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FAM Presentation April 2011

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FAM Presentation April 2011 Powered By Docstoc
					Adding Value While Managing Risk
Profile of Fairlane


•   Manages traditional & non-traditional bond mandates

•   Experienced investment professionals

•   Targets high net worth and institutional investors

•   80% of our investors have been with us for more than fifteen
    years




                                                                   2
Fairlane’s History


•   Fairlane Asset Management was founded in 2003

•   Merged with Strathy Investments Ltd. in 2005 creating over 25
    years of experience

•   Registration with the Ontario Securities Commission:
        Portfolio Manager (PM)
        Investment Fund Manager (IFM)




                                                                    3
Fairlane’s Business


•   Our focus is providing superior absolute returns

•   We concentrate in “Special Situation Investing” using the
    following investment strategies:
    •   Long / Short Investing (Credit Arbitrage Fund)
    •   Long Investing (A Plus Bond Fund)




                                                                4
Investment Approach


•   Thorough and detailed company research and analysis

•   Exploit inefficiencies across security classes

•   Focus on “out of favour” and “under-researched” securities

•   Invest in a small number of investments




                                                                 5
Investment Philosophy/Principles

Protect clients’ wealth

Above average returns

Absolute return orientation

Value

Contrarian

Discipline

               A flexible approach allows us to capitalize
        on opportunities through all stages of the economic cycle.


                                                                     6
How we Structure our Portfolio


•   Invest in a focused and thoroughly researched portfolio of
    investments, primarily A+ rated securities or better

•   Portfolio typically consists of 15-20 credits due to the limited
    number of exceptional opportunities available

•   Strategy is to maximize returns over the long-term, not provide a
    stable 1% per month




                                                                        7
Financial Instruments Utilized


•   Instruments used include:
       •  Bank debt
       •  Senior debt
       •  Subordinated debt
       •  Other liquid investment grade debt

•   We are not forced to remain in sectors that no longer offer value




                                                                        8
Risk Management


•   Our goal is not to avoid risk, but to understand the risks we are
    taking and ensure that the portfolio is well compensated for them


•   Our key lines of defense:
      •   Research
      •   “Scenario analysis” and “stress testing” of portfolio
          allows us to assess overall risk




                                                                        9
Fairlane Product Profile


                                                          Fairlane Growth Fund
                                                          Small to Mid Cap Equity
    Expected Return




                                       Credit Arbitrage Fund
                                       Canadian Fixed Income Strategies




                      Fairlane A Plus Bond Fund
                      Canadian Midterm Credit Bonds




                                            Risk




                                                                                    10
Fairlane A Plus Bond Fund

OBJECTIVE:

  The philosophy of the Fund is to actively invest in under-valued
  investment grade corporate bonds with an average credit rating
  of “A” in order to achieve maximum reliable returns. The
  portfolio will have an average duration of no more than 5 years.

INVESTMENTS:

  The investments are sovereign debt issued in Europe, US,
  Australian, New Zealand and Government of Canada. Currency
  is priced in US and Canadian dollar. Currency exposures are
  managed with hedges using options and futures.




                                                                     11
Fairlane A Plus Bond Fund vs
Globe Canadian Fixed Income Peer Index




                                         12
Fairlane A Plus Bond – Monthly Returns


4%




0%

     Best Month: 4.23% April 2009                                                61 up 75.3%
     Worst Month: (1.16%) December 31, 2009                                   20 down 24.7%

     *Returns measured quarterly from Jan 2001 to Dec 2004 and monthly from Jan 2005 to Sept 2010

                                                January 2001 to April 2011


                                                                                                    13
Fairlane Credit Arbitrage Fund

OBJECTIVE:

  The philosophy of the Fund is to opportunistically invest in credit where
  attractive risk adjusted returns can be captured. We seek the best values
  within the corporate bond market, understand them within a variety of
  market environments, take positions when we believe they are attractive
  and exit these positions when we feel they become less appealing. The
  objective is to invest when spreads are compelling, not to invest for the
  sake of deploying cash. The intention is disciplined security selection,
  rather than interest rate prediction. Anomalies in specific securities or
  sectors are identified through a rigorous evaluation process that utilizes
  fundamental analysis, credit analysis, historic time series, swaps and
  relative value. Government bonds are sold against securities to hedge
  market risk.

INVESTMENTS:
  The portfolio will be a combination of investment grade credit,
  governments and provincials.


                                                                               14
Fairlane Credit Arbitrage vs S&P 500




                                       15
Fairlane Credit Arbitrage Fund:
Leverage and Shorting

•   Leverage

    •   Used to improve return profile of conservative investments
    •   Currently using 2.8 times market value
    •   Can be adjusted to suit client profile

•   Shorting

    •   Short Canadian Government Bonds on a risk adjusted basis
    •   Risk is monitored daily and adjusted weekly




                                                                     16
Fee Information

•   Management fees annually cover:
      •  office overhead
      •  administrative staff
      •  due diligence travel expenses

•   Performance fees (with high water mark) cover:
       •  bonus pool for administrative staff
       •  compensation for partners

•   Minimum account size:
      •  10 million Canadian dollars

       *A Plus Bond base fee 50 bps
        Credit Arbitrage base fee is 1%, performance fee is 15%




                                                                  17
Why Invest with Fairlane?


•   Experienced

•   Solid track record

•   Focused on making money in absolute, not relative terms




                                                              18
The Ideal Fairlane Investor
(Know your client)

•   Investment Size

    •   investment does not represent more than 20% of net worth
    •   investment does not tax the liquid financial resources of the
        client
    •   accounts are segregated, therefore they are scaleable as well
        as transparent

•   Investment Horizon

    •   minimum one year hold period, but prefer longer horizon
    •   willing to take bad years with the good



                                                                        19
Fairlane Team


  Philip Strathy Fixed Income and Small Cap Equities

  Vicki Hunter Fixed Income

  John Strathy Fixed Income Advisor

  Geoff McCrea Equity Arbitrage

  Rob Bradeen Equity Advisor



                                                       20
           Contact
    30 St. Clair Ave West, Suite 1105
        Toronto, Ontario M4V 3A1
  t (416) 975-1920 f (416) 975-1933
www.fairlane-am.com | vcraig@strathy.com

				
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posted:10/1/2011
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