Element Global Value - 4Q13 (Year End Letter)

8/12/2019 Element Global Value - 4Q13 (Year End Letter)

1/14

Element Global Value

The Element Global Value Portfolio has the mandate to go anywhere in pursuit of attractive investment opportunities, using a

bottom-up investment approach. Being equity focused, the portfolio has at least 70% of its assets invested in international equity

markets. Theportfoliouses as benchmarkthe MSCI World (Local) but it does not seek to mimic or track this index in any way.

4rdQuarter 2013Year End Letter

Net Asset Value (NAV) : 120.47

Launch date: 14-January-2011

Portfolio Manager: Filipe Alves da Silva, CFA, CAIA

Portfolio Details

Investment Highlights

2013 was relentless! Equity markets kept posting new highs with almost no corrections during the

year, resulting on strong performances for all major developed equity markets.

This environment was not the best for my style of managing the portfolio. Ideally, I like to make a

purchase after a stock has underperformed strongly, or even had a strong correction, and when

my view differs from the consensus mostly due to different time frames (I strive to focus on thelong term while most market participants focus on the latest quarterly numbers or short term

indicators), thus creating a time-arbitrage opportunity. If there are no pull-backs, even if I really

like a company, I will typically postpone the purchase until a correction occurs. In 2013 there were

very few opportunities to catch bargains on pull-backs!

The result is that, for the 3 years that I have been managing the portfolio, this was the one with

the fewest additions and lowest turnover. Also the portfolio considerably underperformed its

benchmark, posting a return of +21.15% vs. +26.24% for the MSCI World Local. The main reasons

for underperformance were the fact that the portfolio has no exposure to Japan (the best

performing market in 2013, with a 50+% gain, and an 8% weight in the benchmark), two of thelargest holdings posted lackluster performances (IBM: -0.18% and Apple: +8.07%) and the

exposure to the mining sector.

Below I present the review of purchases done during the year, best and worst contributors to

performance as well as top performing positions, do a brief review of the portfolios investment

rules and end with a brief conclusion.

Monthly Performance

Weekly Performance Chart

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD

2011 -1,11% 1,61% -2,05% 3,30% -1,25% -1,72% -1,37% -7,23% -7,20% 8,70% -2,83% -1,18% -12,57%

2012 7,06% 5,19% 1,62% -0,86% -6,98% 2,62% 0,62% 2,67% 1,35% -1,50% 0,97% 0,87% 13,73%

2013 2,90% 0,47% 1,33% 1,51% 1,68% -3,88% 4,46% -0,90% 3,84% 4,64% 2,19% 1,41% 21,15%

80

90

100

110

120

130

Jan/11 Jul/11 Dec/11 Jun/12 Nov/12 May/13 Oct/13

MSCI World Local

Portfolio


2/14


Review of new purchases done in 2013

KazMunaiGas E&P

continues to present tremendous opportunity. KMG is a major oil producer in Kazakhstan. It is

currently undergoing a large CapEx program to increase production and productivity, but shares

have dropped since my purchase (-11.3%) in part due to turbulence across most emerging/frontier

markets, and in part due to lower than expected numbers. The company continues to have a very

healthy balance sheet and trades at absurdly low multiples. The ride will not be a smooth one, but

the investment.

I wrote an article on KazMunaiGas E&P on my blog titled KazMunaiGas E&P: a True Bargain.

Patient Safety Technologies

PSTX was an unusual investment for me: Usually I don't invest in "one-product" companies that do

not generate profits, but PSTX really sparked my interest. The company offers a very competitive

solution to a very real problem as there is pressure from Medicare/States for hospitals to adopt

retained-sponge prevention measures (exactly what PSTX offers) and the market for this type of

products is still far from being crowded. After capturing a customer the company is able to makeroyalty-like return, a very attractive source of income.

The company's path to profitability was cut short, as it was acquired by Stryker Corporation for

$2.22/share, representing a +35% gain since I bought the shares in March.

I wrote an article on Patient Safety Technologies on my blog titled No Sponge Left Behind.

Amerco

Amerco is the parent company of U-Haul, the largest do-it-yourself moving company in the US,

which is firing on all cylinders, and benefiting from the return of the housing market. Shares have

appreciated from the purchase price, posting a hefty 46% return and the company has stated that

it will institute a dividend starting in 2014.

Despite this, the company still trades at a very undemanding multiple (about 13 times), remains

unknown to most, and lacks analyst coverage.

CF industries

I wrote about this company briefly on the last report and promised a more detailed analysis, which

will be given in a different section.
http://elementvalueinvestor.blogspot.ch/2013/02/kazmunaigas-e-true-bargain.htmlhttp://elementvalueinvestor.blogspot.ch/2013/04/no-sponge-left-behind-patient-safety.htmlhttp://elementvalueinvestor.blogspot.ch/2013/04/no-sponge-left-behind-patient-safety.htmlhttp://elementvalueinvestor.blogspot.ch/2013/04/no-sponge-left-behind-patient-safety.htmlhttp://elementvalueinvestor.blogspot.ch/2013/04/no-sponge-left-behind-patient-safety.htmlhttp://elementvalueinvestor.blogspot.ch/2013/04/no-sponge-left-behind-patient-safety.htmlhttp://elementvalueinvestor.blogspot.ch/2013/04/no-sponge-left-behind-patient-safety.htmlhttp://elementvalueinvestor.blogspot.ch/2013/04/no-sponge-left-behind-patient-safety.htmlhttp://elementvalueinvestor.blogspot.ch/2013/04/no-sponge-left-behind-patient-safety.htmlhttp://elementvalueinvestor.blogspot.ch/2013/02/kazmunaigas-e-true-bargain.htmlhttp://elementvalueinvestor.blogspot.ch/2013/02/kazmunaigas-e-true-bargain.htmlhttp://elementvalueinvestor.blogspot.ch/2013/02/kazmunaigas-e-true-bargain.htmlhttp://elementvalueinvestor.blogspot.ch/2013/02/kazmunaigas-e-true-bargain.htmlhttp://elementvalueinvestor.blogspot.ch/2013/02/kazmunaigas-e-true-bargain.htmlhttp://elementvalueinvestor.blogspot.ch/2013/02/kazmunaigas-e-true-bargain.htmlhttp://elementvalueinvestor.blogspot.ch/2013/02/kazmunaigas-e-true-bargain.htmlhttp://elementvalueinvestor.blogspot.ch/2013/02/kazmunaigas-e-true-bargain.htmlhttp://elementvalueinvestor.blogspot.ch/2013/02/kazmunaigas-e-true-bargain.htmlhttp://elementvalueinvestor.blogspot.ch/2013/02/kazmunaigas-e-true-bargain.html


3/14


Review of positions exited during 2013

This year I exited two positions, unfortunately not for good reasons:

Jakks Pacific

The Malibu based toy maker continued making ill-justified acquisitions, has a product line that is

increasingly not adequate attuned to the reality of today's kids and management doesn't seem to

have a clear path out of the mess they got themselves into. So, I decided to sell the position and

realize a -73% loss.

Looking back, although the position was never large, I should have realized the company was

heading the wrong way sooner.

La Seda de Barcelona

La Seda was undergoing a turnaround, but management was unable to maneuver the company

into profitability due to excessive debt and sluggish economic conditions.

My rationale to sell the position was that with the company hemorrhaging money, its debt would

probably be restructured to avoid bankruptcy, a highly dilutive proposition for current

shareholders. This is exactly what happened and shares were even suspended in June. The

company is now in liquidation.

New Position

CF Industries

CF is a low-cost producer of Nitrogen (a key component of fertilizer). The company was founded

60 years ago by a group of farm cooperatives with a need for a reliable source of fertilizer. Initially,

the new company acted as a purchasing agent, leveraging its size to obtain the best possible prices

- and assured fertilizer supplies - for its members. Later, it grew into one of North Americaslargest

manufacturers and distributors of nitrogen and phosphate fertilizer, distributing its products in

North America and other leading agricultural regions. In 2005 the company was demutualized via

an IPO, which shifted the companysfocus to profit maximization.

The US is currently experiencing an energy boom, made possible by the shale gas revolution. Theresult is that gas (and other fuels) is dramatically cheaper in the US than elsewhere. CF is a leading

low-cost producer mainly because natural gas is the main input cost in producing nitrogen, thus

generating a competitive advantage and giving the company an edge against competitors. These

competitorscost of production set a minimum price for nitrogen, making the difference between

this floor and CF's lower cost of production a safe source of cash flow.


4/14


The graph clearly shows the advantage of using Americas cheaper natural gas, as well as the

advantage of being closer to the end-client.

The company has a steady record of returning capital to shareholders via buybacks, being now

halfway through a massive 3bn program, which will be complete in 2014 (mkt cap at time of

purchase $12bn). Also, the company recently increased its dividend by 150%. Besides all this, the

company is undergoing a huge project to increase capacity and on which it plans to spend $2bn

during 2014.

Taking everything into consideration, both cash generated from operations, sourced from thebalance sheet, plus the sale of the phosphate unit by $1.2bn (completed in 2013), will provide

sufficient coverage for CapEx (growth + maintenance), the higher dividend and the remainder of

announced buybacks, leaving $2bn for additional capital returns. My take (and preference) is that

these $2bn will be used to repurchase shares, which will meaningfully increase the company's

value per share.

Despite all this, at the time of the investment CF was trading at only 10 times forward earnings, a

multiple that is too low given the quality of CF's earnings, its policy for ample cash distribution and

expansion plans.

Shares ended the year about 10% higher than the initial purchase price.


5/14


New PositionGeneral Motors (GM)

In December I added a position in General Motors. Together with BMW and Renault, this is now

my third investment in the auto-makers space. All together, at year end they represented about

8% of the portfolio.

Although there is a specific reason for owning each one of the auto-manufacturers, it is not by

chance that I have kept on adding positions in the sector. The industry is characterized by high

fixed costs, and, due to sales of new cars not having returned to their pre-crisis levels, there is

plenty of idle capacity at the automakersfactories. My view is that it is only a matter of time for

sales of new cars reach new highs (US is already recovering nicely, China is steaming ahead

strongly, but Europe is still lagging), and when this happens earnings in these companies willincrease materially from current levels. Automakers will then experience operational leverage,

make use of their idle capacity and meaningfully increase their earnings.

GM is no stranger: the company produces vehicles under 10 brands (plus several JVs and stakes in

other companies), operates in more than 150 countries and employs over 200k people. The

company was the #1 producer for 77 years (1931-2007) but filed for a government-backed

bankruptcy in 2009, as its debt load was too heavy for it to survive the Great Recession. The

company emerged again in 2010 via an IPO, returning to profitability that same year.

Fast forward to December 2013 and the government sold its stake in the company, GM achieved

investment grade rating by Moodys,was re-added to the S&P 500, monetized non-core assets

(such as Ally and PSA ownership stakes) and refinanced $4.5bn of high-cost obligations.

Despite all this, and the meaningful appreciation of the shares in 2013, GM still trades at

undemanding multiples (3x EV/2014 EBITDAP). If it were to trade in line with peers, shares would

have to appreciate by more than +40%.

One can make the case that GM should even trade at a premium to its peers, due to

improvements in operational efficiency from the ongoing turnaround efforts, strong fundamentals

and strong financial condition.

With the government out of the way, GM has initiated a quarterly dividend and should soon

initiate a buyback program.

My expectation is that, with time, GMsshares will trade at similar multiples to its peers, and for

its earnings to increase significantly, as pent up demand hits the market in the coming years.

Top 5 contributors for the year

Below is a brief review of the positions that contributed more to this yearsperformance. Between

parenthesis is the return since the position was initiated (with date) and for the year:


6/14


Microsoft (Jan/11: +46.2%; 2013: +44.3%)

This Company needs no introduction. Most left Microsoft for dead, saying that it rested on its

laurels and was surpassed by Google, Apple and Facebook. The truth is far from this. Today

Microsoft has a stable and increasing source of revenues, is more profitable than ever and has a

fortress balance sheet, with about $80bn in cash.

Despite all this, and even after the strong share performance in 2013, the company remains

unloved by Wall Street, and shares trade below the market multiple (13x) despite offering a 3%

dividend yield. Microsoft ended the year with a weight of 6.6%, ranking as #3 on the top positions.

At current levels I dontexpect to reduce the position.

Archer Daniels Midlands (Sep/11: +66.7%; 2013: +61.9%)

ADM is one of the world's leading agribusiness that manufacturers and sells food essentials,

processed agricultural products and value-added feed ingredients. I think one of the best

descriptions I ever read of ADM is boringbut necessary which is exactly the kind of business that

can generate consistent and ongoing profits,and you know me, I love boring companies. Overall

ADM improved cost, cash and capital management during the year, is ahead of schedule on its

cost-saving efforts, and benefited from lower raw-material costs and improved ethanol margins.

Add to this a couple of points of multiple expansion and you get at the hefty +62% return for theyear.

Fidelity China Special Situations (Jun/11: +14.0%; 2013: Price: +27.2% & NAV: +35.9%)

As I wrote on the 2012 letter I am a big believer in China, and am especially keen in the

emergence of its domestic consumer,but amnot a fan of Chinese state-controlledcompanies. I

chose to gain exposure to this theme via the Fidelitysclose-end, consumer centered fund, called

China Special Situations Fund, managed by Mr. Anthony Bolton.

Although Mr. Boltons time managing the China fund has not been as profitable as his time

managing money in the UK, I have a very positive opinion of him and admire him greatly. This year

he managed to outperform handsomely, with NAV increasing by almost 36%, while the benchmark

posted a measly 1.7% return.

Unfortunately, Mr. Bolton has decided to retire in April of 2014 and Fidelity has appointed Dale

Nicholls, the seasoned portfolio manager of the Fidelity Pacific Fund, as the future Portfolio

Manager for the Special Situations Fund.

Despite wishing that Mr. Bolton would continue at the helm, I think Dale Nicholls will also be agood captain for the fund.

(note: I considerably averaged down my purchase price when the fund was trading at a steep

discount in 2H11 & 1H12).


7/14


BlackRock (Sep/11: +119.1%; 2013: +57.0%)

The company is skillfully helmed by Laurence Fink, who co-founded the company in 1988, and

turned it into largest asset manager in the World (2013 AUM of $4 trillion).

With the wind at its back, and investors starting to get into equity markets again, the company

increased EPS by 21% and the dividend by 15% (current dividend yield stands at 2.4%, but if you

take into consideration the initial purchase price the yield goes up to 5%, to which a roughly 2%

buyback must also be taken into consideration).

Berkshire Hathaway (Apr/12: +50.1%; 2013: 32.2%)

This one is no stranger to most. The company is controlled by the Worlds indisputable king of

investing, Warren Buffett. Mr. Buffett took the past 40 years acquiring a panoply of companies that

range from clothes, to jewelry, insurance, homebuilders, newspapers, railways, among many

others, resulting in a $200 bn behemoth that boasts some of the best managers in the business.

In 2013, Mr. Buffett partnered with 3G Capital to buy the beloved Heinz for $38bn, bought a stake

in ExxonMobil and made several smaller bolt-on acquisitions.

I was always aware of this company, and the quality of its asset allocator, but only decided to take

the position when (quoted from 2012 letter) Berkshires cheapness first came to my attention

when Mr. Buffett authorized a share repurchase program back in September of 2011. This

announcement was huge. Here you have the worlds best capital allocator, who has a very high

reputation for being honest, telling you that his own companysstock, which he knows better than

anyone alive, was trading at very cheap levels (around $72). Since they were added to the

portfolio, Berkshiresshares have outperformed the S&P 500 by more than 10%.

Worst 5 contributors for the year

Mining related companies

The sector continues in a world of pain, with the ETF that tracks the junior miners dropping by a

whopping -60.7% in 2013 (and -81% from the high of November 2010). I had called the sector a

place where dreams go to die and also wrote that every storm eventually runs out of rain,

which clearly didnthappen this yet, with the 3 companies on the portfolio (Monument Mining,

Veris Gold and Energold Drilling) loosing on average more than half their value in 2013 alone.

Opportunities in the mining sector are almost mindboggling, but I have shied away from them

because it has never been a sector I have been a fan of (Gold is just something very difficult for me

to value) and the risk is still too great. (note: all values for the miners are in Canadian Dollars)


8/14


Veris Gold (Sep/12: -90.0%; 2013: -82.0%):The Company is undergoing a huge turnaround,

and in the mining sector, turnarounds are known for taking longer and costing more thanoriginally anticipated. This resulted in the need to raise capital, which diluted existing

shareholders.

The company has the assets and the capacity to produce 200k ounces/yr but the drop in

gold price and high monthly interest payments that are suffocating Verisbalance sheet. As

of this writing the company defaulted on its debt due to a fire in its main plant. The result is

not very apparent in the share price, which is practically unchanged in 2014, but means

more dilution to shareholders, as the loan is restructured.

Because of the huge optionality embedded in the price (if gold recovers, Veris stands tomake a killing) and the insignificant size of the position (0.15%), Veris will remain in the

portfolio.

Monument Mining (May/11: -58.2%; 2013: -43.2%): Monument explores, develops and

produces gold and also owns a polimetalic project in Malaysia. The prime property is the

Selinsing gold mine, which alone produced $40 million of cash-flow in 2013 to which you add

a debt free balance sheet with $41 mn in cash (compares with a market cap of $80mn).

The company has not been as affected by the drop in the price of gold because of its very low

production cost, but investors turned impatient when management decided to buy a non-gold

project called Mengapur for $90 million. The company is currently using the cash-flows from

Selinsing to develop the Mengapur project, as well as explore its other properties.

I expect investors to regain their patience when the company releases the preliminary economic

assessment of the Mengapur project later in 2014.

Energold Drilling (Aug/11: -61.5%; 2013: -45.0%): Energold is a drilling contractor that serves the

mining and mineral exploration industries. At the end of 2013 the company had a market cap of

$71 mn and net working capital of $75 mn, putting it deep in bargain territory.

During the difficult time the mining sector is going through Energold is not generating profits.

Energoldsearnings and consequently share price is linked to the state of the mining industry.

MRV Engenharia (Jan/11: -59.8%; 2013: -37.2%)

MRV is a homebuilder in Brazil that focuses on lower income segments (the new middle class),

producing around 40k units per year.


9/14


Brazilsequity market has been under pressure, and was one of the worst performers for the past

years, dragging MRVs shares along. The company has a healthy financial situation with a NetDebt/EBITDA of 1.9x, a brAA- debt rating from Standard&Poor and a cheap valuation of around 8x

earnings.

I see MRV as one of the best plays on the emergence of the middle class in Brazil, have held the

shares in the portfolio since its inception and have no plans of letting go of them.

Alternative Asset Opportunities (Jan/13: -15.8%)

This is a close-ended fund of Traded Life Interest Policies (TLI) who is trading at a steep discount toNAV (-13% at year end and is currently at around 20.7% due to a NAV increase).

The story and rationale remain the same and Imstill expecting an upwards of 20% in IRR, having

averaged down my purchase price as the year rolled on. This fund offers an attractive,

uncorrelated and low-risk upside, with impending catalysts of increased maturitiesand buy-back

using surplus cash.

Review of best performing positions

Just a few words on the best performing positions, only one of which is a TOP 10 holding

unfortunately:

Ted Baker(Feb/11: +207.7%; 2013: +110.2%)

This is one of the oldest positions in the portfolio. I bought just a few shares because I wanted to

follow the company closely and hopefully manage to increase the position at lower levels, whichwas never realized.

Since the purchase Ted Baker has seen its sales and profits increase by 56% and 60% respectively

and increased its store count by 28% to 316.

Ted prides itself of being a NoOrdinary Designer Labeland has a very clear, unswerving, focus

on quality, attention to detail and quirky sense of humor that continues bringing new and old

costumers in the door. The shares are by no means cheap, but the opportunity for expansion

remains great.

OPAP (Jul/11: +1.4%; 2013: 97.25%)

OPAP has the monopoly to operate and manage numerical lottery and sports betting games in

Greece, and it is Europesbiggest betting firm. During the year a group called Emma Delta acquired


10/14


a 33% in the company from the Greek state, as part of the privatization program. Curiously, one of

the hedge funds I follow closest, Third Point (managed by Dan Loeb), also tried buying the statesstake, but was unsuccessful.

Although the revenues for the first 9 months of 2013 are down about 10%, the worst seems to be

over and the 3Q marked the first quarter of positive comps after 12 consecutive declining

quarters.

PAX Global Technology (Aug/12: 147.6%; 2013: 95.0%)

PAX is the market leader for POS terminals in China, a market with tremendous opportunities,where there are only 3 POS for every 1000 inhabitants, which compares with 20-30 for Western

countries.

The company is steaming ahead, with revenues for the first half of the year increasing by 19%

compared with the same period in 2012. Shares have appreciated significantly and are now

trading for 17 times 2013E earnings, which compares with 7.5 when I first added them to the

portfolio. The 17 multiple would be relatively cheap for a company with PAXscharacteristics and

growth opportunities, but once you take into consideration that the company actually has excess

cash that amounts to 1/3 of its market capitalization, the situation becomes even more attractive,

bringing the multiple down to only 11 times (this PE x-cash was only 3 when the position was firstadded).

Amadeus IT Holdings (Mar/11: 143.6% ; 2013: 67.2%)

This is the type of company I love owning: boring, unknown to most, with a good business model

and protected by a strong moat. The company is the middle man between travel providers (think

airlines) and travel agencies, providing indirect distribution services; it also provides back office IT

solutions for airlines.

Amadeusmodel makes it a transaction-based business, with 90% of recurring revenues, making

the company is a Free Cash Flow machine, that continues to steadily grow its revenues and

earnings due both to industry growth and market share gains.

I cut the position in half during February of 2013 only to see the shares appreciate by more than

+40% for the rest of the year, making this one of the costliest errors I did during the year. The main

reasons for halving the position were the fear that airlines would rebel against Amadeus fees,

Googlesentry into the GDS space would have an impact on Amadeusmargins, limited room to

grow revenues and a fair valuation at 15 times earnings (at the time).What I failed to realize is that Amadeusmoat is very strong, making airlines strongly reliant on its

services, the fact that Googles entry will take years to (maybe) have an impact and that a 15x

earnings multiple is very undemanding for the quality of this companysearnings.


11/14


Archer Daniels Midlands (Sep/11: +66.7%; 2013: +61.9%)

Already reviewed in Top5 contributors for the year

I will not review the 5 worst performing stocks because they coincide with the 5 positions that had

the worst contributions to the portfolio.

Investing is much like dieting: it is simple but not easy

-Warren Buffett

Review of Portfolio Investment Rules (copy from 2012 letter)

In order to force myself to be disciplined, I imposed a set of rules on the portfolio. These rules are

intended to define what I can and cannot do, set limits towards what type of instruments areavailable and define where I can invest:

Gross long exposure must be within the 70%-130% range

Long stocks, with a maximum gross exposure of 130% of assets

Maximum individual position is set at 10%

Short stocks, with a maximum gross exposure of 30%

Maximum individual position is set at 2.5%

Warrants & Options, with a maximum exposure (notional) of 20%

Currency is hedged to Euros on a best effort basis

No geographic/sector restrictions

No restrictions on investable asset classes (as long as it is traded in a stock-exchange)

I am very conservative in what concerns asset allocation, avoid using leverage and do not engage

in short-term trading. Shorts, warrants & options are not actively sought, only wanting to have

the possibility of using these instruments if presented with the right opportunities.


12/14


It is also important to define risk. Most investors define risk as the volatility (the daily, weekly or

monthly variation of the portfolios value). I take a very different view and define risk aspermanent loss of capital. This means that I do look to risk as how much a price of a security

oscillates, but rather on what is the probability I will permanently lose my capital in investing in a

particular security.

I welcome volatility as it creates opportunities to acquire securities at attractive prices!

Conclusion

2013 was a very calm year for investors in the stock market, with relatively few surprises during

the year, and strong returns across the board. Hopefully 2014 will bring more ups and downs so

that I get the opportunity to add quality businesses at attractive prices to the portfolio.

Looking ahead, I still see equities (both developed and emerging) as the best place to be invested

for someone with a long-term investment timeframe. Despite the strong returns of 2013, most

markets are either approaching fair-value or cheap.

On the other hand, I see bonds in general (government, investment grade and high yield) as veryunattractive, and with a very high probability of generating negative (after tax) real returns over

the next business cycle.

2014 looks promising, and I hope to add (at least) a few promising companies to the portfolio.

Be like a duck. Calm on the surface, but always paddling like the dickens underneath.

- Michael Caine


13/14

11,3%

28,9%

0,7%

1,6%

21,5%

12,2%

4,7%

4,4%

5,3%

0,2%

6,1%

3,1%

0% 5% 10% 15% 20% 25% 30% 35%

Financials

Information Technology

Industrials

Energy

Consumer Discretionary

Consumer Staples

Health Care

Materials

ecommunication Services

Utilities

Other

Cash

61,3%

8,6%

3,0%

4,6%4,7%

4,9%

3,0%

1,8%

0,8%

0,9%

0,7%

0,4%

0,2%

0,2%

1,8%

3,1%

0% 10% 20% 30% 40% 50% 60% 70%

United States

China

Canada

FranceGermany

Spain

Israel

Ukraine

Brazil

United Kingdom

Kazakhstan

Japan

Australia

Switzerland

Others

Cash

Allocation by CountryAllocation by Sector

Currency Exposure


For more information please contact Filipe Alves da Silva directly

or send anemail to [email protected]

Contacts

Weight

IBM 7,6%

Apple Inc 6,9%

Microsoft Corporation 6,6%

Fidel i ty China Specia l Si tuations 6,6%

PepsiCo 5,1%

iShares MSCI World ETF Hedged 4,8%

Berkshire Hathaway 4,5%

BMW 4,5%

Archer Daniels Midlands 4,1%

AMERCO 3,7%

54,5%

Name

Total TOP 10 Positions

89,3%

-5,1%

7,1%0,8% 3,3% 0,5% 1,8% 1,7%

-20%

0%

20%

40%

60%

80%

100%

EUR USD CNY BRL CAD GBP UAH HKD

Max. Long Exposure: 130%

Min. Long Exposure: 70%

Position Sizing (Long): Max Position 10% (at purchase)

Use of Derivatives: May use options or warrants

(Max notional exposure of 20%)

Ability to Short: Max individual position 2.5%

Max gross short exposure 30%

Currency Hedging: Hedged on a best effort basis

Investment Guidelines

This report is based on my portfolio. Reference to specific

securities should not be construed as a recommendation to buy or

sell these securities. You should always conduct the due diligence

yourself.

Disclaimer

E L E M E N T

Largest Positions
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


14/14

Complete List of Holdings


Weight

IBM 7,6%

Apple Inc 6,9%

Microsoft Corporation 6,6%

Fide li ty China Special Si tuations 6,6%

PepsiCo 5,1%

iShare s MSCI World ETF He dge d 4,8%

Berkshire Hathaway 4,5%

BMW 4,5%Archer Daniels Midlands 4,1%

AMERCO 3,7%

BlackRock 3,6%

Alternative Asset Opportunities 3,6%

Lowe's 3,5%

Teva Pharmaceuticals 3,0%

CF Industries 2,7%

Amadeus IT Holdings 2,6%

Chatham Lodging Trust 2,5%

Societe d'Edition de Canal+ 2,3%

Corning Inc 2,2%

Telefnica 2,2%

Renault 2,2%

Avangard 1,8%

PAX Global Technology 1,5%

OPAP 1,4%

IMAX Corporation 1,2%

General Motors 1,1%

MRV Engenharia 0,8%KazMunaiGas E&P 0,7%

Patient Safety Technologies 0,5%

Cninsure 0,5%

Monument Mining 0,5%

Calfrac Well Services 0,4%

Energold Drilling 0,4%

Ted Baker 0,4%

GAP Inc 0,3%

Addvantage Technologies 0,2%

Veris Gold Corp 0,2%

Cash 3,1%

Total 100,0%

Name

Documents

Element Global Value - 4Q13 (Year End Letter)