Value Investing in the st 21 Century Lyn

The Growth/Value Spectrum Type of Growth/Value Characteristics 1) Pure Growth Often unprofitable and speculative,

Valuation: Sum of Parts 1) Macro 2) Currency 3) Growth Topline Margins Per-Share 4)

Five Quality Criteria 1) Benefits from long-term trends 2) Strong returns on invested capital

International Value: Historical Peaks 1980’s: Japan peaked, 30+ years of recovery 1990’s: United States

Sberbank: Sum of Parts Growth: 4% Dividend: 6% Valuation: 6% (P/E 6 to 8)

Appendix Charts FATRADER. com Lyn. Alden. com

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Value Investing in the st 21 Century Lyn Alden Schwartzer

The Growth/Value Spectrum Type of Growth/Value Characteristics 1) Pure Growth Often unprofitable and speculative, reliant on external funding, huge growth rates • Example: Netflix 2) Profitable Growth Profitable, consistent, high ROIC growth • Example: Adobe 3) High-Quality Value High ROIC, safe and growing dividends, wide moat, strong balance sheet, moderate growth • Example: Unilever 4) Deep Value Turnaround story, low valuation, potential restructuring opportunity, quite risky • Example: Macy’s

Value and Growth Performance

The Power of Dividends Over Time

Valuation: Sum of Parts 1) Macro 2) Currency 3) Growth Topline Margins Per-Share 4) Dividends 5) Valuations

High-Level Macro View

Five Quality Criteria 1) Benefits from long-term trends 2) Strong returns on invested capital 3) Durable economic moat 4) Safe balance sheet 5) Good management

Disciplined Process, Strong Results

International Value: Mean Reversion

International Value: Historical Peaks 1980’s: Japan peaked, 30+ years of recovery 1990’s: United States peaked, 14 years of recovery 2000’s: Emerging Markets peaked, 11 years of recovery 2010’s: United States peaking? Highest-valued major market in the world Biggest profit margins in the developed world Strong dollar vs most other currencies Has the largest twin-deficit among the G 7

Dollar Strength is at a Historic Peak

International Value: U. S. Percentage

Twin Deficits for Major Countries

International Value: Markets Compared

International Value: The CEF Clue

Stock Example: Sberbank

Recession Resiliency

Sberbank F. A. S. T. Graph

Russia’s Reserve Stockpile

Russia’s Gold Reserves and Debt Levels

Sberbank: Sum of Parts Growth: 4% Dividend: 6% Valuation: 6% (P/E 6 to 8) Currency: 3% (15 -20% Gain) Total: 19%

Thank You FATRADER. com Lyn. Alden. com

Appendix Charts FATRADER. com Lyn. Alden. com

The Long Term Edge

Last Year’s Portfolio Returns

Dollar Strength and Domestic Funding

Banks Holding Treasuries: Record High

Global Value Pays Well