companies in our fully invested, concentrated portfolio
billion market capitalization range at initial purchase**
year track record
billion Mid Cap Value assets under management as of 6/30/2024
billion AUM capacity, assuming no net inflows into other strategies
-
Guides
Philosophy
- Fundamentals drive stock prices
- Capital preservation improves returns
- Culture shapes investment decisions
-
Shapes
Process
- Thorough, proprietary research by career analysts
- Focus on valuation and risk controls
- Team environment – group discussion/analyst decision
-
Generates
Portfolio
- Concentrated and diversified
- Long-term/low turnover
- Fully invested/limit on cash
-
Performance
- Consistent pattern of results
- Objective: Outperform the benchmark over the longer term
Mid Cap Value
Quarter 2 2024
Equity Composite Performance
- Cooke & Bieler - Gross of Fees
- Cooke & Bieler - Net of Fees
- Russell Midcap® Value Index
Quality Characteristics1
- C&B Mid Cap Value†
- Russell Midcap® Value Index*
| ROC 5 Year Avg | Cash Interest Coverage | Debt/EBITDA | Forecasted P/E (Wtd. Harm. Avg.) | P/Normalized Earnings (Wtd. Harm. Avg.) |
|---|---|---|---|---|
| 10.6% | 5.8x | 3.0x | 13.5x | 12.5x |
| 10.1% | 6.3x | 2.9x | 17.0x | - |
| ROC 5 Year Avg | 10.6% | 10.1% |
|---|---|---|
| Cash Interest Coverage | 5.8x | 6.3x |
| Debt/EBITDA | 3.0x | 2.9x |
| Forecasted P/E (Wtd. Harm. Avg.) | 13.5x | 17.0x |
| P/Normalized Earnings (Wtd. Harm. Avg.) | 12.5x | - |
Portfolio Attributes1
- C&B Mid Cap Value
- Russell Midcap® Value Index
| # Holdings | Market Cap ($B) Range | Market Cap ($B) (Wtd. Avg.) | Annual Turnover |
|---|---|---|---|
| 48 | 1.7 - 61.9 | 16.0 | 26% |
| 699 | 0.4 - 93.1 | 25.7 | - |
| # Holdings | 48 | 699 |
|---|---|---|
| Market Cap ($B) Range | 1.7 - 61.9 | 0.4 - 93.1 |
| Market Cap ($B) (Wtd. Avg.) | 16.0 | 25.7 |
| Annual Turnover | 26% | - |
Top 10 Holdings1
| AerCap | 2.9% |
| Gildan Activewear | 2.9% |
| Laboratory Corporation | 2.8% |
| Teleflex | 2.8% |
| Fidelity National Financial | 2.8% |
| Omnicom | 2.6% |
| Open Text | 2.6% |
| State Street | 2.6% |
| Woodward | 2.6% |
| TE Connectivity | 2.5% |
Top 10 Holdings1
| AerCap | 2.9% |
| Gildan Activewear | 2.9% |
| Laboratory Corporation | 2.8% |
| Teleflex | 2.8% |
| Fidelity National Financial | 2.8% |
| Omnicom | 2.6% |
| Open Text | 2.6% |
| State Street | 2.6% |
| Woodward | 2.6% |
| TE Connectivity | 2.5% |
Sector Weights1
- C&B Mid Cap Value
- Russell Midcap® Value Index
-
Communication Services
C&B Mid Cap Value 4.7% Russell Midcap® Value Index 2.9% -
Consumer Discretionary
C&B Mid Cap Value 14.5% Russell Midcap® Value Index 9.0% -
Consumer Staples
C&B Mid Cap Value 4.5% Russell Midcap® Value Index 3.5% -
Energy
C&B Mid Cap Value 1.3% Russell Midcap® Value Index 5.6% -
Financials
C&B Mid Cap Value 22.1% Russell Midcap® Value Index 18.2% -
Health Care
C&B Mid Cap Value 12.0% Russell Midcap® Value Index 6.2% -
Industrials
C&B Mid Cap Value 19.6% Russell Midcap® Value Index 20.1% -
Information Technology
C&B Mid Cap Value 8.5% Russell Midcap® Value Index 9.7% -
Materials
C&B Mid Cap Value — Russell Midcap® Value Index 7.2% -
Real Estate
C&B Mid Cap Value 4.8% Russell Midcap® Value Index 10.1% -
Utilities
C&B Mid Cap Value 2.4% Russell Midcap® Value Index 7.5% -
Cash
C&B Mid Cap Value 5.7% Russell Midcap® Value Index —
Additional Cooke & Bieler Mid Cap Value Disclosures
Mid Cap Value Equity Composite
| Year | Total Return Gross of Fees (%) | Total Return Net of Fees (%) | Russell Midcap® Value Index (%) | Russell Midcap® Value Index 3-Yr Std Dev (%) | Composite 3-Yr Std Dev (%) | Composite Dispersion (%) | Market Value ($Millions) | Total Firm Assets ($Millions) | # of Portfolios |
|---|---|---|---|---|---|---|---|---|---|
| 2014 | 5.65 | 5.08 | 14.75 | 9.81 | 10.98 | 0.12 | 547.7 | 4,921.9 | 11 |
| 2015 | -1.83 | -2.33 | -4.78 | 10.71 | 11.93 | 0.15 | 398.2 | 4,804.9 | 11 |
| 2016 | 24.90 | 24.25 | 20.00 | 11.30 | 13.03 | 0.29 | 441.3 | 5,303.4 | 8 |
| 2017 | 16.30 | 15.33 | 13.34 | 10.32 | 11.72 | 0.13 | 496.9 | 5,912.3 | 7 |
| 2018 | -13.58 | -14.32 | -12.29 | 11.96 | 13.89 | 0.07 | 483.6 | 5,084.6 | 9 |
| 2019 | 38.32 | 37.31 | 27.06 | 12.79 | 15.56 | 0.22 | 865.1 | 9,757.1 | 10 |
| 2020 | 4.74 | 3.96 | 4.96 | 22.62 | 25.49 | 0.58 | 3,201.5 | 9,540.8 | 11 |
| 2021 | 23.03 | 22.13 | 28.34 | 21.95 | 24.41 | 0.11 | 3,909.4 | 11,942.6 | 12 |
| 2022 | -13.57 | -14.23 | -12.03 | 24.44 | 25.14 | 0.15 | 3,511.5 | 10,678,1 | 14 |
| 2023 | 21.03 | 20.14 | 12.71 | 19.31 | 18.32 | 0.17 | 3,721.8 | 11,834.8 | 12 |
The Mid Cap Value Equity Composite has been examined for the period from March 1, 1998 through December 31, 2022. The examination report is available upon request.
The Cooke & Bieler Mid Cap Value Equity Composite (Composite) has an inception date of March 1, 1998 and includes all fully discretionary, fee paying, mid cap value equity portfolios managed for more than one month. The Composite was created in March 1998. For investment purposes, we generally define mid cap equity securities as those of companies whose market capitalization is within the Russell Midcap® Index at initial time of purchase. Securities are selected using the firm’s fundamental, bottom-up approach. Portfolios are concentrated, typically holding approximately 40-50 securities.
The standard fee agreement is 0.75 of 1% on the first $25 million, 0.65 of 1% on the next $25 million, and 0.58 of 1% per annum on the remaining balance, however fees are negotiable. Effective 1/1/2017, net of fee returns are calculated monthly by deducting one twelfth of the annual model fee rate for the respective period across all accounts in the Composite. The Composite includes accounts that pay performance-based fees. Prior to 1/1/2017, net of fee returns reflect the deduction of actual management fees. As of 12/31/23, less than 1% of Composite assets are custodied with brokers that do not charge trading commissions. Accounts custodied elsewhere will incur trading expenses, which may reduce returns.
For comparison purposes, the Composite is measured against the Russell Midcap® Value Index. The index returns are provided to represent the investment environment existing during the time periods shown and are not covered by the report of independent verifiers. FTSE Russell is a subsidiary of London Stock Exchange Group (LSEG) and is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of FTSE Russell Indexes.
Cooke & Bieler Additional Disclosures
Notes:
- Cooke & Bieler, L.P. claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. Cooke & Bieler has been independently verified for the periods January 1, 1993 through December 31, 2022. The verification report is available upon request. A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite maintenance as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm‐wide basis. Verification does not provide assurance on the accuracy of any specific performance report.
- The Firm is defined as Cooke & Bieler, L.P., an independent investment management firm and is registered as an investment adviser under the Investment Advisers Act of 1940. Registration does not imply a certain level of skill or training.
- Rates of return are calculated in U.S. dollars. Portfolios are valued monthly on a trade date basis. Portfolio returns reflect the reinvestment of dividend and interest income.
- Returns are presented both gross and net of fees. Gross of fee returns do not reflect the deduction of investment advisory fees. Client returns will be reduced by investment advisory fees and other expenses they may incur in the management of their investment advisory accounts. Investment advisory fees are described in Part 2A of Form ADV. The actual fee charged is subject to negotiation and may depend on the asset size, client location, and type of portfolio.
- Dispersion is measured using an asset weighted standard deviation of portfolio gross returns represented within the Composite for the full year.
- A list of composite descriptions is available upon request. Policies for valuing investments, calculating performance, and preparing GIPS Reports are also available upon request.
- For comparison purposes, each index is fully invested and includes the reinvestment of income. The returns for each index do not include any transaction costs, management fees or other costs.
- The three-year annualized ex-post standard deviation measures the variability of the composite (using gross returns) and the benchmark for the preceding 36-month period.
- GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein.
- Past performance is not indicative of future results. All investing involves risk, including loss of principal.
Strategy Commentary
Download Commentary
As inflation showed itself to be stubbornly persistent and interest rates appeared to weigh more heavily on the economy, investors became less optimistic in the second quarter that the Federal Reserve would be able to engineer a soft landing. Expectations for rate cuts were pushed further out and 10-year interest rates fell slightly, deepening the yield curve inversion that has held for most of the last 12 months.
Cooke & Bieler’s Mid Cap Value Strategy underperformed the Russell Midcap® Value Index during the quarter, posting a -7.72% return gross of fees (-7.90% net of fees) against a -3.40% return for the benchmark.