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A GROWTH EQUITY PORTFOLIOA GROWTH EQUITY PORTFOLIOA GROWTH EQUITY PORTFOLIOA GROWTH EQUITY PORTFOLIO

WITH SOMETHING MORE...FOURPOINTS Funds Info Tech

June 2014

For professional

investors only

Fund Managers: Benoît Flamant,

Twitter: @benoitflamant

Leslie Griffe de MalvalTwitter: @lgriffe

June 2014

FOURPOINTS IM: Asset Manager Since 1931

An independent company, specialised in global equity investment, owned by its officers and

employees. Our expertise: growth equities in the U.S., Information Technology, Europe, Global

Active management with a non-benchmarked approach, dedicated to professional investors

(institutions, funds of funds, private banks, family offices)

The « Philippe Group » a Franco-American group➤ FOURPOINTS Investment Managers (Paris), authorised by the AMF, and registered by the CSSF in Luxembourg and the SEC in the

United States. AUM $1.4 bn for FOURPOINTS IM as of May 30, 2014, 21 employees

➤ FOURPOINTS Asset Management (New York) (formerly Philippe Investment Management), SEC registered since 1981,

5 employees

➤Our assets are invested alongside our clients

Past performance does not guarantee future performance - This document does not constitute or form part of an offer to issue or sell, or of a solicitation of an offer to subscribe or buy,

any securities nor does it constitute a financial promotion, investment advice or an inducement to participate in any product, offering or investment.



➤Our assets are invested alongside our clients

A team experienced in managing money throughout economic cycles. Senior investment team has

more than 30 years of experience in the investment management and the whole investment team has

been 12 years on average with the group

FOURPOINTS is listed among the 50 most important Asset Management companies in France by

Funds Magazine

The Nexus of Forces

Nexus of Nexus of

MOBILITYMOBILITY

INTERNET OF

THINGS

INTERNET OF

THINGSCLOUDCLOUD




any securities nor does it constitute a financial promotion, investment advice or an inducement to participate in any product, offering or investment. 4

Nexus of Forces

Nexus of Forces

BIG DATABIG DATASOCIALSOCIAL

Social

What is it?

Billions of people sharing and interacting

Unprecedented scale, the power of all

Currently shifting to mobile

Adding users at a really fast pace

Ruled by a few: Facebook, YouTube, Twitter, LinkedIn, Pinterest, Vine, Snapchat, Wechat, Weibo, Line…

Why it matters





Why it matters

A new world of digital marketing, radically changes corporate marketing, communication, and sales

A disruption that advertising agencies have to manage

New high margin investment opportunities

5

Sources: FOURPOINTS IM, Gartner, May 2014

Mobility

What is it?

Think me → See me → Know me →Be me

Mobile is the new personal computer, PC has become legacy

Incredibly intuitive touch-base user interface

Anytime, anywhere, always on, always connected, cheaper and cheaper

Why it matters





"Mobile first" or even "Mobile only"

Scale: billions of users, billions of devices, billions of machines and objects

New ecosystem, new players

New usage, new services, new investment opportunities

PC ecosystem vendors loose a lot of money trying to catch up

The key battleground for content and services providers

The key enabler to reinvent the economy

6

Sources: FOURPOINTS IM, June 2014

Mobility: a Very Large Opportunity

Smartphone market: 1.2bn smartphones in 2014, $248.7bn in sales, growing at a fast

pace in emerging countries

Tablet market: 263.5M tablet units in 2014, $72.3bn in sales

Semiconductor IP market of $2.5bn in 2014

Foundry: $40.4bn in sales





Wireless semiconductor sales $72.4bn in 2014

Mobile advertising market at $19.8bn in 2014

Mobile ecommerce market at $56.7bn in 2014

7

Sources: Gartner, 2014; ZenithOptimedia, September 2013; eMarketer, 2014

Before and Now

Before:

Parisian taxiNow:





$200M+ annualized run rate revenue

500 000+ active users, 85 000+ new users per

week

60 cities in the world

Internet of Things

What is it?

Connect every object to a network: white goods, cars, planes, any machines, wearables, sensors, health

devices, heaters, robots…

Wireless only

A technology not a market, but yet a strong change factor for infotech

Installed base of "things," excluding PCs, tablets and smartphones: 26bn units in 2020, 30x 2009’s





Why it matters

Service corporate customers instead of selling a product

Optimize usage, reduce cost, customer intimacy: every company will be involved, companies that "get it

right " will win

Sponsors: Board and line of business managers, no more CIOs

Next big driver for semiconductor after mobile

9

Sources: Gartner, 2014

Internet of Things: a Huge Opportunity yet still Hard to Size





Big Data

What is it?

Create value out of any data

Optimise usage, ultimate personnalisation, new services…

Storage made way cheaper with disruptive technologies

For every business and public organisation: Automotive, Industrial, Insurance, CPG, Pharmaceuticals…

Sponsors: Board and line-of-business managers, no more CIOs





Why it matters

Reduce costs, create new services and products, sell more, and personalize more

Only data-driven companies will thrive

Investment opportunities for companies to bridge the "old world" and the "new world"

Disrupts the $74bn storage market and the datawarehouse appliance market

11

Big Data Case Study: NASDAQ’s Market Replay

It is about solving new issues

Regulation authorities require past trades replay with the highest possible granularity possible

The goal: to store ten years of historical tick data down to the millisecond

At a reasonable cost





Why Amazon Web Services?

Cost

Time-to-market

Sell the data

“The major advantages of cloud computing are cost and time-to-market. By leveraging the infrastructure

created by AWS, we avoided the need to buy expensive hardware and were able to decrease our time to

market threefold.” Jeff Kimsey, VP of Product Management for NASDAQ OMX

12

Cloud Computing

What is it?

Cloud Computing is to corporations what Gmail is to consumers

Corporations buy a service, not equipment, data and applications run by a Service Provider, subscription-

or usage-based billing

It is about outsourcing what is not strategic and focusing on what is truly differentiating

A Power Shift from the CIO to Business Units

Why it matters





Why it matters

Flexibility, scalability, lower costs, variable spending (opex), no capex

Modernized intuitive applications updated several times a year

The same application can serve Fortune 100 as well as small businesses: much larger Total Addressable

Market, financial leverage

Strong visibility of future revenue, ability to anticipate the right expense level, profit warnings less likely

Legacy vendors outrun by cloud-centric players, on-premise infrastructure market under pressure

A loss for Infrastructure-centric IT services

Formidable facilitator for innovative digital economy companies

13

Cloud Computing: a very large market

$312 bn

150

200

250

300

350

Cloud Computing Addressable Market





Sources: Gartner, 2014

$78 bn

$172 bn

0

50

100

150

Entreprise business

application market

Hardware market Software infrastructure

market

Cloud Computing: Salesforce Case Study

3 100

4 100

5 100

6 100

7 100 Siebel

CRM

During the Tech bubble burst (2001Q1 to 2003Q1)

Siebel quarterly revenue dropped 43.5%

Operating margin went from 17.9% to a 3.3% loss

During the Great Recession (2008Q1 to

2010Q1), CRM grew quarterly revenue by

52%, gained 300 bps in operating margin, and

never suffered a negative sequential growth

Siebel and Salesforce.com

relative quarterly sales





Source: FOURPOINTS IM, company reports, June 2014

100

1 100

2 100

100=1997Q1 for Siebel, 100=2003Q1 for CRM

Peak Siebel quarterly revenue (2001Q1): $598 million

2014Q1 Salesforce quarterly revenue: $1.2bn

never suffered a negative sequential growth

In the summer of 2011, investors worried about

the economy: CRM dropped 41.2% despite beating

expectations each quarter

The stock gained 123.7% since its 2011 low

P/S peaked at more than 20 early 2006

CRM is a 13 bagger (2004 to 2013)

Beyond Salesforce

9 Application Cloud companies (SaaS) are held by the fund (ex. Salesforce), all selected

with key criteria: diversification, ability to target large markets, stickiness, barrier to

entry, potential profitability, strong management. All are much less mature than

Salesforce

Average market cap: $3.5bn, $0.8-$11.6bn range (Salesforce MK $24bn)

Annualized average revenues $355 million, average 2014 top line growth according to





Annualized average revenues $355 million, average 2014 top line growth according to

guidance: +37.5% (21% to 55% range), 2013 top line growth was 39.6%

Growth is for most of them capacity-constrained, not subject to economic cycles

Average P/S 2015 ratio: 9.4 (8.5 ex. cash), average YTD performance: -16.3%

Weight in the portfolio: 17.4% (19.2% inc. Salesforce)

16

Source: FOURPOINTS IM, company reports, Bloomberg, June 2014

Valuing High-Growth Software Companies: P/S

CAGR/WACC 8% 9%

15% 5.5 5.2

25% 8.5 8.1

35% 12.2 11.7

End of period (5Y) price/sales multiple: 4

End of period (5Y) price/sales multiple: 5

Company OM* P/S**

PTC US 13.9% 3.3

SGE LN 26.6% 3.5

SAP GR 27.0% 3.9

MSFT US 34.4% 4.0

ORCL US 38.8% 5.1

P/S of mature software companies





CAGR/WACC 8% 9%

15% 5.5 5.2

25% 10.4 9.9

35% 15.3 14.6

ORCL US 38.8% 5.1

DSY FP 24.4% 5.6

AVV LN 29.8% 6.2

ANSS US 37.4% 7.8

* GAAP/IFRS, last reported fiscal year

** P/S TTM

Salesforce Revenue CAGR

5-y (CY08-CY13) 30.5%

3-y (CY10-CY13) 34.5% Source: FOURPOINTS IM, company reports, Bloomberg, June 2014

What Companies Are Willing to Spend on Acquisition

Acquirer Acquired Date Deal size P/S*

SAP SuccessFactors 2/2012 $3.4bn 10.4

SAP Ariba 5/2012 $4.3bn 8.2

Oracle Eloqua 12/2012 $2.5bn 8.6





Oracle Eloqua 12/2012 $2.5bn 8.6

Salesforce.com ExactTarget 7/2013 $2.5bn 8.6

Oracle Responsys 12/2013 $1.5bn 7.5

Source: FOURPOINTS IM, June 2014

* Trailing Twelve Months

Return for Companies Surfing Disruption Waves

Sector Company Period

Increase

SalesNet

ProfitStock

Mobility APPLE 2006 – 2013 9x 19x 7x

ARM HOLDINGS 1998 – 2013 17x 79x 17x

Search GOOGLE 2004 – 2013 19x 18x 6x






Search GOOGLE 2004 – 2013 19x 18x 6x

eCommerce,

eBooks, Cloud AMAZON 2000 – 2013 27x - 26x

Cloud SaaS SALESFORCE.COM 2004 – 2013 23x - 13X

Patience Often Pays: ARM Holdings





Source: Bloomberg, June 2014

Growth Companies Are Often Controversial: Amazon





Source: Bloomberg, June 2014

What it means

Leading companies aligned along structural disruptions deliver

strong growth

The stronger the disruption, the more we tend to underestimate the potential growth, the more

we consider them as overvalued

This is not about momentum nor about cyclical growth, this is about sustained growth fueled by

structural disruptions





structural disruptions

Market sentiment though still depends on macro

Superior growth comes with some volatility and occasional strong drawdowns

Market timing such stocks is a true challenge

What Do We Learn From Indices Performance?

2008-2013 performance USD CAGR EURO CAGR

FOURPOINTS FUNDS Info Tech 148.6% 20.0% 155.2% 20.6%

MSCI IT World* 131.3% 18.3% 137.4% 18.9%

MSCI IT World ex. Apple 107.6% 15.7% 113.1% 16.3%

S&P 500 NTR 120.9% 17.2% 122.6% 17.4%





MSCI World All Countries NTR 100.4% 14.9% 105.6% 15.5%

EuroStoxx 600 NTR 87.9% 13.4% 92.8% 14.0%

23

Source: FOURPOINTS IM,

FOURPOINTS FUNDS Info Tech Class I as of December 31, 2013,

*NTR since 1.1.2013

Disruptions Generate Outperformance, not IT Spending

Most of the 2008-2013 MSCI IT World outperformance over global equity is due to

Apple (up 6.6x)

The MSCI IT World, ex. Apple, underperforms the S&P500

This was a unique combination of a huge disruption, mobility, owned for a long time

by one company, which already was a megacap (Apple’s MK end 2008 was $76bn)





by one company, which already was a megacap (Apple’s MK end 2008 was $76bn)

An occurrence very unlikely to repeat itself

"IT Spending" Is not a Relevant Metric Anymore!





Source: Bernstein Research, June 2014

Portfolio Construction

Top line growth

Alignment on our Investment Themes

Uniqueness

Management

Execution

Valuation

Alignment on our Investment Themes

Uniqueness

Management

Execution

Valuation





Top line growth


0-10%

More mature companies

Ability to accelerate growth

Strongly undervalued

DCF-centric valuation

0-10%

More mature companies

Ability to accelerate growth

Strongly undervalued


10-25%

In their late teens

Undervalued


10-25%

In their late teens

Undervalued


25%+

Less mature companies

Very large addressable market

Sustainable high-growth

P/S valuation

25%+

Less mature companies

Very large addressable market

Sustainable high-growth

P/S valuation

2014 YTD Performance (as of May 30, 2014)

2014 YTD performance USD EURO

FOURPOINTS FUNDS Info Tech -3.4% -2.4%

MSCI IT World NTR +4.7% +5.7%

S&P 500 NTR +4.7% +5.7%





Source: FOURPOINTS IM & FactSet, FOURPOINTS FUNDS Info Tech

MSCI World All Countries NTR +4.2% +5.2%

EuroStoxx 600 NTR +5.5% +6.5%

The best The best

1 Ubisoft Digital Economy 6 Qualcomm Mobility

2 Akamai Enterprise Other 7 Mediatek Mobility

3 F5 Networks Enterprise Infra. 8 Facebook Digital Economy

YTD Performance Contribution: the Best (as of May 30, 2014)





4 Dialog Semiconductor Mobility 9 AppleMobility&

Digital Economy

5 LogMeIn Enterprise SaaS 10 VMware Enterprise Infra.

28


The worst The worst

37 ARM Holdings Mobility 42 E2open Enterprise SaaS

38 Concur Technologies Enterprise SaaS 43 StratasysEnterprise Other

(3D Printing)

39 Veeva Enterprise SaaS 44CornerStone

OnDemandEnterprise SaaS

YTD Performance Contribution: the Worst (as of May 30, 2014)





OnDemand

40 Digital Globe Enterprise Other 45 LinkedIn Digital Economy

41 Amazon Digital Economy 46 Splunk Enterprise Other

29


YTD Performance by Region & Market Cap (as of May 30, 2014)

Region WeightPerformance

contribution

APAC 8.0% +1.1%

Europe 5.8% +0.8%

Israel 4.3% (0.25%)

Market

capWeight

Performance

contribution

% with positive

performance

Small 5.5% (0.5%) 25%

Mid 55.1% (2.4%) 28%

Large 19.0% (0.3%) 25%





North

America80.1% (3.1%) Megacap 18.5% +1.4% 75%

30

Source: FOURPOINTS IM & FactSet, FOURPOINTS IM FUNDS Info Tech

Everything that is not a megacap felt downward pressure, yet only in the US

YTD Performance by Growth Profile (as of May 30, 2014)

Top line growth in 2014 Weight Performance contribution

Moderate growth (0-10%) 27.3% +0.3%

Strong growth (10-25%) 42.7% +1.3%





Investors have avoided anything that is growth-related

Strong growth (10-25%) 42.7% +1.3%

High-growth (25%+) 24.7% (3.0%)


Category WeightPerformance

contribution

Enterprise SaaS 19.2% (1.8%)

Digital Economy 18.3% (1.0%)

YTD Performance by Category (as of May 30, 2014)





Enterprise Other 21.9% (0.1%)

Enterprise Infra. 14.0% +1.0%

Mobility 21.8% +2.1%

32

Source: FOURP FOURPOINTS IM & FactSet, FOURPOINTS FUNDS Info Tech

Fund’s YTD Performance in a Nutshell

What did not work

Small, mid, and large caps

Growth stocks

Enterprise SaaS & Digital Economy themes

What worked





What worked

Asia and Europe

Megacaps

Lower-growth stocks

Mobility & Enterprise themes

Conclusion

A strong nexus of forces

Disruptions generate strong lasting return for investors, not productivity-

centric IT spending

YTD performance negatively impacted by a Perfect Storm





YTD performance negatively impacted by a Perfect Storm

There is a lot of value in the portfolio

M&A is a free option

Appendix





Appendix

Social

1 276

540

848

396

500600

800

1000

1200

1400in

M

Number of monthly active users





Sources: FOURPOINTS IM, company reports, press, June 2014.

186144

396

200

70

255

0

200

400

Mobility, a Radically Different Food Chain

Before

PC ecosystem

Now

Mobility ecosystem





Internet of Things: Connected Devices Gathering Data





Sources: KPCB, 2014 Internet Trends, May 2014

FOURPOINTS FUNDS Info Tech as of May 30, 2014





FOURPOINTS FUNDS Info Tech as of May 30, 2014

FOURPOINTS Funds Info Tech Portfolio Sales Growth

Calendar Year 2008 2009 2010 2011 2012 2013

Average Sales Growth

+15.8% +9.8% +29.9% +29.1% +23.5% +23.7%





Average Sales Growth

of companies in the

portfolio

+15.8% +9.8% +29.9% +29.1% +23.5% +23.7%

Source: FOURPOINTS IM

Based on Info Tech’s portfolio as of May 30, 2014,

FOURPOINTS Funds Info Tech Track Record

EUR 2009 2010 2011 2012 2013

FOURPOINTS

Funds Info Tech56.5% 32.9% (11.8%) 11.3% 21.5%

MSCI IT World 46.2% 17.2% (0.2%) 10.3% 23.2%*

MSCI World All






FOURPOINTS Funds Info Tech, Class, as of May 30, 2014.

* Calculated with MSCI IT World and MSCI All Countries NTR indexes

MSCI World All

Countries27.4% 18.1% (6.4%) 11.7% 18.7%*

Breakdown by Geography (as of May 30, 2014)

Bermuda

3.2%

United Kingdom

3.8%

Taiwan

4.0%

South Korea

2.5%

Israel

4.4%

France

2.3%

China

1.5%

Canada

2.0%






FOURPOINTS Funds Info Tech, % of invested portfolio

United States

76.4%

TOP 10 (as of May 30, 2014)





Product Details

FOURPOINTS Funds Info Tech SICAV (UCITS IV)

Registration: Luxembourg, UK, Switzerland, Italy, Spain, Germany, Austria, Belgium, France

Fiscal transparency: Germany, Belgium, Austria, UK

Investment Manager: FOURPOINTS Investment Managers

Management company: Degroof Gestion Institutionnelle

Currency: EUR

Valuation: Daily

Custodian: Banque Degroof Luxembourg

Auditor: KPMG

ISIN Codes and Bloomberg ticker:

Share R: LU0127700903 (accumulation) / ITTEGLI LX

Share I: LU0100548261 (accumulation) / ITTEGLO LX





Share I: LU0100548261 (accumulation) / ITTEGLO LX

Share USD: LU0620567890 (accumulation) / ITTEUSD LX

Share D: LU0180672007 (distribution) / ITTEGLU LX

Share RH: LU0288052094 (accumulation) / ITTGBAL LX

ISIN Codes and Bloomberg ticker: EUR Share Class – hedged for USD/EUR currency exposure

Share RH: LU0288052094 (accumulation) / ITTGBAL LX

Management Fees:

Part R / RH: 2.20%

Part I / USD: 1.20%

Part D: 1.00%

Cut-off: 4 pm Luxembourg time

Out of scope

FOURPOINTS

Michel Raud

Béatrice Philippe

President – Co-CIO

42-year experience in asset

management

Investment Professionals

2012- Present: President FOURPOINTS AM and FOURPOINTS IM (merger of PIM

Gestion France and IT Asset Management)

1973 – 2012 : President – Co-CIO of Philippe Group (PIM Gestion France and

Philippe Investment Management)

1972 – 1973 : Business International, Paris

MBA Finance HECJF, Paris / Stanford’s Graduate School of Business Summer

Program /Councillor of French American Chamber of commerce/

Member of council of Rockefeller University

2012 – Present: Co-CIO, Deputy Managing Director FOURPOINTS IM (merger of

PIM Gestion France and IT Asset Management)Michel Raud

Deputy Managing Director –Co-CIO

42-year experience in asset management

PIM Gestion France and IT Asset Management)

1988 – 2012: Co-CIO, Managing director of Philippe Group (PIM Gestion France

and Philippe Investment Management)

1987 – 1988 : Banque Financière CARDIF – Director

1972 – 1987 : Nivard Flornoy stockbroker – Director research on French equities

MBA HEC, Paris / Member of SFAF

Benoit Flamant

Deputy CIO

18-year experience in asset

management

2012 – Present: Head of Tech Investments of FOURPOINTS IM (merger of PIM

Gestion France and IT Asset Management)

1996 – 2012 : Managing director, CIO and cofounder of IT Asset Management

1988 – 1996 : IBM and Microsoft, marketing director

1985 – 1987 : ADI/GSI Software Engineer

Ecole Centrale de Paris

45

FOURPOINTS

Investment Professionals

Leslie Griffe de Malval

Portfolio Manager & Analyst Technologies Equity


2012 – Present: FOURPOINTS IM (merger of ITAM and PIM Gestion France ),

co-manager of Tech funds

2007 – 2012: ITAM, based in Paris, portfolio manager for the info tech funds

2004 – 2006: Associate in venture capital, VPSA, Paris.

2003 – 2004: Analyst in capital risk, Siparex, Paris.

2000 – 2002: Associate in M&A, Arthur Andersen Corporate Finance in Paris.

Specialized Master’s in Strategy and Management of International Business at ESSEC

Business School and Master Degree in Competitive Intelligence.

Louiza Ferrara, CFA

Portfolio Manager & Analyst, New York


Julien Chehowah

Analyst, Global Equities


46

Eric Fourrier

Portfolio Manager & Analyst


Marie de Mestier



Emmanuelle Ferreira



Anthony Carvalho

Analyst

1-year experience in

asset management

Julien Mathou

FOURPOINTS IM

Disclaimer: This document does not constitute or form part of an offer to issue or sell, or of a solicitation of an offer to subscribe or buy, any securities nor does it

constitute a financial promotion, investment advice or an inducement to participate in any product, offering or investment. The expectations expressed about the

stocks, the market, the economy and other factors represent the opinion of the manager and may not be realised in the future. Performance is presented for a specific

period. Performance may be different in the future. Performance for an index is presented. The fund is not managed to track the benchmark and will likely differ in terms

of industry weights, market capitalisation weights and in terms of number of securities held. Therefore performance for the fund will likely differ from performance of the

index in any particular period.

Stéphane LeniqueInes Cointet

Contacts





Julien MathouBusiness Relationship Manager

[email protected]

+33(0)1 70 77 07 78

FOURPOINTS IM

13/15, rue de La Baume 75008 Paris – France Téléphone: +33 (1) 40 28 16 50 - Fax : +33 (1) 40 28 00 55

www.fourpointsim.com

Stéphane LeniqueHead of Development Europe

[email protected]

+33 (0)1 70 75 10 73

Ines CointetSales Manager France

[email protected]

+33 (0)1 70 75 10 84

47

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A GROWTH EQUITY PORTFOLIO WITH SOMETHING MORE › wp-content › uploads › ... · An independent company, specialisedin global equity investment, owned by its officers and employees