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Weekly Market Recap
Date: 02/09/2015
Last Week:
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The Dow Jones Industrial Average recovered rose 659 points (+ 3.8%), more than recovering the 508
point (-2.9%) whack from the previous week
o The weekly gain was the largest point gain since December 2011
o Disney led the way, rising 12.2%
o Merck was the caboose, falling 2.6%
o The Dow is now up for the year (by 1 point!) after January’s 3.7% swoon
Dow Transports motored ahead as well, rising 3.4% for the week
o Transports rose despite the jump in oil prices
Dow Utilities did not join the party, falling 3.7%
After dipping below 2000, the S&P reversed sharply gaining 3.0% to 2055
o Nine of 10 sectors advanced with only Utilities falling
o The Telecommunications and Energy sectors were the best performers
o More cyclical groups outperformed such as Coal, Nonferrous Metals, Business Training and
Transport Services
o Worst were Office Equipment, Gold Miners, Electric Utilities
o Earnings reports were mixed, F/X, transition, typical lowering of guidance
New highs on the NYSE beat new lows by more than 4 to 1, 486 vs 111
Smaller issues performed well too
o The S&P Smallcap 600 gained 3.9%
o The S&P Midcap 400 up 2.9%
The NASDAQ Composite gained 2.4%
Interest rates spiked with the 10 year Treasury up 26 basis points to 1.94%, the largest one week
increase since June 2013
Oil (West Texas) gushed 7% for the week to $51.69 per barrel and is now up 13% over the past two
weeks
o Oil prices see-sawed during the week. Initial optimism on higher than expected rig count
reductions during the previous week (-128 rigs) was then offset midweek by concern over
crude inventory reports which were double consensus estimates with stockpiles at the
highest level on a monthly basis in the last 80 years.
o However by week end another weekly reduction in rig counts (-100 in North America last
week to 1837 rigs) pushed prices ahead for the week. Can you say volatility?
Gold fell to a three week low, closing at $1235/oz. Gold is up 4.3% for the year
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The Eurozone continues to wrestle with slow growth and debt issues
o German Industrial Production disappointed, rising 0.1% versus 0.4% expectations in
December although the region’s Purchasing Managers’ Index hit a six month high. With
Eurozone QE German bond yields plumbed new depths, now below those of Japan for the
first time (chart courtesy Strategas Research).
The Greek drama added another chapter when the ECB announced that it would no longer
accept Greek government debt as collateral for funding the Greek government. Despite the
new leaders’ more conciliatory tone, creditors such as Germany are still playing hardball so
stay tuned. Could a Greek exit of the Eurozone roil the markets or is the fear worse than the
reality by now?
Central bankers continue to work overtime in Euroland
o The big debate rages on, are these policymakers reacting to economic data or really just
waging currency wars akin to the beggar thy neighbor policies of yesteryear?
o Finland became the first Eurozone country to sell at auction five year government debt at a
negative yield (yes, you are reading that correctly) when a 1 billion euro sale was priced at an
effective yield of -0.017%. The Financial Times notes that about one-third of the Eurozone’s
sovereign debt market is trading with negative yields.
o Denmark again cut its interest rate on deposits at the central bank to -0.75% (yes, negative),
the fourth cut in three weeks. The jury is out on whether the Danish Nationalbank can keep
the peg to the Euro, especially after the Swiss threw in the towel in January on similar efforts
o With high debt levels, will lower rates and depreciating currencies be enough to kick-start
growth without structural reform?
Similar happenings elsewhere around the globe
o More signs Brazil may be in recession as December’s industrial production fell 3%. The
resignation of the CEO of oil giant Petrobras and the downgrade of its debt cannot help
business confidence in the world’s fifth largest country
o Asian eco-data was mixed, China’s growth continues to slow (China buys 7% of Europe’s
exports, a reminder that we’re all connected at least a little bit)
o
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The Reserve Bank of Australia was the latest central bank to ease monetary policy in
response to declining oil prices. It cut its benchmark interest rate to a record low of 2.25%
Tuesday
Not to be outdone, the Peoples’ Bank of China also eased, lowering the required reserve ratio
by 50 basis points to 19.5%
Cornerstone Macro Research now counts 17 easings year-to-date vs 2 tightenings
Meanwhile back in the U.S. – jobs rocked
o The U.S. January jobs report again was robust with payroll employment up 257,000
including +39,000 construction jobs. Although government jobs fell 10,000 in January, the
five year headwind of declining government jobs seems to be abating (chart courtesy
Cornerstone Macro Research)
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Don’t count Philly Fed Governor Plosser as a fan of the Fed’s communication efforts: “Our
statement is a bit like the Hotel California…words check in and they never check out. We
have too many words…too long…too confusing”
M&A activity continues – Evercore/ISI counted 10 deals for $60 billion last week
o Pfizer bid $17 billion for pharma and drug delivery company Hospira
o Verizon agreed to sell wireline assets to Frontier Communications for $10 billion and lease
rights on the majority of remaining towers to American Tower for $5 billion
o FCC Chairman Tom Wheeler weighed in on “net neutrality,” floating proposals to regulate
internet and wireless services under Title II of the Telecommunications Act. Industry,
lobbyists, consumer groups and politicians are opining. Investors are most interested in the
reactions of Comcast and AT&T, which have pending mergers with Time Warner Cable and
Direct TV, respectively, hanging in the balance
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The prior two months were also revised higher by 144,000 jobs. The unemployment rate
ticked up 0.1% to 5.7% due to labor force expansion (up 1 million) and a slight increase in the
labor participation rate
 Cornerstone Macro Research notes payroll employment gains over the past three
months have averaged 336,000, the fastest in 17 years and that the breadth of
industries reporting higher employment is the best in 16 years
Speculation again shifts whether/when the Federal Reserve’s will nudge up interest rates.
Inflation measures have been tepid and the Fed says they will be “patient” but will rising
average hourly earnings (AHE) gains at 2.6% change their tune? We may get a hint at
Chairman Yellen’s February 24th Humphrey-Hawkins Congressional testimony
This Week
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Asian markets were mixed overnight, with the Nikkei up 0.4%, the Hang Seng down 0.6% and the
Shanghai Composite up 0.6%
o China’s inflation data Tuesday will signal whether it will ease monetary policy like the rest
of the world. Early indications show consumer price indices coming in low, raising
expectations of stimulus
European markets are lower with the Euro Stoxx down 1.7%. The FTSE is down 0.7%. The CAC 40 is
down 1.1%. The DAX is down 1.5%. The ASE Athens is down 6%, led by financials down 9%
o Greek Prime Minister Alexis Tsipra made a speech which showed faint intention of sticking
to the terms of an international bailout to keep Greece afloat. Standard & Poor’s cut Greece’s
credit rating again on Friday
 “The possibility of Greece leaving the euro zone has increased with this speech from
35 percent to 50 percent,” said LNG Capital chief credit strategist Gary Jenkins
U.S. markets early morning are responding to the Greek crisis and Chinese growth concerns with
S&P futures down roughly 10 points
o WTI crude is up $1 to $52.50/barrel and Brent crude up $0.50 to $58.30/barrel
o Natural gas is up $0.05 to $2.65/Mcf
o Gold is up $6/oz to $1,240
o After the meteoric rise of the U.S. dollar in the second half of 2014, the Dollar has flat-lined
the last few weeks and is up slightly 0.05% this morning
o After a slight rebound in February, the 10 year Treasury yield is down 5bps today to 1.9%
Scant M&A news:
o Harris Corp is acquiring Exelis for $4.7 billion as U.S. defense spending stagnates
According to Strategas, roughly two-thirds of the S&P 500 have reported fourth quarter earnings
with 71% beating, a surprise factor of 5%. Last quarter, 74% beat with a surprise factor of 5%
The last three years of forward S&P estimates have followed a typical cadence of starting hot while
creeping down over the year. This consistency is exemplified perhaps by the VIX being relatively
docile and remarkably range bound between roughly 12 and 20
o Lately though, S&P earnings estimates have been ratcheting back at an accelerated pace,
perhaps due to a confluence of significant factors: strengthening of the dollar against foreign
currencies, oil price contraction and tempered international GDP growth expectations
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Over 60 S&P 500 constituents report this week:
o Monday
 Crown Castle, Waste Connections, Diamond Offshore Drilling, Hasbro, TECO
Energy, Loews, Masco, Computer Sciences, Dun & Bradstreet
o Tuesday
 Crown Holdings, Akamai, KKR, Omnicom, NCR Corp., Martin Marietta, PG&E,
Regeneron, Wyndham, Coca-Cola, HCP, Starwood Hotels, Reynolds, CVS Health,
Sealed Air, Western Union, Pioneer Natural Resources, FMC Technologies,
Genworth, Cerner, Molson Coors
o Wednesday
 Pepsi, Mondelez, MetLife, Cisco, Yamana Gold, Time Warner, Zoetis, Lorillard,
Wisconsin Energy, Mosaic, Nvidia, Applied Materials, Northeast Utilities, NetApp,
CenturyLink, Tesoro, Equifax, Whole Foods, TripAdvisor
o Thursday
 Nielsen, Republic Services, Markel, Scripps, Dr. Pepper Snapple, BorgWarner,
Hospira, Avon, Coca-Cola Enterprises, International Flavors & Fragrance, McGraw
Hill, Apache, Kellogg, AIG, DaVita, CBS, Assurant
o Friday
 Exelon, JM Smucker, DTE, Ventas, VF Corp, Interpublic
Economic data and events, not a particularly heavy week:
o Monday
 MBA Foreclosures as % of Total Loans (2.39% prior and has been coming down since
the peak in 2010), China CPI/PPI, Obama/Merkel meeting
o Tuesday
 NFIB Small Business Optimism (100.4 prior and 101.1 cons – steadily rising), Job
Openings (4,972 prior and 4,948 cons – highest level since 2001)
o Wednesday
 MBA Mortgage Apps Weekly % Change (up 1.3% prior)
o Thursday
 January Retail Sales (-0.9% prior and -0.5% cons, but note: numerous ways to slice –
ex auto, gas, grocery, etc.), Initial Jobless Claims (278k prior and 288k cons), Business
inventories month to month (0.2% prior and 0.2% cons), European Leaders Summit
o Friday
 European Leaders Summit, Eurozone Q4 GDP, University of Michigan Sentiment
(98.1 prior and 98.2 cons), Import Price Index month to month (-2.5% prior and -3.3%
cons)
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Performance
BB&T Scott & Stringfellow Preliminary Performance for wrap accounts managed by the Sterling Equity
Opportunities Group, Net of Fees. Performance reflects reinvested interest income and dividends and
realized and unrealized capital gains and losses.
(The performance presented represents past performance and is no guarantee of future results. Market
conditions vary from year to year and can result in a decline in market value due to material market or
economic conditions. The information shown is supplemental information; please refer to Sterling
Capital Management’s Form ADV 2 for additional information.)
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Leaders -1.1% year to date, +85.1% cumulative, since inception (12/31/00)
S&P 500 Total Return +0.0% year to date, +105.1% since portfolio inception (12/31/00)
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Special Opportunities -0.9% year to date, +273.9% since inception (12/31/00)
Russell 3000 Total Return +0.3% year to date, +119.5% since portfolio inception (12/31/00)
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Equity Income +0.1% year to date, +202.3% since inception (12/31/00)
Russell 1000 Value Total Return -0.7% year to date, +142.9% since portfolio inception (12/31/00)
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SMID +1.3% year to date, +45.5% since inception (6/30/11)
Russell 2500 Total Return +1.1% year to date, +57.5% since portfolio inception (6/30/11)
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Insight +0.4% year to date, +63.6% since inception (8/31/11)
Russell 1000 Total Return +0.3% year to date, +82.1% since portfolio inception (8/31/11)
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Enhanced Equity -0.6% year to date, +93.9% since inception (12/31/03)
CBOE BuyWrite Total Return +0.2% year to date, +73.0% since portfolio inception (12/31/03)
As always, thanks very much for your interest and support.
Chip Ford, CFA
757-417-4959
[email protected]
Dan Morrall
757-417-4955
[email protected]
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Investment advisory services are available through Sterling Capital Management LLC, a separate subsidiary of BB&T Corporation. Sterling Capital
Management LLC manages customized investment portfolios, provides asset allocation analysis and offers other investment-related services to affluent
individuals and businesses. Securities and other investments held in investment management or investment advisory accounts at Sterling Capital
Management LLC are not deposits or other obligations of BB&T Corporation, Branch Banking and Trust Company or any affiliate, are not guaranteed by
Branch Banking and Trust Company or any other bank, are not insured by the FDIC or any other government agency, and are subject to investment risk,
including possible loss of principal invested.
Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial trends, which are based
on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not
intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all
investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied upon for, accounting,
legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts
contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.
8
Sterling Capital Management – Special Opportunities SMA Composite – Scott & Stringfellow
January 1, 2003 – December 31, 2013
Description: Consists of all discretionary separately managed wrap Special Opportunities portfolios at BB&T Securities/Scott & Stringfellow. Sterling’s Special Opportunities equity portfolios invest
primarily in companies with the best perceived combination of underlying growth potential and attractive valuation in a concentrated portfolio that has the flexibility to shift among styles.
Year
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
Annualized Since Inception
Total Return
"Pure"
Gross of Fees
26.47
15.49
-2.82
12.73
39.58
-31.98
16.24
23.07
4.67
29.90
11.22
Total Return
Net of Fees
24.79
13.91
-4.14
11.15
37.57
-32.96
14.60
21.29
3.11
27.85
9.60
No. of
Portfolios
1,414
1,524
1,828
2,007
2,002
2,029
1,573
1,043
878
472
Total Assets
End of Period
($MM)
621
528
563
650
600
436
552
346
261
156
Percent of
Firm Assets
1.4
11.9
14.3
18.3
21.1
22.9
26.8
26.2
28.9
29.9
Total
Firm Assets
($MM)
45,638
4,420
3,932
3,548
2,839
1,908
2,059
1,319
904
522
Composite
Dispersion
(%)
0.4%
0.5%
0.6%
0.7%
0.0%
1.5%
0.7%
0.7%
0.5%
0.8%
Russell
3000
33.55
16.42
1.03
16.93
28.34
-37.31
5.14
15.72
6.12
11.95
5.25
Composite
3-Year
St Dev (%)
13.56
15.87
17.39
22.61
21.24
19.07
8.80
8.62
10.45
14.87
Benchmark
3-Year
St Dev (%)
12.71
15.95
19.62
22.94
20.61
16.02
8.25
7.62
9.63
15.05
Sterling Capital Management LLC claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with
the GIPS standards. Sterling Capital Management LLC has been independently verified for the periods 01/01/01 to 12/31/12. The verification report(s) is/are available upon request.
Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and
procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite
presentation.
Notes:
1. Sterling Capital Management LLC (SCM) is a registered investment advisor with the SEC. Sterling manages a variety of equity, fixed income and balanced assets. Prior to January 2001, Sterling
was a wholly owned subsidiary of United Asset Management (UAM). In January 2001, Sterling Capital Management LLC purchased all the assets and business of Sterling Capital Management
Company from UAM to become an employee owned firm. There were no changes in personnel. In April 2005, BB&T Corporation purchased a majority equity ownership stake in Sterling
Capital Management LLC. There were no changes in personnel. In October 2010, the management group of Sterling Capital entered into an agreement with BB&T Corporation that reduced and
restructured management's interest in Sterling Capital Management. Additionally, BB&T Asset Management merged into Sterling Capital Management. There were no material changes in
personnel. In January 2013, CHOICE Asset Management firm merged into Sterling Capital Management. There were no changes in personnel.
2. George F. Shipp, CFA, has managed the portfolio since inception. No alterations of composites, as presented herein, have occurred due to changes in personnel or other reasons at any time.
3. Inception date of composite: December 31, 2000. Creation date: December 31, 2000. The appropriate index is the Russell 3000 Index which measures the performance of the largest 3,000 US
companies, representing approximately 98% of the investable US market. It represents the universe of stocks from which all-cap managers typically select. The index is reconstituted annually.
Total return includes price appreciation/depreciation and income as a percent of the original investment. A complete list of all of SCM’s composites and their descriptions is available upon
request. Policies for valuing portfolios, calculating performance and preparing compliant presentations are available upon request.
4. Performance reflects reinvested interest income and dividends and realized and unrealized capital gains and losses. All portfolios are valued monthly as of calendar month-end and utilize tradedate and accrued income accounting. Valuations and performance are reported in US dollars. Portfolio returns are calculated monthly using the Modified Dietz method. Portfolios are revalued
for cash flows greater than 10%. Composite returns are calculated by weighting the individual portfolio returns using beginning of period market value plus weighted cash flows. Periodic time
weighted returns are geometrically linked. Returns are not calculated net of non-reclaimable withholding taxes due to immaterial dollar amounts.
5. Gross of fees returns do not reflect the deduction of any trading costs, fees or expenses. The BB&T Securities/Scott & Stringfellow SMA fee includes all charges for trading costs, portfolio
management, custody and other administrative fees. The net return reflects the actual SMA fee of the individual account. The stated fee schedule is: 2.5% on portfolios less than $150,000; 2.2%
on portfolios between $150,000 and $250,000; 2.05% on portfolios between $250,000 and $500,000; 1.75% on portfolios between $500,000 and $750,000; 1.6% on portfolios between $750,000 and
$1,000,00; 1.5% on portfolios between $1,000,000 and $5,000,000; 1.3% on portfolios between $5,000,000 and $10,000,000; and 1.2% on portfolios over $10,000,000.
6. The annual composite dispersion presented is measured by an equal-weighted standard deviation calculation method of all portfolios in the composite for the entire year. The three year
annualized standard deviation measures the variability of the composite and benchmark returns over the preceding 36 month period.
7. The performance presented represents past performance and is no guarantee of future results. Stock market conditions vary from year to year and can result in a decline in market value due to
material market or economic conditions.
Sterling Capital Management – Equity Income SMA Composite – Scott & Stringfellow
January 1, 2004 – December 31, 2013
Description: Consists of all discretionary separately managed wrap Equity Income portfolios at BB&T Securities/Scott & Stringfellow. Sterling’s Equity Income portfolios invest primarily in companies
with a dividend yield greater than the S&P 500 with a history of growing the dividend, either three consecutive years or six of the prior ten years.
Year
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
Annualized Since Inception
Total Return
"Pure"
Gross of Fees
26.77
12.04
10.15
16.04
19.03
-26.29
9.20
23.09
10.19
23.23
10.21
Total Return
Net of Fees
25.01
10.44
8.50
14.38
17.26
-27.35
7.66
21.35
8.63
21.39
8.61
No. of
Portfolios
2,390
2,348
2,327
2,242
2,192
2,187
1,806
1,188
810
370
Total Assets
End of Period
($MM)
1,127
904
849
765
663
552
668
442
263
128
Percent of
Firm Assets
2.5
20.5
21.6
21.6
23.4
28.9
32.4
33.5
29.1
24.5
Total
Firm Assets
($MM)
45,638
4,420
3,932
3,548
2,839
1,908
2,059
1,319
904
522
Composite
Dispersion
(%)
0.5%
0.4%
0.5%
0.7%
1.1%
1.3%
0.6%
0.6%
0.5%
0.4%
Russell
1000 Value
32.53
17.51
0.39
15.51
19.69
-36.85
-0.17
22.25
7.05
16.49
6.08
Composite
3-Year
St Dev (%)
9.84
11.92
14.92
17.88
16.23
13.25
6.52
6.00
9.51
12.76
Benchmark
3-Year
St Dev (%)
12.88
15.73
20.98
23.51
21.40
15.58
8.17
6.78
9.59
14.97
Sterling Capital Management LLC claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with
the GIPS standards. Sterling Capital Management LLC has been independently verified for the periods 01/01/01 to 12/31/12. The verification report(s) is/are available upon request.
Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and
procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite
presentation.
Notes:
1. Sterling Capital Management LLC (SCM) is a registered investment advisor with the SEC. Sterling manages a variety of equity, fixed income and balanced assets. Prior to January 2001, Sterling
was a wholly owned subsidiary of United Asset Management (UAM). In January 2001, Sterling Capital Management LLC purchased all the assets and business of Sterling Capital Management
Company from UAM to become an employee owned firm. There were no changes in personnel. In April 2005, BB&T Corporation purchased a majority equity ownership stake in Sterling
Capital Management LLC. There were no changes in personnel. In October 2010, the management group of Sterling Capital entered into an agreement with BB&T Corporation that reduced and
restructured management's interest in Sterling Capital Management. Additionally, BB&T Asset Management merged into Sterling Capital Management. There were no material changes in
personnel. In January 2013, CHOICE Asset Management firm merged into Sterling Capital Management. There were no changes in personnel.
2. George F. Shipp, CFA, has managed the portfolio since inception. No alterations of composites, as presented herein, have occurred due to changes in personnel or other reasons at any time.
3. Inception date of composite: December 31, 2000. Creation date: December 31, 2000. The appropriate index is the Russell 1000 Value Index which consists of stocks from the Russell 1000 Index
with a less than average growth orientation and a lower price-to-book ratio. It represents the universe of stocks from which value managers typically select. The index is reconstituted annually.
Total return includes price appreciation/depreciation and income as a percent of original investment. A complete list of all of SCM’s composites and their descriptions is available upon request.
Policies for valuing portfolios, calculating performance and preparing compliant presentations are available upon request.
4. Performance reflects reinvested interest income and dividends and realized and unrealized capital gains and losses. All portfolios are valued monthly as of calendar month-end and utilize tradedate and accrued income accounting. Valuations and performance are reported in US dollars. Portfolio returns are calculated monthly using the Modified Dietz method. Portfolios are revalued
for cash flows greater than 10%. Composite returns are calculated by weighting the individual portfolio returns using beginning of period market values plus weighted cash flows. Periodic time
weighted returns are geometrically linked. Returns are not calculated net of non-reclaimable withholding taxes due to immaterial dollar amounts.
5. “Pure” gross of fees returns do not reflect the deduction of any fees including trading costs. The BB&T Securities/Scott & Stringfellow SMA fee includes all charges for trading costs, portfolio
management, custody and other administrative fees. The net return reflects the actual SMA fee of the individual accounts. The stated fee schedule is: 2.5% on portfolios less than $150,000; 2.2%
on portfolios between $150,000 and $250,000; 2.05% on portfolios between $250,000 and $500,000; 1.75% on portfolios between $500,000 and $750,000; 1.6% on portfolios between $750,000 and
$1,000,00; 1.5% on portfolios between $1,000,000 and $5,000,000; 1.3% on portfolios between $5,000,000 and $10,000,000; and 1.2% on portfolios over $10,000,000.
6. The annual composite dispersion presented is measured by an equal-weighted standard deviation calculation method of all portfolios in the composite for the entire year. The three year
annualized standard deviation measures the variability of the composite and benchmark returns over the preceding 36 month period.
7. The performance presented represents past performance and is no guarantee of future results. Stock market conditions vary from year to year and can result in a decline in market value due to
material market or economic conditions.
Sterling Capital Management – Leaders SMA Composite – Scott & Stringfellow
January 1, 2004 – December 31, 2013
Description: Consists of all discretionary separately managed wrap Leaders portfolios at BB&T Securities/Scott & Stringfellow. Sterling’s Leaders equity portfolios invest primarily in companies which
have established themselves as market leaders, exhibiting sustainable advantages in production, marketing and research and development.
Year
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
Annualized Since Inception
Total Return
"Pure"
Gross of Fees
30.51
11.28
-2.81
14.80
44.06
-38.43
16.56
17.79
8.18
15.61
5.70
Total Return
Net of Fees
28.94
9.88
-4.03
13.33
42.12
-39.26
15.02
16.18
6.67
13.90
4.24
No. of
Portfolios
96
105
133
137
141
165
151
141
105
62
Total Assets
End of Period
($MM)
43
37
43
46
43
33
52
41
28
16
Percent of
Firm Assets
0.1
0.8
1.1
1.3
1.5
1.7
2.5
3.1
3.1
3.1
Total
Firm Assets
($MM)
45,638
4,420
3,932
3,548
2,839
1,908
2,059
1,319
904
522
Composite
Dispersion
(%)
0.5%
0.4%
0.5%
0.3%
1.6%
1.2%
0.8%
0.4%
0.4%
1.0%
S&P
500
32.39
16.00
2.11
15.06
26.46
-37.00
5.49
15.79
4.91
10.88
4.64
Composite
3-Year
St Dev (%)
12.38
14.59
16.98
22.25
20.88
17.86
7.50
7.02
8.85
13.80
Benchmark
3-Year
St Dev (%)
12.11
15.30
18.97
22.16
19.91
15.29
7.79
6.92
9.17
15.07
Sterling Capital Management LLC claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with
the GIPS standards. Sterling Capital Management LLC has been independently verified for the periods 01/01/01 to 12/31/12. The verification report(s) is/are available upon request.
Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and
procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite
presentation.
Notes:
1. Sterling Capital Management LLC (SCM) is a registered investment advisor with the SEC. Sterling manages a variety of equity, fixed income and balanced assets. Prior to January 2001, Sterling
was a wholly owned subsidiary of United Asset Management (UAM). In January 2001, Sterling Capital Management LLC purchased all the assets and business of Sterling Capital Management
Company from UAM to become an employee owned firm. There were no changes in personnel. In April 2005, BB&T Corporation purchased a majority equity ownership stake in Sterling
Capital Management LLC. There were no changes in personnel. In October 2010, the management group of Sterling Capital entered into an agreement with BB&T Corporation that reduced and
restructured management's interest in Sterling Capital Management. Additionally, BB&T Asset Management merged into Sterling Capital Management. There were no material changes in
personnel. In January 2013, CHOICE Asset Management firm merged into Sterling Capital Management. There were no changes in personnel.
2. Guy W. Ford, CFA, has managed the portfolio since January 31, 2012, succeeding George F. Shipp, CFA, who had managed the portfolio since inception. No alterations of composites, as
presented herein, have occurred due to changes in personnel or other reasons at any time.
3. Inception date of composite: December 31, 2000. Creation date: December 31, 2000. The appropriate index is the S&P 500 Index which is an unmanaged, weighted index of 500 stocks providing
a broad indicator of price movements. It represents the universe of stocks from which large-cap managers typically select. The index is rebalanced quarterly. Total return includes price
appreciation/depreciation and income as a percent of the original investment. A complete list of all of SCM’s composites and their descriptions is available upon request. Policies for valuing
portfolios, calculating performance and preparing compliant presentations are available upon request.
4. Performance reflects reinvested interest income and dividends and realized and unrealized capital gains and losses. All portfolios are valued monthly as of calendar month-end and utilize tradedate and accrued income accounting. Valuations and performance are reported in US dollars. Portfolio returns are calculated monthly using the Modified Dietz method. Portfolios are revalued
for cash flows greater than 10%. Composite returns are calculated by weighting the individual portfolio returns using beginning of period market value plus weighted cash flows. Periodic time
weighted returns are geometrically linked. Returns are not calculated net of non-reclaimable withholding taxes due to immaterial dollar amounts.
5. Gross of fees returns do not reflect the deduction of any trading costs, fees or expenses. The BB&T Securities/Scott & Stringfellow SMA fee includes all charges for trading costs, portfolio
management, custody and other administrative fees. The net return reflects the actual SMA fee of the individual account. The stated fee schedule is: 2.5% on portfolios less than $150,000; 2.2%
on portfolios between $150,000 and $250,000; 2.05% on portfolios between $250,000 and $500,000; 1.75% on portfolios between $500,000 and $750,000; 1.6% on portfolios between $750,000 and
$1,000,00; 1.5% on portfolios between $1,000,000 and $5,000,000; 1.3% on portfolios between $5,000,000 and $10,000,000; and 1.2% on portfolios over $10,000,000.
6. The annual composite dispersion presented is measured by an equal-weighted standard deviation calculation method of all portfolios in the composite for the entire year. The three year
annualized standard deviation measures the variability of the composite and benchmark returns over the preceding 36 month period.
7. The performance presented represents past performance and is no guarantee of future results. Stock market conditions vary from year to year and can result in a decline in market value due to
material market or economic conditions.
Sterling Capital Management – Insight SMA Composite – Scott & Stringfellow
August 31, 2011 – December 31, 2013
Description: Consists of all discretionary separately managed wrap Insight portfolios at BB&T Securities/Scott & Stringfellow. Sterling’s Insight equity portfolios invest primarily in companies where
there has been recent insider buying activity; we also retain the flexibility to own companies in which insiders own a substantial stake.
Total Return
Total
Composite
"Pure"
Total Return
No. of
End of Period
Total Assets
Percent of
Firm Assets
Dispersion
Russell
Composite
3-Year
Benchmark
3-Year
Year
Gross of Fees
Net of Fees
Portfolios
($MM)
Firm Assets
($MM)
(%)
1000
St Dev (%)
St Dev (%)
2013
28.48
26.64
121
27
0.1
45,638
0.2%
33.11
N/A
N/A
2012
17.74
16.17
74
14
0.3
4,420
0.1%
16.42
N/A
N/A
4 months 2011*
4.86
4.62
2
0
0.0
3,932
3.50
N/A
N/A
Annualized Since Inception
21.86
20.30
22.44
N/A
N/A
*Inception 8/31/11
Sterling Capital Management LLC claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with
the GIPS standards. Sterling Capital Management LLC has been independently verified for the periods 01/01/01 to 12/31/12. The verification report(s) is/are available upon request.
Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and
procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite
presentation.
Notes:
1. Sterling Capital Management LLC (SCM) is a registered investment advisor with the SEC. Sterling manages a variety of equity, fixed income and balanced assets. Prior to January 2001, Sterling
was a wholly owned subsidiary of United Asset Management (UAM). In January 2001, Sterling Capital Management LLC purchased all the assets and business of Sterling Capital Management
Company from UAM to become an employee owned firm. There were no changes in personnel. In April 2005, BB&T Corporation purchased a majority equity ownership stake in Sterling
Capital Management LLC. There were no changes in personnel. In October 2010, the management group of Sterling Capital entered into an agreement with BB&T Corporation that reduced and
restructured management's interest in Sterling Capital Management. Additionally, BB&T Asset Management merged into Sterling Capital Management. There were no material changes in
personnel. In January 2013, CHOICE Asset Management firm merged into Sterling Capital Management. There were no changes in personnel.
2. Adam B. Bergman, CFA, has managed the portfolio since inception. No alterations of composites, as presented herein, have occurred due to changes in personnel or other reasons at any time.
3. Inception date of composite: August 31, 2011. Creation date: August 31, 2011. The appropriate index is the Russell 1000 Index which measures the performance of the largest 1,000 US
companies, representing over 90% of the investable US market. It represents the universe of stocks from which all-cap managers typically select. The index is reconstituted annually. Total
return includes price appreciation/depreciation and income as a percent of the original investment. A complete list of all of SCM’s composites and their descriptions is available upon request.
Policies for valuing portfolios, calculating performance and preparing compliant presentations are available upon request.
4. Performance reflects reinvested interest income and dividends and realized and unrealized capital gains and losses. All portfolios are valued monthly as of calendar month-end and utilize tradedate and accrued income accounting. Valuations and performance are reported in US dollars. Portfolio returns are calculated monthly using the Modified Dietz method. Portfolios are revalued
for cash flows greater than 10%. Composite returns are calculated by weighting the individual portfolio returns using beginning of period market value plus weighted cash flows. Periodic time
weighted returns are geometrically linked. Returns are not calculated net of non-reclaimable withholding taxes due to immaterial dollar amounts.
5. “Pure” gross of fees returns do not reflect the deduction of any fees including trading costs. The BB&T Securities/Scott & Stringfellow SMA fee includes all charges for trading costs, portfolio
management, custody and other administrative fees. The net return reflects the actual SMA fee of the individual account. The stated fee schedule is: 2.5% on portfolios less than $150,000; 2.2%
on portfolios between $150,000 and $250,000; 2.05% on portfolios between $250,000 and $500,000; 1.75% on portfolios between $500,000 and $750,000; 1.6% on portfolios between $750,000 and
$1,000,00; 1.5% on portfolios between $1,000,000 and $5,000,000; 1.3% on portfolios between $5,000,000 and $10,000,000; and 1.2% on portfolios over $10,000,000.
6. The annual composite dispersion presented is measured by an equal-weighted standard deviation calculation method of all portfolios in the composite for the entire year. The three year
annualized standard deviation measures the variability of the composite and benchmark returns over the preceding 36 month period, but is not applicable since the composite inception is
shorter.
7. The performance presented represents past performance and is no guarantee of future results. Stock market conditions vary from year to year and can result in a decline in market value due to
material market or economic conditions.
Sterling Capital Management - SMID Opportunities SMA Composite – Scott & Stringfellow
June 30, 2011 – December 31, 2013
Description: Consists of all discretionary separately managed wrap SMID Opportunities portfolios at BB&T Securities/Scott & Stringfellow. Sterling’s SMID Opportunities equity portfolios invest
primarily in companies similar to the market capitalization of the Russell 2500 index.
Year
2013
2012
6 months 2011*
Annualized Since Inception
Total Return
"Pure"
Gross of Fees
25.34
17.47
-10.17
11.84
Total Return
Net of Fees
23.89
16.08
-10.72
10.51
No. of
Portfolios
20
13
3
Total Assets
End of Period
($MM)
4
2
0
Percent of
Firm Assets
0.0
0.0
0.0
Total
Firm Assets
($MM)
45,638
4,420
3,932
Composite
Dispersion
(%)
0.3%
0.2%
Russell
2500
36.80
17.88
-9.78
16.18
Composite
3-Year
St Dev (%)
N/A
N/A
N/A
N/A
Benchmark
3-Year
St Dev (%)
N/A
N/A
N/A
N/A
*Inception 6/30/11
Sterling Capital Management LLC claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with
the GIPS standards. Sterling Capital Management LLC has been independently verified for the periods 01/01/01 to 12/31/12. The verification report(s) is/are available upon request.
Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and
procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite
presentation.
Notes:
1. Sterling Capital Management LLC (SCM) is a registered investment advisor with the SEC. Sterling manages a variety of equity, fixed income and balanced assets. Prior to January 2001, Sterling
was a wholly owned subsidiary of United Asset Management (UAM). In January 2001, Sterling Capital Management LLC purchased all the assets and business of Sterling Capital Management
Company from UAM to become an employee owned firm. There were no changes in personnel. In April 2005, BB&T Corporation purchased a majority equity ownership stake in Sterling
Capital Management LLC. There were no changes in personnel. In October 2010, the management group of Sterling Capital entered into an agreement with BB&T Corporation that reduced and
restructured management's interest in Sterling Capital Management. Additionally, BB&T Asset Management merged into Sterling Capital Management. There were no material changes in
personnel. In January 2013, CHOICE Asset Management firm merged into Sterling Capital Management. There were no changes in personnel.
2. Joshua L. Haggerty, CFA, has managed the portfolio since inception. No alterations of composites, as presented herein, have occurred due to changes in personnel or other reasons at any time.
3. Inception date of composite: June 30, 2011. Creation date: June 30, 2011. The appropriate index is the Russell 2500 Index which measures the performance of the smallest 2,500 companies in the
Russell 3000. It represents the universe of stocks from which small- and mid-cap managers typically select. The index is reconstituted annually. Total return includes price
appreciation/depreciation and income as a percent of the original investment. A complete list of all of SCM’s composites and their descriptions is available upon request. Policies for valuing
portfolios, calculating performance and preparing compliant presentations are available upon request.
4. Performance reflects reinvested interest income and dividends and realized and unrealized capital gains and losses. All portfolios are valued monthly as of calendar month-end and utilize tradedate and accrued income accounting. Valuations and performance are reported in US dollars. Portfolio returns are calculated monthly using the Modified Dietz method. Portfolios are revalued
for cash flows greater than 10%. Composite returns are calculated by weighting the individual portfolio returns using beginning of period market value plus weighted cash flows. Periodic time
weighted returns are geometrically linked. Returns are not calculated net of non-reclaimable withholding taxes due to immaterial dollar amounts.
5. Gross of fees returns do not reflect the deduction of any trading costs, fees or expenses. The BB&T Securities/Scott & Stringfellow SMA fee includes all charges for trading costs, portfolio
management, custody and other administrative fees. The net return reflects the actual SMA fee of the individual account. The stated fee schedule is: 2.5% on portfolios less than $150,000; 2.2%
on portfolios between $150,000 and $250,000; 2.05% on portfolios between $250,000 and $500,000; 1.75% on portfolios between $500,000 and $750,000; 1.6% on portfolios between $750,000 and
$1,000,00; 1.5% on portfolios between $1,000,000 and $5,000,000; 1.3% on portfolios between $5,000,000 and $10,000,000; and 1.2% on portfolios over $10,000,000.
6. The annual composite dispersion presented is measured by an equal-weighted standard deviation calculation method of all portfolios in the composite for the entire year. The three year
annualized standard deviation measures the variability of the composite and benchmark returns over the preceding 36 month period, but is not applicable since the composite inception is
shorter.
7. The performance presented represents past performance and is no guarantee of future results. Stock market conditions vary from year to year and can result in a decline in market value due to
material market or economic conditions.
Sterling Capital Management – Enhanced Equity SMA Composite – Scott & Stringfellow
January 1, 2004 – December 31, 2013
Description: Consists of all discretionary separately managed wrap Enhanced Equity portfolios at BB&T Securities/Scott & Stringfellow. Sterling’s Enhanced Equity portfolios invest primarily in
companies held in other Equity Opportunities Group portfolios where call options are written opportunistically to enhance the portfolio’s cash flow.
Year
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
Annualized Since Inception
Total Return
Gross of Fees
22.13
10.49
2.26
12.42
30.73
-32.00
11.71
16.50
9.96
13.91
8.44
Total Return
Net of Fees
19.74
8.26
0.21
10.23
28.20
-33.44
9.30
13.80
7.54
11.30
6.17
No. of
Portfolios
20
23
29
31
35
48
44
44
34
18
Total Assets
End of Period
($MM)
11
10
12
15
21
21
22
22
14
6
Percent of
Firm Assets
0.0
0.2
0.3
0.4
0.7
1.1
1.1
1.7
1.5
1.1
Total
Firm Assets
($MM)
45,638
4,420
3,932
3,548
2,839
1,908
2,059
1,319
904
522
Composite
Dispersion
(%)
0.5%
0.7%
0.8%
0.6%
1.0%
1.8%
0.8%
0.6%
0.5%
0.0%
CBOE
Buy/Write
(BXM)
13.26
5.20
5.72
5.86
25.91
-28.65
6.59
13.33
4.25
8.30
5.03
Composite
3-Year
St Dev (%)
11.35
13.68
15.62
20.29
18.99
16.45
6.98
6.20
Benchmark
3-Year
St Dev (%)
9.44
11.60
13.69
17.22
15.88
13.42
4.69
4.11
Sterling Capital Management LLC claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with
the GIPS standards. Sterling Capital Management LLC has been independently verified for the periods 01/01/01 to 12/31/12. The verification report(s) is/are available upon request.
Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and
procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite
presentation.
Notes:
1. Sterling Capital Management LLC (SCM) is a registered investment advisor with the SEC. Sterling manages a variety of equity, fixed income and balanced assets. Prior to January 2001, Sterling
was a wholly owned subsidiary of United Asset Management (UAM). In January 2001, Sterling Capital Management LLC purchased all the assets and business of Sterling Capital Management
Company from UAM to become an employee owned firm. There were no changes in personnel. In April 2005, BB&T Corporation purchased a majority equity ownership stake in Sterling
Capital Management LLC. There were no changes in personnel. In October 2010, the management group of Sterling Capital entered into an agreement with BB&T Corporation that reduced and
restructured management's interest in Sterling Capital Management. Additionally, BB&T Asset Management merged into Sterling Capital Management. There were no material changes in
personnel. In January 2013, CHOICE Asset Management firm merged into Sterling Capital Management. There were no changes in personnel.
2. George F. Shipp, CFA, has managed the portfolio since inception. No alterations of composites, as presented herein, have occurred due to changes in personnel or other reasons at any time.
3. Inception date of composite: December 31, 2003. Creation date: December 31, 2003. The appropriate index is the CBOE Buy/Write Index (ticker symbol BXM) that is designed to show the
performance of a basket of S&P 500 stocks with calls written monthly at the money. It represents the universe of stocks from which covered call managers typically select. Total return includes
price appreciation/depreciation and income as a percent of the original investment. A complete list of all of SCM’s composites and their descriptions is available upon request. Policies for
valuing portfolios, calculating performance and preparing compliant presentations are available upon request.
4. Performance reflects reinvested interest income and dividends and realized and unrealized capital gains and losses. All portfolios are valued monthly as of calendar month-end and utilize tradedate and accrued income accounting. Valuations and performance are reported in US dollars. Portfolio returns are calculated monthly using the Modified Dietz method. Portfolios are revalued
for cash flows greater than 10%. Composite returns are calculated by weighting the individual portfolio returns using beginning of period market value plus weighted cash flows. Periodic time
weighted returns are geometrically linked. Returns are not calculated net of non-reclaimable withholding taxes due to immaterial dollar amounts.
5. Gross of fees returns do not reflect the deduction of any trading costs, fees or expenses. The BB&T Securities/Scott & Stringfellow SMA fee includes all charges for trading costs, portfolio
management, custody and other administrative fees. The net return reflects the actual SMA fee of the individual account. The stated fee schedule is: 2.5% on portfolios less than $150,000; 2.2%
on portfolios between $150,000 and $250,000; 2.05% on portfolios between $250,000 and $500,000; 1.75% on portfolios between $500,000 and $750,000; 1.6% on portfolios between $750,000 and
$1,000,00; 1.5% on portfolios between $1,000,000 and $5,000,000; 1.3% on portfolios between $5,000,000 and $10,000,000; and 1.2% on portfolios over $10,000,000.
6. The annual composite dispersion presented is measured by an equal-weighted standard deviation calculation method of all portfolios in the composite for the entire year. The three year
annualized standard deviation measures the variability of the composite and benchmark returns over the preceding 36 month period.
7. The performance presented represents past performance and is no guarantee of future results. Stock market conditions vary from year to year and can result in a decline in market value due to
material market or economic conditions.