.
The opinions expressed are based on CBL Asset Management’s internal forecasts and should not be relied upon as indicating any
guarantee of return from an investment in our funds.
CBL Asset Management is a business name of CBL Asset Management IPAS, registered in Latvia on 11/01/2002, Reg.No.
40003577500. Registered Office: Republikas square 2A, Riga, LV-1010, Latvia. Authorised and regulated in Latvia by Financial and
Capital Market Commission, license No. 06.03.07.098/181.
14
CBL Asset Management IPAS
2A Republikas laukums
Riga, LV-1010, Latvia
T +371 6 701 08 10
E-mail: asset@cbl.lv
www.cblam.lv
Veronika Baranova
Head of Institutional Relations
Direct: +371 67010 716
E-mail: veronika.baranova@cbl.lv
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