Hereford Funds IMVA Opportunity Portfolio
February 2014
February 2014 Investment Review
The Fund’s first month might be described as a “son-in-law” month – I had hoped for better. We tried to navigate the market’s volatility and actually did ok on that
front, but we have some individual positions that were weak. Among our top five positions, 3D Systems (DDD) had an extremely volatile month, and, consequently,
jerked the Fund around a bit. We were able to lower our average cost basis and are doing fine, as of 1/3/14. 3D Systems raised their forward revenue guidance but
lowered earnings guidance (due to higher R&D expenditures) for 2014. I think DDD is set up for an impressive market share grab over the next several years and
am excited about the position. Some well-known short sellers are actively promoting the opposite thesis, but I think their bet, over the long-term, has very poor
odds. Luminex (LMNX) was basically flat; I suspect investors are waiting to see how this year’s new product offerings perform. We added to Altisource Portfolio
Solutions (ASPS); ASPS has been caught up in the negative press that Ocwen Financial (OCN) has received. OCN and its spin-offs (including ASPS) certainly
have a Byzantine relationship, but we believe they, as a group, are the best sub-prime mortgage servicing option in the industry. Those fundamentals should
eventually win the day, but the company needs to pay more attention to the “care and feeding” of other stakeholders (regulators and mortgage investors) in the
meanwhile. Finally, we were able to buy Apple (AAPL) at attractive prices during the market’s swoon. AAPL does not have the upside of some of our other
positions, but I do like the stock’s long-term risk to reward.
Key Information
NAV A Shares (28/02/14): $99.19
Total Fund Size: $12.49 mil
Strategy Assets: $ 279.51 mil(a)
Fund Launch Date: 31-Jan-14(b)
Monthly Performance (%)
Jan-14 Feb-14
N/A
-0.8
N/A
4.6
N/A
4.6
Hereford Funds IMVA Opportunity Portfolio
S&P 1500 Index(d)
S&P 500 Index(d)
YTD
-0.8
4.6
4.6
Period Performance (%)
YTD
-5.7
1.1
1.0
IMVA Opportunity Portfolio(c)
(d)
S&P 1500 Index
S&P 500 Index(d)
1 yr
29.8
25.7
25.4
2 yr
29.3
19.5
19.3
3 yr
16.9
14.4
14.4
4 yr
23.5
16.7
16.4
5 yr
33.6
23.5
23.0
10 yr
15.1
7.5
7.2
Since Inception 31/03/99
Cumulative
Annualised
259.8
9.0
110.1
5.1
90.9
4.4
IMVA Opportunity Portfolio (c) vs. S&P 1500(d) & S&P 500(d)
Ten Years Ending 28/02/14
500
Start of Hereford Funds IMVA Opportunity Portfolio
31-Jan-14
350
450
300
400
350
250
300
200
250
150
200
100
150
50
100
0
50
IMVA Opportunity Portfolio
Fund's TopTen Holdings
Luminex Corp.
3D Systems Corp.
Altisource Ptfl Solns Reg. Shs
Ocwen Financial Corp.
Apple, Inc.
Freeport McMoran Copper & Gold
Intrepid Potash Inc.
Niko Resouces Ltd.
Anadarko Petroleum
Babcock & Wilcox
% NAV
7.58
7.31
6.09
5.64
4.26
4.07
3.99
3.21
3.13
3.00
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
1.9
2.6
20.8
15.1
13.6
5.0
19.2
10.2
--11.6
100.0
Investment Objective
The investment objective of the Hereford Funds Opportunity Portfolio sub 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 USbased 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) - 31/12/13
Volatility
Sharpe Ratio
Information Ratio
Tracking Error
Beta
Alpha
Reference Strategy
28.01
0.32
(listed below benchmark)
(listed below benchmark)
(listed below benchmark)
(listed below benchmark)
S&P500
16.04
0.31
0.40
17.00
1.31
7.80
S&P 1500
17.47
0.39
0.36
16.85
1.31
6.89
* Share Class A
Fund Details
Dealing day
Dividends
Investment Manager
Management Company
Custodian
Legal Advisers
Auditor
Daily
None: income accumulated within the fund
Investment Management of Virginia, LLC, 919 E. Main Street, Suite 1600, Richmond, VA 23219, USA
VPB Finance S.A., 26 Avenue de la Liberté, L-1930 Luxembourg
VP Bank (Luxembourg) S.A., 26 Avenue de la Liberté, L-1930 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)
(g)
Share Class L
1.25%
0.75%
Minimum Investment
Share Class A
Share Class L
$100,000 initial; $10,000 subsequent
$100,000 initial; $10,000 subsequent
Order Transmission / Information
Original Applications To:
VPB Finance S.A.
attn. Fund Operations / TA-HFF
P.O. Box 923
L-2019 Luxembourg
or, for transmissions via courier service,
26, avenue de la Liberté, L-1930 Luxembourg
Subsequent Applications Only Via Facsimile:
VPB Finance S.A.
attn. Fund Operations / TA-HFF
Fax :
(+352) 404 770 283
Tel:
(+352) 404 770 260
e-mail: [email protected]
(a) This figure refers to the approximate total assets invested in the reference strategy as of 28/02/14. The figure includes $12.49 million in assets (Hereford Fund) and $250.58 million in assets managed directly by Investment
Management of Virginia, LLC ("IMVA" or "the Investment Manager") and $16.44 million in assets managed by other firms based upon models provided by the Investment Manager. The $250.58 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 IMVA Hereford Funds Opportunity Portfolio 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 Portfolio 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 Portfolio 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: PSN database – 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.
(g) Share Class L 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, 26, avenue de la Liberté, L1930 Luxembourg or from VPB Finance S.A., 26, avenue de la Liberté, L-1930 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.