Hereford Funds-IMVA Opportunity Fund
June 2014
June 2014 Investment Review
The Fund had a good June and ended roughly flat for the quarter. This performance lagged the broad U.S. market, but perhaps we have turned the corner. There
were no changes to our top five positions, and, at the end of the quarter, the top ten positions accounted for approximately 54% of the Fund. Our largest energy
names, EOX and SGY, both benefitted from strong capital flows into the Energy Sector. 3D Systems had a good month, and the short sellers seem to be less
enthusiastic about their thesis as we enter the 3rd Quarter. Altisource Portfolio Solutions and Ocwen continue to be dogged by negative headlines targeting the nonbank mortgage servicing industry; I believe that each company is doing fine, and they will eventually prove this to investors. Luminex continues to underperform on a
relative basis, but I also suspect that this company is doing fine. Our conversations with management indicate that Project Aries is on track, and we have high hopes
for this product launch. During June, we added to Anacor Pharmaceuticals (ANAC) at attractive prices and reduced our position in Apple. Anacor is approaching an
important product launch later this summer, and they clearly have aggressive plans for the in-house salesforce they are establishing. Apple has been a powerful
stock this year. Its balance sheet and free cash flow generation are still among the best in the equity market (and in the history of capitalism), but investor sentiment
is much more balanced at these levels. In short, the stock is easier for investors to own now, and, consequently, I think much of the discount to fair value has been
realized.
Key Information
NAV A Shares (30/06/14): $99.03
Total Fund Size: $13.37 mil
(a)
Strategy Assets: $240.45 mil
Fund Launch Date: 31-Jan-14(b)
Monthly Performance (%)
Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14
N/A
-0.8
-1.3
-2.1
-1.9
5.3
N/A
4.6
0.8
0.4
2.2
2.3
N/A
4.6
0.8
0.7
2.4
2.1
Hereford Funds-IMVA Opportunity Fund
S&P 1500 Index(d)
S&P 500 Index(d)
YTD
-1.0
10.8
11.0
Period Performance (%)
YTD
-5.9
7.0
7.1
IMVA Opportunity Portfolio(c)
S&P 1500 Index(d)
S&P 500 Index(d)
1 yr
18.0
24.7
24.6
2 yr
26.0
22.9
22.6
3 yr
18.6
16.5
16.6
4 yr
26.1
20.1
20.0
5 yr
24.7
19.2
18.8
10 yr
13.7
8.1
7.8
Since Inception 31/03/99
Cumulative
Annualised
259.2
8.8
122.5
5.4
102.6
4.7
IMVA Opportunity Portfolio(c) vs. S&P 1500(d) & S&P 500(d)
Ten Years Ending 30/06/14
400
Start of Hereford Funds-IMVA Opportunity Fund
31-Jan-14
350
350
300
300
250
250
200
200
150
150
100
100
50
500
IMVA Opportunity Portfolio
Fund's TopTen Holdings
3D Systems Corp.
Ocwen Financial Corp.
Altisource Ptfl Solns Reg. Shs
Luminex Corp.
Stone Energy
Emerald Oil, Inc.
Freeport McMoran Copper & Gold
Advanced Energy Industries
Intrepid Potash, Inc.
Anadarko Petroleum
% NAV
7.10
6.74
6.63
6.57
5.41
5.41
4.25
4.23
4.21
3.80
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
--30.8
16.7
13.5
5.6
18.1
10.5
--4.8
100.0
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) - 31/03/14
Volatility
Sharpe Ratio
Information Ratio
Tracking Error
Beta
Alpha
Reference Strategy
25.67
0.33
(listed below benchmark)
(listed below benchmark)
(listed below benchmark)
(listed below benchmark)
S&P 500
15.44
0.16
0.34
17.49
1.24
7.12
S&P 1500
15.56
0.20
0.31
17.14
1.26
6.19
* 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
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)
1.25%
Minimum Investment
Share Class A
$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 30/06/14. The figure includes $13.37 million in assets (Hereford Funds-IMVA Opportunity Fund) and $204.99 million in assets
managed directly by Investment Management of Virginia, LLC ("IMVA" or "the Investment Manager") and $22.09 million in assets managed by other firms based upon models provided by the Investment Manager. The $204.99
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: 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.
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, L-1930
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.