AdvisorOne.com | April 2012 India: Still a land of PRINTED COPY FOR PERSONAL READING ONLY. NOT FOR DISTRIBUTION. (investment) Opportunity? FA Insight: How to cultivate the best employees Nothing riles the 2012 SMA Managers of the Year. They’ve seen it all before and continue to outperform in the most volatile of markets by John Sullivan The one thing seen among all of this year’s winners? performance, firm, people, process, style, customer service, tax “Dividend yield,” says Gib Watson, Prima Capital’s president efficiency and composite. and CEO, which probably doesn’t come as a surprise, given the The goal? To identify two finalists for each award, desperate search for income in this slow-growth world. with one of the finalists being recognized as the primary This is the eighth year Investment Advisor has teamed with recommendation. the Denver-based research firm to announce the best SMA The categories are: Large-Cap U.S. Equity Manager; managers in multiple categories. Prima, which was purchased Mid-Cap U.S. Equity Manager; Small-Cap U.S. Equity by Envestnet in February (see the June 2011 issue for more about Manager; International or Global Manager; Taxable or TaxEnvestnet), looks for repeatable and sustainable processes in Exempt Fixed Income Manager; and Specialty Manager, the products and managers they choose. The products must which involves a specialty stock, dividend strategy, opportunisreport to the PrimaGuide research application, have at least tic alpha manager, all-cap, go-anywhere or tax-aware strategy. $200 million in assets and have tenured management of at Unfortunately, no one qualified for the Specialty Manager least three years. Products and managers must rate highly category this year, but fortunately, two competing firms in one according to Prima’s due diligence process, which uses a proPRINTED COPY FOR PERSONAL READING ONLY. FOR DISTRIBUTION. category were so NOT close in the outcome of Prima’s due diligence prietary, systematic, multifactor manager evaluation methodprocess that both were awarded the prize. It was just one of ology that combines both quantitative and qualitative criteria. many pleasant surprises to come from this year’s crop. There are 13 factors that the analysts consider, including Investment Advisor April 2012 | AdvisorOne.com P latform shoes and leisure suits quickly faded (thank God), but one other product of the 70s, Cambiar Investors, founded in 1973, has withstood the test of time, much to the delight of its clients. “You don’t have to find every single great stock out there,” says Jennifer Dunne, the firm’s international portfolio manager and senior analyst. “But if you put one in the portfolio, it better go up.” Jennifer Dunne International Equity Award Cambiar Investors LLC The Denver-based boutique firm is 100% employeeowned with roughly $7.5 billion in assets under management. The inception of the ADR portfolio (for which they won the award) was February 2006. The International Equity Fund was launched in 1997 as a trust and converted to a ‘40 Act fund in 2002. Currently, the ADR overlaps the international fund by 100% (the fund owns two additional names). More impressively, the global investment team averages 18 years experience for each of its 10 analysts. “Our president, Brian Barish, was the driving force behind the launch of the international strategy,” Dunne adds. “We are all sector specialists. We don’t rotate; we stay focused on our areas of expertise, which translates to a tremendous amount of trust when it comes to the insight and recommendations we offer.” Cambiar’s single investment philosophy, according to Molly Cisneros, the firm’s senior vice president, is to find relative value across multiple asset classes. “However, we’re not out there buying cheap for cheap’s sake,” Cisneros stresses. “We also look for high-quality companies, a quality and experienced management team and low amounts of debt. We feel that last point kept us out of the problems that plagued so many of our competitors in the past few years.” The team’s inflection point is one with a one- to two-year time horizon. During the period the position is held, they expect 50% (yes, 50%) of total return—roughly 40% of appreciation combined with roughly 10% of dividend distributions. “We ask ourselves why a particular valuation is compressed,” Dunne says. “Is it structural or transitory? This is where the experience comes in.” The point, she concludes, is to have a very analyst- and research-based process. “We have between 40 and 50 stocks in the portfolio,” Dunne says. “Lots of stocks go up 20% or 30%, but our 50% PRINTED COPY the FOR PERSONAL READING hurdle really concentrates mind, and that’s something that separates us.” Photo: John Johnston International ADR Portfolio ONLY. NOT FOR DISTRIBUTION. (#72266) Reprinted with permission from Investment Advisor magazine. Copyright 2012 by The National Underwriter Company doing business as Summit Business Media. All Rights Reserved. For more information about reprints from Investment Advisor, contact PARS International Corp. at 212-221-9595. Cambiar’s objective of selecting stocks having a potential for 50% appreciation may or may not be realized. For more information on Cambiar Investors please contact us at: 1.888.673.9950 www.cambiar.com