CAMBIAR SMID VALUE COMMENTARY 2Q 2020

MARKET REVIEWFinancial assets rose in unison during the second quarter – with stocks, bonds and commodities all notching strong gains. Within the U.S. equity markets, the S&P 500 Index climbed 20.5%, while the smaller cap Russell 2000 Index posted a 25.4% return. On a style basis, growth stocks remain firmly in the driver’s seat – a trend that has been in place for much of the current cycle, but has been exacerbated in the current pandemic environment. The ‘gro-mo’ trade (growth and momentum) has reached a level where Nasdaq stocks are outperforming the broader market by magnitudes last seen in the dotcom bubble. Granted, many tech companies today have real revenues and earnings, but implied valuations are approaching euphoric levels.

After providing a margin of downside protection in the first quarter, Cambiar’s domestic strategies outperformed their respective passive benchmarks to the upside in the second quarter. The ability to perform well in two very different market environments has largely been a function of attaching to quality companies that can not only see through, and past, the current uncertainty, but can also be in a position to take market share as business conditions normalize.

In Cambiar’s first quarter commentary, we noted that event-driven bear markets such as the one that took place in 1Q often take on a ‘faster in/faster out’ profile. That said, the shift in investor sentiment from one of fear to one of missing out was certainly much quicker than expected – with an approximate 45% rally in the S&P 500 from the March bottom to early June. Stocks subsequently weakened into quarter-end in response to a re-intensifying of COVID-19 cases and corresponding delays to small business re-opening schedules.

As we reach the halfway point of 2020, the S&P 500 Index has returned -3.1%. Given the pandemic-induced collapse in economic activity and resulting rise in unemployment, this modest pullback in the equity market speaks to the continued resiliency of risk assets. As has been the case for most of the current cycle, any decline in stocks has been an opportunity to buy – and the drawdown in March was no exception. While factors such as oversold market conditions and progress on a COVID-19 vaccine contributed to a portion of

the second quarter gains, Cambiar views the massive expansion in money supply to be the primary upward catalyst for stock prices in 2Q. The rise in money supply is illustrated in the following graph:

In aggregate, an extraordinary amount of uncertainty regarding the forward economic outlook is being countered by an extraordinary monetary (and fiscal) response. And unlike the 2008-2009 financial crisis, the monetary transmission mechanism in the current market is very much intact; as such, the Fed’s money supply explosion has quickly made its way into the real economy…and asset prices.

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Source: Bloomberg

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SMID VALUECONTRIBUTORS

Top Five Avg. Weights Contribution

Cerence Inc 2.60 2.84

ON Semiconductor 2.62 1.28

Incyte Corporation 2.13 1.13

IPG Photonics 2.45 1.08

Charles River Laboratories 2.65 1.05

DETRACTORS

Bottom Five Avg. Weights Contribution

Synchrony Financial 0.39 -0.03

Huntington Ingalls 2.39 -0.04

Air Lease Corporation 0.04 -0.18

American Financial 2.31 -0.28

BankUnited, Inc. 0.87 -0.32

A complete description of Cambiar’s performance calculation methodology, including a complete list of each security that contributed to the performance of the Cambiar portfolio mentioned above is available upon request. Please contact Cambiar at 1.888.673.9950 for additional information. Past performance is no guarantee of future results.

2Q 2020 YTD 1 Year 3 Year 5 Year Since Inception

SMID Value (gross) 21.7% -15.0% -7.4% 5.6% 5.6% 12.3%

SMID Value (net) 21.5% -15.2% -8.0% 4.9% 4.9% 11.7%

Russell 2500 Value 20.6% -21.2% -15.5% -2.6% 1.9% 8.1%

SMID Value Composite Inception Date: 7.31.2010 / See Disclosure – Performance

Small-mid cap equities experienced a potent recovery in the second quarter, just months after suffering one of the worst declines in the history of small cap indices. After outperforming the index in the first quarter decline, the Cambiar Small-Mid Value (SMID) portfolio outgained the benchmark by a solid margin in 2Q. Although broad-based in nature, the rally had somewhat of a lower quality bias – as higher beta/higher leverage names led the advance, while traditional defensive sectors such as Utilities and Real Estate lagged. Given Cambiar’s quality focus vs. the market backdrop in the quarter, we are relatively pleased with the portfolio’s ability to outperform in an environment that was less suited for our investment discipline.

As investors stepped back into the market, the primary beneficiaries were some of the hardest-hit areas from the first quarter; examples include Consumer Discretionary and Energy. While not surprised by the bounce seen in some of these sectors, an investment ‘all-clear’ is far from secure (in our opinion). As such, Cambiar remains focused on identifying durable businesses that can look through and past the current environment, as opposed to a shorter-term trading opportunity.

Buy/sell activity returned to more normal levels in the quarter, with Cambiar making three new purchases and

five liquidations. There were no thematic underpinnings to the new names entering the portfolio, and the SMID portfolio remains diversified across/within sectors of the market. Residual cash averaged approximately 3% in the quarter – which is close to being fully invested (essentially one open slot in the portfolio). Given the upswing in equities, this cash position was a negative contributor in the quarter (vs. the fully invested index). The first two quarters of the year illustrate the self-cancelling impact of portfolio cash (i.e., helped in 1Q, detracted in 2Q).

Cambiar’s holdings in Technology comprised the largest contribution to performance (at a sector level) in the quarter. The SMID Value portfolio continues to maintain a constructive view towards technology companies, with the sector representing approximately 20% of the portfolio as of quarter-end. While the portfolio generated outsized gains in a number of tech positions, software company Cerence Inc. was a notable standout, with the stock gaining ~168% in the quarter. Cerence’s voice recognition technology has a dominant market share in the auto OEM market, and we believe its offerings should take on greater importance as software becomes even more entrenched in next generation EV/autonomous vehicles. Cambiar trimmed the portfolio (multiple times) in the quarter to reflect the gain in share price; that said, we remain constructive on the

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company’s prospects and continue to believe Cerence represents an attractive investment opportunity.

The Real Estate sector represented another bright spot for the SMID portfolio, on both an allocation and stock selection basis. As a group, real estate stocks have endured a challenging year, as the economic fallout from the pandemic led many investors to rotate out of the sector on the basis that many tenants would renege (or ask for extensions/modifications) on their rent/lease obligations. Cambiar’s active underweight position in the sector has subsequently had a positive impact on performance. The portfolio also benefited from positive stock selection in the sector, with Invitation Homes and VICI Properties posting strong gains. VICI rallied in response to the company reported to having collected 100% of rents from their casino tenants in May and June. Invitation Homes is a leading owner/operator of single-family rental homes; the company similarly moved up after stating that rental receipts have been relatively unaffected by the pandemic.

As previously mentioned, Energy and Discretionary stocks were notable outperformers in the quarter. The SMID Value portfolio does not have a current allocation to Energy, which hampered performance (relative to the index) for 2Q. Price volatility in energy stocks has been significant this year, particularly in the smaller cap segment of the market. While we continue to monitor the sector, Cambiar believes there is better visibility in other areas of the market. Within Consumer Discretionary, all of the portfolio’s holdings participated in the market upswing, but did not keep pace with the sharp rally in the index. Despite their recent recovery, the outlook for pandemic epicenter industries such as cruise lines, restaurants, retail, and airlines, remains highly uncertain. And despite their recent rebound, many of these companies remain deep in the red on a year-to-date basis. Cambiar’s approach in the Discretionary sector is to remain selective, with an emphasis on companies who have the balance sheet, brand and staying power to manage through the current environment.

Although Cambiar’s Industrial holdings generated positive results on an absolute basis, returns in the sector trailed the index and were thus a detractor from performance for the quarter. Many of these positions held up well in 1Q – so the fact that they did not recover by the same magnitude in 2Q is understandable. Toro (lawn/landscaping equipment) and Huntington Ingalls (shipbuilder) were two holdings that posted flattish returns in the quarter (vs. 23% for the average industrial company in the index). For Toro,

strong growth on the residential side has been offset by deferred equipment purchases on the professional (e.g., golf courses) side. We believe this delay should create a pent-up demand situation in future quarters. Regarding Huntington, the company reported mixed results due to a transitory (i.e., pandemic) decline in construction capacity. Despite this recent setback, Huntington maintains one of the highest backlogs in the defense industry, and Cambiar believes the intermediate term investment thesis remains intact.

The strong rebound in small-mid stocks has been a welcomed development – after a very difficult first quarter drawdown. That said, protection of principal remains paramount in the buy decision, given the potential for additional choppiness in the back half of 2020. Our team continues to prioritize companies that meet Cambiar’s quality and balance sheet attributes, as these characteristics should provide a margin of downside protection should market conditions deteriorate, as well as participate to the upside in a recovery scenario.

LOOKING AHEADThe first two quarters of 2020 have been somewhat extraordinary in the speed and magnitude of stock moves – from the quickest descent into a bear market on record to a full retracement that has the S&P 500 Index within sight of its February all-time high. While the recent surge in COVID-19 cases have given consumers pause, this increased caution has yet to make its way to the equity markets. If anything, the whipsaw in stocks over the past six months is just another example of how hard it is to time the market.

With stocks effectively completing their V-shaped recovery, the obvious question on investors’ minds is the direction of the markets from here. While strategists tend to look at similar patterns in history as a guide, the sample size for the move in stocks thus far in 2020 is fairly small – and certainly does not include a global health pandemic. Additional factors such as the status of unemployment benefits/additional stimulus measures, a still-hobbled job market, rising geopolitical tensions, and an upcoming U.S. presidential election add more uncertainty to the forward trajectory for equities.

It is Cambiar’s view that COVID-19 news flow remains front and center for investors, with the stop-and-go impact on stocks likely to continue until there is more clarity on timing of a vaccine (in our opinion, an

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early/mid 2021 event). Despite the overly optimistic signals currently being given by rising stock prices, a sustainable recovery of the economy will be very difficult until there is some resolution on this front. Cambiar continues to closely monitor the pandemic situation and its impact on companies – current holdings as well as companies we would like to own. Protection of principal remains paramount; as such, our team remains biased towards companies whose earnings and cashflow should be relatively more insulated, vs. companies whose business outlook is more closely correlated to the health backdrop.

We hope you and your families remain safe, and we appreciate your continued confidence in Cambiar Investors.

DISCLOSUREPerformance: The performance information represents the respective Cambiar strategy composite and may be preliminary. Returns are presented gross (g) and net (n) of management fees and include the reinvestment of all income. Gross and net returns have been reduced by transaction expenses. Net returns are also reduced by actual investment advisory fees and other expenses that may be incurred in the management of the account. Gross returns for Cambiar’s SMID Value Composite include accounts with both gross and “pure” gross performance. “Pure” gross returns, applicable to separately managed accounts that are part of broker-affiliated or broker-sponsored programs, including wrap programs, that waive commission costs or bundle fees including commissions (SMA), are not reduced by any expenses, which includes transaction costs, and are provided as supplemental information. Net returns for SMAs are calculated by subtracting actual SMA fees reported by the SMA sponsor. Cambiar negotiates advisory fees with each individual client or relationship. Please refer to our Form ADV Part 2A for additional information regarding our investment management fees. Net of fees performance reflects a blended fee schedule of all accounts within the relevant composite. SMAs might also incur bundled fees that are charged by brokerage firms which sponsor SMA fee programs and that may include transactions costs, investment management, portfolio monitoring, consulting services, and in some cases, custodial service fees. Cambiar clients and mutual fund investors may incur actual fee rates that are greater or less than the rate reflected in this performance summary. Results are reported in U.S. dollars. Index returns include the reinvestment of all income, and assume no management, custody, transaction or other expenses. Each index is a broadly based index that reflects overall market performance and Cambiar’s returns may not be correlated to the index against which it is compared for a number of reasons including investment approach and number and types of holdings. Each index is unmanaged, and one cannot invest directly in an index. Cambiar’s past results do not necessarily indicate Cambiar’s future performance and, as is the case with all investment advisors who concentrate on equity investments, Cambiar’s future performance may result in a loss. The top/bottom contributors is for a representative portfolio in the strategy. A complete description of Cambiar’s performance calculation methodology, including a complete list of each security that contributed to the performance of the portfolios, is available upon request. Please contact Cambiar at 1-888-673-9950 for additional information.

SMID Value Benchmark: The Russell 2500™ Value Index is a float-adjusted, market capitalization-weighted index comprised of firms in the Russell 2500™ Index that experience lower price-to-book ratios and lower forecasted growth values. The Russell 2500 Index is a float-adjusted, market capitalization-weighted index that measures the performance of the 2,500 smallest companies in the Russell 3000® Index, which consists of 3,000 of the largest U.S. equities.

Certain information contained in this communication constitutes “forward-looking statements”, which are based on Cambiar’s beliefs, as well as certain assumptions concerning future events, using information currently available to Cambiar. Due to market risk and uncertainties, actual events, results, or performance may differ materially from that reflected or contemplated in such forward-looking statements. All information provided is not intended to be, and should not be construed as, investment, legal or tax advice. Nothing contained herein should be construed as a recommendation or endorsement to buy or sell any security, investment or portfolio allocation. Securities highlighted or discussed have been selected to illustrate Cambiar’s investment approach and/or market outlook. The portfolios are actively managed and securities discussed may or may not be held in client portfolios at any given time, do not represent all of the securities purchased, sold, or recommended by Cambiar, and the reader should not assume that investments in the securities identified and discussed were or will be profitable. As with any investments, there are risks to be considered. All material is provided for informational purposes only and there is no guarantee that the opinions expressed herein will be valid beyond the date of this presentation.

M2 is a measure of the money supply that includes cash, checking deposits, and easily convertible near money.

Russell: Russell Investment Group is the source and owner of the Russell Index data contained or reflected in this material and all trademarks and copyrights related thereto. The presentation may contain confidential information and unauthorized use, disclosure, copying, dissemination or redistribution is strictly prohibited. This is a presentation of Cambiar Investors, LLC. Russell Investment Group is not responsible for the formatting or configuration of this material or for any inaccuracy in Cambiar’s presentation thereof.

Cambiar SMID Value Commentary | 2Q 20205