Hereford Funds-IMVA Opportunity Fund
February 2015
February 2015 Investment Review
February finally provided a measure of success for the Fund. I am still trying to get us back to flat for the year, but it was nice to see a move in the right direction.
Early in the month, I reduced our energy sector holdings by completing the liquidation of Triangle Petroleum, trimming Stone Energy, and exiting American Eagle. The Fund remains
overweight the energy sector, but I have tried to lower our risk incrementally by reducing the smaller capitalization exposure. Other activity included partial sales of Intrepid Potash,
Advanced Energy, Apple, Abbott Labs, and Anacor Pharmaceuticals. Advanced Energy (a semi-conductor capital equipment manufacturer) and Anacor have done well for the Fund,
and Anacor continues to excel. Apple and Abbott, both blue chip stocks, appear to have promising futures, but each is fairly popular at the moment, which makes me nervous.
The only purchases during the month were an addition to Luminex and a new position in American Express. Luminex has been weak since the conference call in early February when
the new CEO provided guidance for 2015. The guidance was obviously fairly sobering, but I believe our thesis remains intact. Nachum Shamir, the new CEO, seems to be setting
expectations for the next couple of quarters at levels that he can achieve and hopefully exceed. The real energy and potential upside behind LMNX is the progress of Project Aries.
That product should enter clinical trials shortly, and we hope to see FDA approval in late summer.
American Express’s stock came for sale after the announcement that their deal/partnership with Costco was ending. This move was obviously a negative surprise for the market, and
AMEX was down sharply. Costco has been a very important source of earnings for AMEX, and this change likely means that AMEX earnings will be flat to down in 2015.
Nonetheless, I believe that the weakness in AMEX provided us with an opportunity to buy one of the great finance companies on sale. I am encouraged that AMEX was willing to walk
away from a proposal that did not meet their profitability expectations, and, longer term, I believe that AMEX can outperform based on the quality of its cardholder base, opportunities to
increase merchant penetration, and the security AMEX provides in a world of increasing cyber fraud and crime.
Key Information
NAV A Shares (28/2/15): $64.14
Total Fund Size: $1.93 mil
Strategy Assets: $146.74 mil(a)
Fund Launch Date: 31-Jan-14(b)
Monthly Performance (%)
Mar-14 Apr-14 May-14 Jun-14
-1.3
-2.1
-1.9
5.3
0.8
0.4
2.2
2.3
0.8
0.7
2.4
2.1
Hereford Funds-IMVA Opportunity Fund
S&P 1500 Index(d)
S&P 500 Index(d)
Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15
-6.4
1.7
-8.6
-13.1
-7.7
-5.5
-8.6
7.4
-1.8
4.1
-1.8
2.7
2.5
-0.1
-2.9
5.7
-1.4
4.0
-1.4
2.4
2.7
-0.3
-3.0
5.8
Period Performance (%)
Since Inception 31/03/99
YTD
-1.8
2.7
2.6
IMVA Opportunity Portfolio(c)
S&P 1500 Index(d)
S&P 500 Index(d)
1 yr
-35.3
14.9
15.5
2 yr
-8.4
20.2
20.3
3 yr
2.6
17.9
18.0
4 yr
0.8
14.5
14.6
5 yr
8.5
16.3
16.2
10 yr
9.1
8.2
8.0
Cumulative
132.7
141.3
120.5
Annualised
5.5
5.7
5.1
IMVA Opportunity Portfolio(c) vs. S&P 1500(d) & S&P 500(d)
Ten Years Ending 28/2/15
450
Start of Hereford Funds-IMVA Opportunity Fund
31-Jan-14
350
400
300
350
250
300
200
250
150
200
100
150
50
100
500
IMVA Opportunity Portfolio
Fund's TopTen Holdings
3D Systems Corp.
Luminex Corp.
KVH Industries, Inc.
Anacor Pharmaceuticals, Inc.
Babcock & Wilcox Co.
Intrepid Potash, Inc.
Stone Energy
Cree, Inc.
Murphy Oil Corp.
Quidel Corp.
% NAV
8.26
7.17
5.28
5.07
4.95
4.76
4.71
4.56
4.44
3.76
S&P 1500
S&P 500
Fund's GICS Sectoral Breakdown
Consumer Discretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
Information Technology
Materials
Telecommunication Services
Utilities
[Cash]
Total
% of assets
4.2
-18.6
10.2
18.0
8.0
25.5
6.5
--9.0
100.0
YTD
-1.8
2.7
2.6
Investment Objective
The investment objective of the Hereford Funds-IMVA Opportunity Fund is to provide capital appreciation over a multi-year investment horizon by investing primarily
in a diversified portfolio of publicly traded equity securities of US-based companies, which hold unique opportunities in the opinion of the Investment Manager.
Potential investments comprise small, mid, and large capitalization companies; growth and value companies; and special situations, including non US-based
companies, which are listed on a US exchange. The strategy is highly concentrated and appropriate only for risk-tolerant, long-term investors who can accept the
potential for materially greater volatility than the broad market indices.
The indicative benchmarks are the S&P 1500 and the S&P 500 Indices.
Risk Profile(e)
Fund Codes
Bloomberg:
ISIN:
Reuters:
Sedol:
Valoren:
WKN:
HFIMVOALX*
LU1022309220
N/A
BJ625V8
23467814
A1XCJ3
Since Inception (31/03/99) - 31/12/14
Volatility
Sharpe Ratio
Information Ratio
Tracking Error
Beta
Alpha
Reference Strategy
28.59
0.17
(listed below benchmark)
(listed below benchmark)
(listed below benchmark)
(listed below benchmark)
S&P 500
17.12
0.16
0.12
18.96
1.28
2.97
S&P 1500
17.32
0.19
0.09
18.79
1.27
2.23
* Share Class A
Fund Details
Investors
Dealing day
Dividends
Investment Manager
Management Company
Custodian
Legal Advisers
Auditor
Open to Non-U.S. investors only
Daily
None: income accumulated within the fund
Investment Management of Virginia, LLC, 919 E. Main Street, Suite 1600, Richmond, VA 23219, USA
BSI Fund Management S.A., 44F, rue de la Vallée, L-2661 Luxembourg
BSI Europe S.A., 122, rue Adolphe Fischer, L-1521 Luxembourg
Elvinger, Hoss & Prussen, 2 Place Winston Churchill, L-1340 Luxembourg
Deloitte Audit S.à.r.l., 560, rue de Neudorf, L-2220 Luxembourg
Annual Management Charge
Share Class A(f)
1.25%
Minimum Investment
Share Class A
$100,000 initial; $10,000 subsequent
Order Transmission / Information
Original Applications To:
UBS Fund Services (Luxembourg) S.A.
attn: Transfer Agent
33A, avenue J.F. Kennedy
L-1855 Luxembourg
Subsequent Applications Only Via Facsimile:
UBS Fund Services (Luxembourg) S.A.
attn: Transfer Agent
Fax :
(+352) 441010 6417
Tel:
(+352) 441010 6404
e-mail: [email protected]
(a) This figure refers to the approximate total assets invested in the reference strategy as of 28/2/15. The figure includes $1.93 million in assets (Hereford Funds-IMVA Opportunity Fund), $135.54 million in assets managed
directly by Investment Management of Virginia, LLC ("IMVA" or "the Investment Manager"), and $9.27 million in assets managed by other firms based upon models provided by the Investment Manager. The $135.54 million
managed directly by IMVA comprise those accounts in the Opportunity Portfolio composite (see www.imva.net), as well as “Special” Opportunity Portfolio accounts, which are excluded from the composite for reasons/variances,
including but not limited to these: they have different weightings; client restrictions have been imposed; they are wrap accounts; they do not own all Opportunity Portfolio positions, or they own additional positions. Model assets
have been excluded from the definition of the firm for GIPS purposes.
(b) The Hereford Funds-IMVA Opportunity Fund was funded on 31/1/14. The first trades were executed on 3/2/14.
(c) Data and graph depict IMVA Opportunity Portfolio composite returns through January of 2014 and Hereford Funds-IMVA Opportunity Fund Class A thereafter (net basis). Historical net performance of the IMVA Opportunity
Portfolio composite (the Reference Strategy) reflects modeled fees and expenses typical of Hereford Funds-IMVA Opportunity Fund Class A (1.25% fee + 0.25% expense). Fund follows substantially the same parameters as
the Reference Strategy, although the Fund has a 10% constraint for individual positions and a 40% limit for the top five names (IMVA's Opportunity Portfolio has no such constraints). Performance presentation is incomplete
without accompanying footnotes as shown at www.imva.net.
(d) Total return including dividends.
(e) Source: eVestment Analytics – All numbers are presented gross of fees and expenses.
(f) Share Class A is tax transparent in Germany and has been granted Reporting Status by HMRC as of 31 January 2014.
This document is for information purposes and internal use only. It is neither an advice nor a recommendation to enter into any investment.
Investment suitability must be determined individually for each investor, and the financial instruments described above may not be suitable for all investors. This information does not provide any accounting, legal, regulatory or
tax advice. Please consult your own professional advisers in order to evaluate and judge the matters referred to herein.
An investment should be made only on the basis of the prospectus, the annual and any subsequent semi-annual-reports of HEREFORD FUNDS (the "Fund"), a société d'investissement à capital variable, established in
Luxembourg and registered under Part I of Luxembourg law of 20 December, approved by the Commission de Surveillance du Secteur Financier (CSSF). These can be obtained from [the Fund, 44F, rue de la Vallée, L-2661
Luxembourg or from BSI Fund Management S.A., 44F, rue de la Vallée, L-2661 Luxembourg and any distributor or intermediary appointed by the Fund].
No warranty is given, in whole or in part, regarding performance of the Fund. There is no guarantee that its investment objectives will be achieved. Potential investors shall be aware that the value of investments can fall as well
as rise and that they may not get back the full amount invested. Past performance is no guide to future performance.
The information provided in this document may be subject to change without any warning or prior notice and should be read in conjunction with the most recent publication of the prospectus of the Fund. Whilst great care is
taken to ensure that information contained herein is accurate, no responsibility can be accepted for any errors, mistakes or omission or for future returns.
This document is intended for the use of the addressee or recipient only and may not be reproduced, redistributed, passed on or published, in whole or in part, for any purpose, without the prior written consent of HEREFORD
FUNDS. Neither the CSSF nor any other regulator has approved this document.