Performance
Update
The Boyar Value Fund
December 31, 2015
A Multi-Cap Value Fund Seeking
Long-Term Capital Appreciation
BOYAX
Overall
The Lipper ratings are subject to change every month and are
based on an equal-weighted average of percentile ranks for
the Tax Efficiency metrics over three-, five-, and ten-year
periods (if applicable). The highest 20% of funds in each peer
Portfolio Manager:
Mark Boyar, President, Boyar Asset Management
Investment Objective:
Long-term capital appreciation by primarily investing
in multi-cap stocks that Mr. Boyar perceives to be
undervalued relative to their intrinsic value
Inception Date:
5/5/98
Minimum Investment:
$5,000 ($3,000 for IRAs)
Nasdaq Symbol:
BOYAX
H ISTORICAL C OMPETITIVE R ETURNS
Share price and investment return will fluctuate such that an investor’s shares may
be worth more or less than their original cost upon redemption. Past performance
data quoted represents past performance.
group are named Lipper Leaders, the next 20% receive a
score of 4, the middle 20% are scored 3, the next 20% are
Average Annual Returns (through 12/31/15)
scored 2, and the lowest 20% are scored 1.
Lipper Leader ratings are not intended to predict future
results and Lipper does not guarantee the accuracy of this
information.
3 Year
5 Year
At NAV
-0.07%
13.41%
11.91%
6.22%
6.43%
Inclusive of sales charges
-5.05%
11.48%
10.77%
5.68%
6.12%
After taxes on distribution
-5.66%
10.99%
10.41%
5.32%
5.72%
-2.35%
8.95%
8.57%
4.57%
5.01%
1.38%
15.13%
12.57%
7.31%
5.44%
After taxes on distribution
and the sale of shares
Lipper ratings for Tax Efficiency reflect a fund’s historical
success in postponing taxable distributions relative to peers,
Since
10 Year Inception*
1 Year
S&P 500 Index
*(5/5/98)
as of 6/30/14. Tax Efficiency offers no benefit to investors in
tax-sheltered accounts such as 401(k) plans.
Cumulative Returns Since Inception*
S&P 500 Index
154.78%
More information is available at www.lipperleaders.com.
Lipper Leader ratings © 2014 Reuters, All Rights Reserved.
*(5/5/98)
Boyar Value Fund
200.58%
Past performance is not indicative of future
results. Current performance may be lower
or higher than quarterly performance.
For current, to the most recent
month end, performance please go to
w w w. b o y a r a s s e t m a n a g e m e n t . c o m .
The Boyar Value Fund has a maximum sales
charge of 5.00%. After-tax returns are calculated using the highest historical individual
federal income tax rate and do not reflect the
additional impact of state and local taxes.
Actual after-tax returns depend on a shareholder’s tax situation and may differ from
those shown. After-tax returns are not relevant for shareholders who hold fund shares
in tax-deferred accounts or to shares held by
non-taxable entities. It is important to note
that the Fund is currently waiving a portion of
fees and at such time as the fee waiver is no
longer in place, future returns may be lower
than past returns.
The S&P 500 Index is an unmanaged index of
stocks trading in the United States. Index performance illustrated is hypothetical and is not
indicative of any mutual fund investment.
Investors cannot invest in an index.
The value of the portfolio will fluctuate as the
underlying securities move in response to
overall market movements and other factors
beyond the control of the advisor, and investments in the fund may result in the loss of
principal. The fund may invest in stocks of
several different capitalization levels and it is
important to note that historically, small- and
mid-cap stocks have experienced greater
volatility than stocks of larger, more established companies.
Mark Boyar
FOURTH QUARTER 2015
Mark began his career as a securities analyst in 1968. In 1975, he founded
A Look Back
Asset Analysis Focus, a subscription-based, institutional research service
focused on value investing. He quickly began managing money for high
net worth clients and later formed Boyar Asset Management, a registered
investment advisor, in 1983. He began managing the Boyar Value Fund
,
in1998. His opinions are often sought by such media outlets as Barron’s
BusinessWeek,CNBC,Forbes,Financial World,The New York Times and
The Wall Street Journal.
Top Ten Equity Holdings (As of 12/31/15)
Holdings
1. Home Depot, Inc.
2. Travelers Cos, Inc
3. Microsoft Corp.
4. Walt Disney Co.
5. Ameriprise Financial Inc
6. Pfizer Inc.
7. JPMorgan Chase & Co.
8. Time Warner Inc.
9. Clorox Co.
10. Bank of America Corp
5.29%
4.98%
4.28%
4.16%
3.77%
3.43%
2.96%
2.89%
2.53%
2.64%
Total
36.93%
The best performing asset class of 2015 was stocks, whose meager 1.38%
total return as measured by the S&P 500 still surpassed those of
long-term bonds, short-term treasury bills and commodities. Those
minimal gains make 2015 the worst for finding positive returns since
1937, when the 3 month Treasury bill outdistanced the other major
asset classes with a return of 0.3 percent.
Some of the world’s greatest investors struggled in 2015. Warren
Buffett, David Einhorn and Carlos Slim, until recently the world's
richest man, all suffered double digit losses. Last year proved particularly
troublesome for hedge funds, the average of which was down about 4
percent according to Hedge Fund Research. Bill Ackman of Pershing
Square sent a letter to investors in December saying 2015 was the fund's
worst year since it was founded in 2004, losing more than 19%.
In previous bad years investors were able to capture substantial returns
in at least one major asset class. For example, 2008 was a terrible year
for equity markets worldwide, but bonds increased more than 20%. But
in 2015 not one major asset class performed well.
The 30-year U.S. Treasury note returned a negative 2 percent, the
3-month Treasury bill returned 0.11% and the CRB commodities
index fell more than 23% according to Societe Generale. 2015 was
certainly an outlier when it came to investment returns. According to
Bianco Research, gains from the best-performing assets had surpassed
10% in all but one year since 1995. Going back nine decades, 23 years
(or a quarter of the total) saw at least one asset class return more than 30
percent. In addition only four years ended with gains smaller than 4
percent.
The above illustrates the Fund’s ten largest equity holdings, as a percentage of total assets, as of 12/31/15 and are subject to change.
Industry Weightings
Commercial Services 0.68%
Housewares 0.97%
Comsmetics/Personal Care 1.04%
(As of 12/31/15)
Cash & Cash Equivalents 16.64%
Electrical Compo&Equip 0.45%
Healthcare-Services 0.44%
Real Estate 0.09%
Retail 14.48%
Telecommunications 1.13%
Entertainment 1.67%
Miscellaneous Manufactur 1.69%
Leisure Time 1.70%
Apparel 1.70 %
Internet 2.00%
Media 14.13%
Transportation 2.00%
Household Products/Wares 2.64%
Lodging 2.95%
Had you been devoid of any type of communication for the full year,
and checked the S&P 500 on December 31st you would have thought
not much had happened in the markets during 2015. Although the
S&P 500, inclusive of dividends advanced by about 1.45%, volatility
spiked, with the number of days with 1% moves (in either direction)
increasing dramatically. During August we saw a sharp and swift decline
of 10%, the first such correction since 2008. Between August 10th and
August 25th, the Dow Jones Industrial Average plunged 11% on fears
that everyone had underestimated China's troubles and their impact on
the rest of the world. Besides the slowdown in China, as its economy
shifts from one that is dependent on exports and government spending
to an economy predicated on consumer spending there were a number
of other factors that contributed to both the stock market volatility and
lackluster results in 2015.
The Energy Market
Diversified Finan Serv 3.77%
Banks 8.63%
Food 4.10%
Software 4.28%
Pharmaceuticals 6.65%
Insurance 4.98%
The above illustrates the Fund’s industry weightings, as a percentage of total assets, as of 12/31/15 and are subject to change.
The price of a barrel of West Texas Intermediate crude oil posted its
all-time high of $147.27 on July 11, 2008. When the financial crisis
struck later that year, the price of crude had fallen back all the way to
around $30 a barrel. WTI did not top $100 a barrel again until February
of 2011.
Continued on page 3.
The mention of specific securities, countries or asset classes is not a recommendation or solicitation for any person to buy, sell or hold any particular security. Investors should
consider the investment objectives and policies, risk considerations, charges and expenses of this fund carefully before investing. The prospectus contains this and other information
relevant to an investment in the fund. Please read the accompanying prospectus carefully before you invest or send money. If a free prospectus did not accompany this literature,
please contact your securities representative or the Boyar Value Fund, 570 Lexington Avenue, 11th Floor, New York, NY 10022, 800 523-8425.
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F D I C - I N S U R E D
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•
M A Y
L O S E
Ladenburg Thalmann & Co., Inc. • 570 Lexington Avenue • 11th Floor • 800.523.8425 • www.ladenburg.com
NYSE, NYSE Amex, FINRA and all other principal exchanges. Member SIPC.
VA L U E
12/31
U.S. oil producers then turned to a new technology that had transformed the natural gas industry in the country - hydraulic fracturing, or fracking.
By 2010, just three years after pundits had predicted the inevitable decline of U.S. onshore oil production, crude oil output had reached a low of
4.5 million barrels a day. By late 2013, fracking had boosted that total to 7.5 million barrels a day. Two years later that number has increased by
an additional 1 million barrels per day, producing an oil glut. This oil supply coupled with a slowing in the world’s major economies has negatively impacted oil demand and has driven crude prices to below $30 a barrel.
In order to help finance the fracking revolution companies turned to the high yield debt market. It is estimated that approximately 20% of the
total high yield debt market is currently represented by energy related companies. With the price of a barrel of oil plummeting there is concern
that a number of these companies will not be able to service their debt.
The precipitous decline in the price of crude is a double-edged sword. Clearly consumers benefit mightily, which should buoy both retail and
leisure stocks among others. On the other hand, states such as North Dakota, Texas, Pennsylvania and California which benefited from the spike
in oil prices have begun to feel the pain. Unemployment has risen and real estate values have softened. A lot of these lost jobs were high paying
and helped drive the economy during the past couple of years. During the second half of the year, the stock market was held hostage by the price
of oil. In fact the two markets seemed to move in lockstep. A number of forecasters are predicting a continued decline in crude prices during the
first half of 2016. Goldman Sachs believes oil could fall to $20 per barrel. You may recall Goldman predicted $200 a barrel oil when it was trading
at $140 a number of years ago.
The Federal Reserve & The U.S. Dollar
When the Fed cut short-term rates to near zero in December 2008, the U.S. was losing hundreds of thousands of jobs per month and the financial
system was on the verge of collapse. The rate cut was an emergency response which was not expected to last very long. This “temporary” measure
lasted for seven years. On December 16th, the Fed declared that the economy was finally healthy enough and raised interest rates by a quarter of
a point. They are targeting approximately four rate hikes for 2016. With the world economy in such a fragile state it is questionable whether that
will occur. Furthermore, the Fed is cognizant of what happened in the late 1930's when interest rates rose too rapidly crippling the U.S. economy.
The fear of an impending interest rate rise in 2015 (even though it was one of the most telegraphed in economic history) impeded the bull market
advance.
Performance
2015 was certainly not a year to write home about. In the 4th quarter, The Boyar Value Fund increased 4.55% versus 7.04% for the S&P 500. For
the year the fund was down .07% versus a 1.38% gain for the S&P 500. Our underperformance was caused by our lack of exposure to the so called
“FANG” stocks (Facebook, Apple, Netflix and Google). Jessica Binder Graham, a Goldman Sachs analyst, quantified not only how much these
stocks contributed to the S&P 500’s modest gain (The S&P 500 is a market weighted index, meaning that larger companies performance is given
more weight when calculating index performance) but how it also masked how poorly most stocks fared in 2015. The S&P 500 ended the year at
an index level of 2044 and according to Ms. Graham’s research Amazon was responsible for 15.8 points; Microsoft 8 points; Facebook 6.5 points
and Alphabet formerly Google 15.8 points. If you exclude these names along with four other big-cap gainers, the S&P 500 would have
decreased by 4%. Furthermore, the average S&P 500 stock declined almost 4%, according to Bespoke Investment Group. While
as consumers we love the FANG stocks products/services, however as value investors we do not particularly care for the rich multiples they sell for.
A Look Ahead to 2016
Volatility
The past twelve months featured some stomach churning moments including a market drop of more than 10% during the month of August. In
addition, there were many days when the stock market experienced 100 point moves both up and down. Towards the end of the year the market
was held captive to the price movement of crude oil. In days when the price of that commodity advanced stocks also moved higher. Conversely,
on down days when the price of oil slid so did stocks. We would look for more of the same in 2016.
The mention of specific securities, countries or asset classes is not a recommendation or solicitation for any person to buy, sell or hold any particular security. Investors should
consider the investment objectives and policies, risk considerations, charges and expenses of this fund carefully before investing. The prospectus contains this and other information
relevant to an investment in the fund. Please read the accompanying prospectus carefully before you invest or send money. If a free prospectus did not accompany this literature,
please contact your securities representative or the Boyar Value Fund, 570 Lexington Avenue, 11th Floor, New York, NY 10022, 800 523-8425.
N O T
F D I C - I N S U R E D
•
N O T
B A N K - G U A R A N T E E D
•
M A Y
L O S E
Ladenburg Thalmann & Co., Inc. • 570 Lexington Avenue • 11th Floor • 800.523.8425 • www.ladenburg.com
NYSE, NYSE Amex, FINRA and all other principal exchanges. Member SIPC.
VA L U E
12/310
Fourth Year of the Presidency
Presidential election years are the second best performing year of the four-year cycle, producing loses of greater than 5% in only six of those 30
years according to The Stock Trader’s Almanac. Incumbent parties lost power in five of those years. Interestingly eighth years of presidential terms
represent the worst of election years since 1920. In the 8th year, the DJIA and the S&P 500 have suffered average declines of -13.9% and -10.9%
respectively. Out of these six full years, only 1988 was positive.
To add to the confusion, the Obama years thus far have been diametrically opposed to normal historical patterns. The first and second year of a
president's term has normally been the worst in terms of stock market performance. In the case of President Obama, the first and second year of
his second term saw the S&P 500 experience double digit returns, while the third year, normally the best for stocks has thus far been the worst.
So it is anybody's guess as to how the fourth year turns out. My suggestion is to listen to Henry Singleton, investor extraordinaire: "I don't believe
all this nonsense about historical rhetoric or market timing. Just buy good value and when the market is ready, that value will be recognized."
The Strong U.S. Dollar
The strong U.S. dollar negatively impacts the earnings of U.S. multinational corporations. On the other hand, a strong currency attracts foreign
investment and helps finance our deficit. It should also enable interest rates to remain lower than normally would be the case. However it causes
particular pain for firms in emerging markets that issued bonds in dollars instead of local currencies. The dollar’s rise means it will take more of
them to repay the debt. If we use the euro as a surrogate for all the major world currencies you can see the magnitude of the greenback’s gain.
The summer of 2014 saw the euro trade at around 136, today it trades at ~109. There are a growing number of pundits who believe it will trade
at par with the U.S. dollar. On a purchasing power parity basis that makes no sense. Our predication is the euro does not trade at 100, if it does
take a European vacation or better still buy a house in Tuscany.
Higher Interest Rate
The Fed has telegraphed four interest rate hikes for 2016. With the U.S. economy growing at a paltry 2%, after all the stimulus thrown at it by
the Federal Reserve, and the rest of the world's major economies teetering, it is unlikely that we will get that many rate hikes in 2016. In all likelihood any interest hikes that occur will be in March and June. The Fed normally does not like to raise rates as Election Day nears. What you
don't want is for the Fed to be too aggressive and impede the economic expansion. Unfortunately, the history of the Federal Reserve is littered
with mistakes big and small. Let's hope the Fed does the right thing. The Fed is certainly cognizant of what happened to the economy in the late
1930's, when it prematurely raised rates, thinking the economy was on sound footing.
Precipitous Decline in the Price of Oil
As mentioned in the early part of this letter, the decline in the price of oil from more than $140 a barrel to below $30 per barrel is a double edged
sword. Approximately 20% of the entire high yield debt market is represented by oil and gas producers. The spread in the high yield market versus
U.S. Treasuries has widened dramatically, reflecting potential defaults from highly leveraged energy related businesses. A growing number of
analysts are predicting the price of oil could fall to $20 per-barrel in 2016, including Goldman Sachs, who once predicted oil would reach $200
per barrel....It is anyone's guess how low oil can get before it rebounds. Fracking will continue to be a large contributor to oil output during the
foreseeable future, and with Iran once again entering the market do not look for the price of oil to reach $100 a barrel anytime soon.
The mention of specific securities, countries or asset classes is not a recommendation or solicitation for any person to buy, sell or hold any particular security. Investors should
consider the investment objectives and policies, risk considerations, charges and expenses of this fund carefully before investing. The prospectus contains this and other information
relevant to an investment in the fund. Please read the accompanying prospectus carefully before you invest or send money. If a free prospectus did not accompany this literature,
please contact your securities representative or the Boyar Value Fund, 570 Lexington Avenue, 11th Floor, New York, NY 10022, 800 523-8425.
N O T
F D I C - I N S U R E D
•
N O T
B A N K - G U A R A N T E E D
•
M A Y
L O S E
Ladenburg Thalmann & Co., Inc. • 570 Lexington Avenue • 11th Floor • 800.523.8425 • www.ladenburg.com
NYSE, NYSE Amex, FINRA and all other principal exchanges. Member SIPC.
VA L U E
12/31
The Death of Bricks and Mortar Retail Has Been Greatly Exaggerated
Stock performance for conventional retailers has been subpar, reflecting industry concerns pertaining to consumer fundamentals and the potentially disruptive impact of e commerce. In our view, the highly negative investor sentiment and corresponding declines have overstated the impact
of these headwinds, and have created attractive investment opportunities that should begin to bear fruit in 2016.
Conventional store locations still retain a highly relevant and valuable part of the retail industry landscape. In some cases these store locations are
also a meaningful source of value for companies that own the underlying real estate, providing an additional source of downside protection for
shareholders. Importantly, many conventional retailers have invested significant resources in their e commerce capabilities in order to become
effective omni-channel providers. Broader consumer uncertainty could remain an ongoing challenge, but we would not view this as a long-term
challenge to overall sector sales and profits. Looking ahead, any upgrade in consumer sentiment paired with the substantial recent declines in
gasoline prices could eventually serve as meaningful drivers of demand across the retail space. While this gradual recovery materializes, several
retail stocks that we follow offer dividend yields of over 3% that should further reward investor patience.
Time to Tune in to Media Stocks – Shares of Many Companies in the Bargain Bin
There are a number of uncertainties facing the media sector these days including OTT/SVOD threats, skinny bundles, cord cutting, among
others. Investing in the rapidly evolving media sector is not without its perils, but we believe the sell-off in many media stocks has presented an
opportunity. Media shares were buffeted in 2015 following the release of Disney’s 3Q 2015 earnings in August 2015 when it reduced its growth
outlook for its cable networks to mid-single-digits (previously high single-digit) reflecting, in part, a “modest” decline in subscribers at its flagship
ESPN cable network. During Liberty Media’s recent investor day held in November 2015, legendary media investor Dr. John Malone commented on the sell-off in media stocks post the Disney revelation and stated, “The overreaction of the market kind of surprised me. … Like anything
else it creates opportunity. If things get mispriced, that’s opportunity for investors.” Historically the media sector has been a fertile ground for our
firm due to the favorable investment merits of many media stocks, including irreplaceable assets, strong brands, and attractive recurring revenue
streams. While the media sector was a tough place for investors during 2015, we believe from a long-term perspective this area of the market
offers some compelling buying opportunities.
Best regards,
Chief Investment Officer
The mention of specific securities, countries or asset classes is not a recommendation or solicitation for any person to buy, sell or hold any particular security. Investors should
consider the investment objectives and policies, risk considerations, charges and expenses of this fund carefully before investing. The prospectus contains this and other information
relevant to an investment in the fund. Please read the accompanying prospectus carefully before you invest or send money. If a free prospectus did not accompany this literature,
please contact your securities representative or the Boyar Value Fund, 570 Lexington Avenue, 11th Floor, New York, NY 10022, 800 523-8425.
N O T
F D I C - I N S U R E D
•
N O T
B A N K - G U A R A N T E E D
•
M A Y
L O S E
Ladenburg Thalmann & Co., Inc. • 570 Lexington Avenue • 11th Floor • 800.523.8425 • www.ladenburg.com
NYSE, NYSE Amex, FINRA and all other principal exchanges. Member SIPC.
VA L U E
12/31