Hereford Funds-IMVA Opportunity Fund
August 2014
August 2014 Investment Review
The Fund was up slightly during August, though it failed to keep pace with the strong move in the S&P 500 Index. Nonetheless, at month end, our five largest
positions appear to be either on track or improving. Nothing new to report from Luminex; the stock performed in line for the month. Management remains confident
in the schedule for the launch of Project Aries. 3D Systems had a good month and is moving ahead at full steam. The company has continued to announce
acquisitions; LayerWise, the most recent acquisition, strengthens the company’s product offering in advanced metal printing which is a very important vertical
opportunity in 3D printing and central to our thesis on the company. I suspect the company’s organic growth in this area will be one of the main catalysts for better
DDD stock performance over the next year or so. Ocwen and Altisource were both very weak to start the month but have recovered somewhat since then. I am
hopeful that the recent price action in both stocks indicates that a potential settlement with the New York Superintendent of Financial Services may be in the works.
Stone Energy was weak to start the month and has been roughly flat since then. Our conversations with management indicate that the company’s strategy and plans
are on track. We suspect the company may have several positive developments from both onshore (Utica and Marcellus drilling results) and offshore (Cardona
drilling results and infrastructure progress) properties over the next quarter or so. Emerald Oil was one of our best performers for the month, on an absolute and
relative basis. Besides Ocwen and Altisource, mentioned above, our weakest performers were Endeavour International, Niko Resources, and American Eagle
Energy; these are all small capitalization energy names. We have liquidated Endeavour and are sticking with both Niko and American Eagle. Both of these
companies are selling at a substantial discount to net asset value and have very attractive long-term potential upside. As always, please call me with questions.
Key Information
NAV A Shares (31/08/14): $94.24
Total Fund Size: $11.96 mil
Strategy Assets: $230.68 mil(a)
Fund Launch Date: 31-Jan-14(b)
Monthly Performance (%)
Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14
N/A
-0.8
-1.3
-2.1
-1.9
5.3
-6.4
1.7
N/A
4.6
0.8
0.4
2.2
2.3
-1.8
4.1
N/A
4.6
0.8
0.7
2.4
2.1
-1.4
4.0
Hereford Funds-IMVA Opportunity Fund
S&P 1500 Index(d)
S&P 500 Index(d)
Period Performance (%)
IMVA Opportunity Portfolio
S&P 1500 Index(d)
(d)
S&P 500 Index
YTD
-10.5
9.5
9.9
(c)
1 yr
5.5
24.9
25.3
2 yr
17.6
22.1
21.9
3 yr
21.3
20.6
20.6
4 yr
24.2
20.2
20.1
5 yr
20.8
17.1
16.9
10 yr
13.9
8.7
8.4
YTD
-5.8
13.3
13.8
Since Inception 31/03/99
Cumulative
Annualised
241.9
8.3
127.5
5.5
107.8
4.9
IMVA Opportunity Portfolio (c) vs. S&P 1500(d) & S&P 500(d)
Ten Years Ending 31/08/14
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.
Emerald Oil
Altisource Ptfl Solns Reg Shs
Stone Energy
Ocwen Financial Corp.
Freeport-McMoran, Inc. Cl B
Advanced Energy Industries
Anadarko Petroleum
Intrepid Potash
% NAV
8.23
8.07
6.76
6.47
6.06
5.68
4.74
4.73
4.38
4.31
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
--29.3
15.9
17.0
5.6
19.7
11.0
--1.5
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) - 30/06/14
Volatility
Sharpe Ratio
Information Ratio
Tracking Error
Beta
Alpha
Reference Strategy
27.90
0.29
(listed below benchmark)
(listed below benchmark)
(listed below benchmark)
(listed below benchmark)
S&P 500
17.39
0.14
0.33
17.14
1.30
5.97
S&P 1500
17.58
0.17
0.29
16.98
1.29
5.14
* 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 31/08/14. The figure includes $11.96 million in assets (Hereford Funds-IMVA Opportunity Fund) and $196.80 million in assets
managed directly by Investment Management of Virginia, LLC ("IMVA" or "the Investment Manager") and $21.92 million in assets managed by other firms based upon models provided by the Investment Manager. The $196.80
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, 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.