vine street presentation final

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Protecting and growing wealth September 8, 2015

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Page 1: Vine Street Presentation Final

Protecting and growing wealthSeptember 8, 2015

Page 2: Vine Street Presentation Final

Contents

I. Experience and structure

II. Mission and philosophy

III. Our approach

IV. Why we win

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Page 3: Vine Street Presentation Final

Vine StreetCapital Management, LLC

Experience and structureA history of success

Zachary Perry, CFA 20 Years of successful investing • Franklin Templeton - 13 years - Small cap portfolio

manager for Private Client Group for ten years. Grew assets from less than $50 million to more than $1 Billion. Annualized return of >10% vs Proxy Index of ~4%**

• Osterweis Management - 6 years - Investments outperformed the S&P 500 during tenure**. Expanded Osterweis’ investments to Latin America

• Vine Street Capital Management - Partner at Corte Madera based Registered Investment Advisor. Provide investment management and financial advice to individuals and institutions

Education • Princeton University BA• Wharton MBA

**Source: Franklin Templeton performance documents and Osterweis Mgt performance documents 3

Page 4: Vine Street Presentation Final

Vine StreetCapital Management, LLC

John C Bernabei, CFP 23 years of Institutional Investing Experience • Prudential Financial – 12 years. Head of west coast equity

desk. Provided investment advice to money managers and hedge funds in equity strategy, sector and stock selection.

• Wells Fargo – 4 years. Provided investment advice on US equity strategy, sector and stock selection

• CLSA / Tucker Anthony – 6 years. Provided investment advice on asian strategy and stock selection (CLSA) and small cap stock selection (Tucker Anthony)

• Vine Street Capital Management - Partner at Corte Madera based Registered Investment Advisor. Provide investment management and financial advice to individuals and institutions

Education • Michigan State University – BS in Mechanical Engineer• University of Southern California – MBA in Finance

Experience and structureA history of success

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Page 5: Vine Street Presentation Final

Vine StreetCapital Management, LLC

Our Structure Registered Investment Advisor • Products include internally managed Core Equity, Income Equity, and

portfolio allocation services into other asset classes• Offers full transparency into portfolio through custodial Schwab• Client avoids dilution and tax inconsistency of funds• $500,000 minimum

Diversified portfolio of 25-35 investments • Diversify by industry, geography and capitalization to control volatility• Top 20 holdings = 70-80% of portfolio• Invest globally• No leverage

Experience and structureSimple and transparent

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Page 6: Vine Street Presentation Final

Vine StreetCapital Management, LLC

Our Mission

Protect and grow client’s wealth through strong performance while controlling risk

Our Philosophy

We partner with our clients • Culture of honesty and transparency• Stable investment strategy• Rigorous risk control• Invest our liquid net worth along side clients

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Mission and philosophyA partnership with our clients

Page 7: Vine Street Presentation Final

Vine StreetCapital Management, LLC

Our Objective

Outperform the S&P 500 over rolling 5-year periods

By compounding at reasonable returns with good companies webelieve we can outperform through a business cycle (which typicallylast 4-6 years) without taking undue risk.

We do not seek to outperform every quarter or every year becausesuch expectations require unwarranted risk taking that leads to poordecision making, trend following, and eventually, value destruction.

We recommend that clients consider Vine Street a multi-year investment opportunity

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Mission and philosophyA consistent measure of success

Page 8: Vine Street Presentation Final

Vine StreetCapital Management, LLC

Our Premise We can outperform Wall Street because our focus is: • Long term compounding• Business Analysis• Concentrated portfolio selection can add alpha over the long term

Wall Street focuses on: • Short term price movements• Marketing and asset accumulation

Investment community is driven by a casino mentality • High turnover• High priced performance and trading fees• Opaque and complicated strategies• Marketing gimmicks

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Mission and philosophyInvest - don’t gamble

Page 9: Vine Street Presentation Final

Vine StreetCapital Management, LLC

Using a multi-year horizon offers an advantage

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The Wall Street Casino

Page 10: Vine Street Presentation Final

Vine StreetCapital Management, LLC

The Street is focused on marketing over stock picking

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Stock Pickersare becoming rare

Page 11: Vine Street Presentation Final

Our approach

Client Trust

Multi-Year

Investment

Horizon

Disciplined

Value

Approach

Appropriate

Risk Control

Strong

Five-Year

Returns

Page 12: Vine Street Presentation Final

Vine StreetCapital Management, LLC

Long Term Investing means: •Assuming 4 to 10 year holding periods•Analyzing a company’s prospects throughout a business cycle•To understand risk to earnings and the balance sheet in a recession•To understand how industry changes may help or hurt the firm•To understand hidden value/risks and compounding returns/costs

Long Term Investing allows the following strategies: •Buy below intrinsic value when volatility strikes•Use intrinsic value to determine portfolio – not indexes•Own well-managed firms without market timing•Wait for non-linear returns•Allow investments to compound their advantage

Investors with short horizons cannot follow these strategies 12

Our approachMulti-year horizon

Page 13: Vine Street Presentation Final

Vine StreetCapital Management, LLC

Value investing means buying companies that have the following characteristics:

A strong sustainable market position • High or growing returns on capital• Strong management focused on shareholder value• Trading below intrinsic value

Buying below intrinsic value means: We look to purchase these businesses when trading at a compoundedreturn of 15% or greater based on discounted cash flows

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Our approachBuying value

Page 14: Vine Street Presentation Final

Vine StreetCapital Management, LLC

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Our risk control is fundamental analysis

Causes of Permanent Losses Our Risk Control

Overpaying for future growth • Invest only at discount to intrinsic value• No fads or trends

Disintermediation risk Discard businesses that are dying or have little defensibility

Liquidity risk• No leverage at portfolio level• Cash flow to support balance sheet at

investment level

Agency risk• Partner with our clients• Transparency and communication• Measure for long term investing

Page 15: Vine Street Presentation Final

Vine StreetCapital Management, LLC

But only with the proper risk control and client staying power

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Why we winValue wins over time

Page 16: Vine Street Presentation Final

Why We WinOur investment process works

Because we partner with our clients

Client Trust

Multi-Year

Investment

Horizon

Disciplined

Value

Approach

Appropriate

Risk Control

Strong

Five-Year

Returns

Page 17: Vine Street Presentation Final

Vine StreetCapital Management, LLC

Benefits for Vine Street Clients: • 40 combined years of successful investing• Experience and an approach that has succeeded in a wide range of difficult markets

• A partner for your long term investing needs with skin in the game• An approach focused on value and risk control• A firm that offers transparency and access to the manager• Portfolio allocation services and financial planning

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Why our clients win