Friess Associates market observations and insights
December 31, 2014
Much Ado About Energy
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sector, which represented our second largest position
on December 31. Still, that’s not the result of a broad
call on the consumer based on lower prices for gasoline.
From the improved product selection at the off-price retailer TJX Cos. to the superior brand portfolio at apparel
maker VF Corp., there is company-specific reasoning behind each consumer-sensitive company in the portfolios
we manage.
As drivers, we all see reason to celebrate lower prices
for retail gasoline. On a broader scale, minutes from
the Federal Reserve’s meeting in mid-December showed
that officials believed the steep decline in oil prices
would ultimately prove to be beneficial to the economy.
Goldman Sachs estimates that the drop in gas prices –
approaching $1 per gallon versus the year-ago period at
the end of 2014 – is akin to cutting taxes in the U.S. by
between $100 billion and $125 billion.
Estimated Earnings Growth
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According to sources, gyms across the nation are
crowded. People are hitting the weights harder than at
any other time in recent memory.
While skeptics say these conditions are not unusual
considering the time of year, there’s a convincing case being made in business circles that argues that the uptick in
strength training is not related to New Year resolutions.
Americans need to prepare to carry heavier wallets.
You’re flush with cash, right? Just when the Federal Reserve pulls the plug on its long-running stimulus
program, market forces converge to give anyone with a
driver’s license an unexpected holiday bonus in the form
of a steep discount at the pump. What’s more, a stronger
dollar gives Americans more global purchasing power at
a time when the country is coming off its best year of job
growth since 1999. Welcome to 2015, the year of the
U.S. consumer!
Market strategists, brokers and the like regularly make
tidy and logical pronouncements regarding consumer
spending, sector trends or just about anything else that
might help make their forecasts for particular stocks or
stocks in general seem tidy and logical. That’s part of
their jobs. Our job is to constantly remind ourselves that
picking the right stocks is rarely tidy and that logic can
depend on your perspective.
The annual ritual is on. Experts in various fields share
what seem to be insightful forecasts about matters germane to their respective areas of expertise. Some people
go so far as to tell us where oil prices or the S&P 500 Index will be 12 months from now. We don’t weigh in on
those discussions. While broader factors can influence
our search, individual-company earnings trends remain
our most reliable guide for finding stocks poised to set
themselves apart.
Based on consensus earnings estimates, Wall Street
predicts the companies that make up the S&P 500 Index will grow 2015 earnings 8.9 percent. The average
company we hold is expected to grow earnings at more
than twice that rate.
We are generally confident in the consumer, as evidenced by our exposure to the consumer discretionary
10
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Index
8.9%
5
0
Forecasted Increase in Earnings Per Share
2015 vs 2014
Source: Consensus estimates from FactSet Research Systems Inc.
This is not a forecast of future performance. Earnings growth for a portfolio holding does not
guarantee a corresponding increase in the market value of the holding or the portfolio.
It’s not hard to find widespread support for lower prices
being a good thing. At the same time, many who tout
the situation as reason to act now on one company or
another fail to appreciate timing.
The economic benefit of lower gas prices accrues over
miles, which take time to travel. With individual savings estimated anywhere from $550 to $750 over the
course of 2015, we’ll split the difference at what works
out to be $54.17 a month. No one is about to turn it
down, but it’s hard to imagine the extra money leading
anybody to major lifestyle changes.
Please see page 3 for more information on trends
among the consumer discretionary companies we hold.
There will be more dramatic and immediate changes
in energy operations from Alberta Canada to Texas.
North American producers surveyed throughout December for the Barclays “E&P Spending Outlook” reported plans to reduce their spending budgets by $30
billion to $166 billion in 2015. That estimate was made
under the assumption oil would sell at $65 per barrel on
average. Spending could drop by twice that amount if
prices hold near $50, Barclays said.
While it’s important to know there’s a bump in consumer spending power, the fact that it comes at the expense of the domestic energy boom carries equal weight.
Expanded domestic energy production, which becomes
less economically viable as oil prices retreat, has been a
notable contributor to the post-recession recovery. Investments in the mining industry, particularly related to
oil and gas production, accounted for nearly one-fifth of
growth in U.S. business investment since the recession
ended in 2009, according to Wells Fargo Securities.
So, when it comes to the big picture, every glass-halffull scenario can be met with a glass-half-empty retort.
The backdrop surely matters, but by itself it’s too blunt
to embrace as an instrument to pick individual stocks.
We believe the bottom-up view, stressing each company’s circumstances and its particular experience with
prevailing conditions, is the best way to isolate highpromise investments on a repeatable basis.
Conditions look conducive for continued growth at
Chipotle Mexican Grill (page 4), where the idea is to
serve high-quality food with the efficiency of a fast-food
operation. The company offers a limited number of
main menu items that can be customized in a wide variety of ways. At a time when some restaurant chains face
criticism and, in some cases, protests from their own
employees, Chipotle Mexican Grill boasts one of the
lowest staff turnover rates in the fast-casual dining segment by inspiring its crew members with well-defined
paths to advancement.
Chipotle Mexican Grill exceeded the consensus
earnings estimate with 56 percent earnings growth in
the September quarter. Same store sales jumped 20 percent in the period. The company is executing a plan to
Friess Associates
increase revenue per store by better promoting its takeout and catering capabilities, which currently account
for just 6 percent of sales.
The Affordable Care Act continues to reshape health
care with its emphasis on cost control. By fulfilling relatively routine surgical needs outside of a hospital-affiliated setting, AmSurg Corp. (page 4) positions itself to
profit through roughly 300 ambulatory surgery centers
throughout the U.S. AmSurg grew September-quarter
earnings 30 percent, beating the consensus estimate.
Having acquired Sheridan Healthcare, AmSurg now
offers physician services, enabling hospitals to reduce
costs via outsourcing.
Pilgrim’s Pride Corp. (page 5) has good timing. After
years of enhancing productivity, from lowering facility
costs to improving the yield of the chickens it produces, drought is keeping upward pressure on beef prices.
Lower supplies and higher prices of beef continue to
drive customer appetite for chicken at a time when Pilgrim’s Pride is operationally positioned to convert the
new demand into profits. The company exceeded the
consensus estimate with 57 percent September-quarter
earnings growth.
New management with experience from Lockheed
Martin and Raytheon are implementing change at Spirit Aerosystems Holdings (page 5), a commercial aerostructure manufacturer emerging from years of struggles
marked by cost overruns and execution issues. After
posting a loss in 2013, the company is on track to close
out 2014 with an estimated $3.51 in earnings per share
thanks to management’s focus on improving cash flow
and profitability.
Oil’s dramatic drop (40 percent) in the December
quarter attracted a lot of the market’s attention in the
final months of 2014. With some stability on that front,
we expect upcoming earnings reports from the fourth
quarter to set the tone for the months ahead.
We’re confident in the companies we hold, and we look
forward to seeing how they perform this earnings season.
All of us at Friess Associates appreciate the opportunity
to employ our research-driven investment approach on
your behalf.
Scott Gates
Chief Investment Officer
2
Consumer Primed to Drive Opportunity for the Right Companies
Motorists traveling this holiday season were treated to
the cheapest Christmas day gasoline prices in six years.
The national average price for a gallon of regular unleaded
fell every day from September 25 through December 25,
helping to push it 38 percent off its $3.70 per gallon high
earlier in the year. It’s likely that dollars being saved at
the gas pump will fuel stronger household spending and
support U.S. economic growth as we enter 2015.
The extra cash from falling energy prices could help
generate $100 billion or more in additional consumer
spending over the next 12 months. Despite the big
expectations, we believe it’s important to remember
that the savings accrue over time and are dependent on
unpredictable oil and gas prices. That said, improving
employment, continued recovery in the housing market,
potential for easing credit conditions, and favorable
year-over-year comparisons due to bad weather last year
also aid the outlook.
Consumer discretionary holdings, from apparel
retailers to hotel operators, accounted for more than
one quarter of firm-wide assets at year-end. In a sector
with some obvious tailwinds, we remain focused on
finding companies with fundamentals that position
them to benefit the most in the current environment.
On average, portfolio holdings from the consumer
discretionary sector are expected to grow 2015 earnings
21 percent compared with 16 percent for the average
company in the S&P 500 Index.
Lower energy prices and higher consumer confidence
may already be showing up in results for some
convenience stores, restaurants and grocers. Sales
at casual-dining chains increased 1.9 percent in the
month of October, the biggest gain since March
2013, according to Knapp-Track indexes that measure
revenue and guest counts. Chipotle Mexican Grill,
Papa John’s International and Regal Entertainment
Group are among our current holdings that we believe
should benefit as this trend broadens.
Less certain is the near-term impact on the justcompleted holiday shopping season. Providing a
preliminary look, MasterCard’s Advisors Spending Pulse
report showed U.S. retail sales rose 5.5 percent from the
day after Thanksgiving through Christmas Eve. The
report, which combines sales through the company’s
payment system with other estimates, indicated that
women’s apparel, jewelry and casual dining were
partly offset by surprisingly sluggish sales of consumer
electronics. We expect strong product cycles for holdings
including Apple and GoPro to make them exceptions in
the electronics category.
Our research indicates that demand for Apple’s latest
iPhones remained strong while the company continued to
play catch up on inventory. GoPro also saw strong demand
this holiday, with its cameras and related accessories
among the leading selling products in stores and online.
The company’s lower-priced Hero camera was largely
unavailable in the days leading up to Christmas due to
sold-out conditions. More expensive models, while still in
stock, also sold well, according to reports.
On average, portfolio holdings from the
consumer discretionary sector are expected
to grow 2015 earnings 21 percent . . .
In a crowded field for retail apparel, we believe
new product offerings, name recognition, market
share opportunities, e-commerce strategies and other
fundamental drivers are critically important. As the
operator of T.J. Maxx and Marshalls stores, holding
TJX Cos. offers branded apparel and goods at discount
prices. Efforts are underway to address the company’s
modest online presence through acquisitions, a strategy
that should help attract younger customers and drive
traffic back to stores through returns. Additionally, the
company benefits from ongoing buying opportunities
related to west coast port congestion, which has caused
shortages and delays for traditional and specialty retailers.
Holding VF Corp., a global footwear and apparel
maker with a portfolio of more than 30 brands, beat the
consensus earnings estimate for the September quarter.
Strong brand names including The North Face and
Timberland helped the company retain full-priced
sales while the diversity of its product portfolio made
it less susceptible to less-than-ideal weather swings.
Nike and Under Armour are additional holdings with
discernable advantages in the athletic category due to
strong global brand awareness.
The start of the year brings with it a unique set of
opportunities for companies catering to consumers,
particularly following a sharp decline in energy prices.
Unlike the past, falling oil prices result from oversupply
and not slower economic conditions in the U.S.
While it remains unclear how the push and pull of
lower investment spending in the energy sector and
potentially stronger real consumer spending will play
out, most agree that lower energy prices will be a net
positive for the consumer. We’ll continue to search for
opportunities in the sector using individual-company
fundamentals as our guide.
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Friess Associates
AmSurg Corp., AMSG
Following its $2.4 billion purchase of Sheridan Healthcare,
AmSurg’s profitability is finding new health. Trends in healthcare reform continue to encourage surgical procedures in AmSurg’s
ambulatory centers instead of hospitals. At the same time, hospitals
are looking to reduce costs by outsourcing various physician services,
which is Sheridan’s expertise.
Nasdaq-listed AmSurg Corp. is a leading operator of ambulatory
surgery centers in partnerships with physicians. Its centers provide a
Cvol: 350,359
lower cost alternative versus competing acute care hospitals offering
similar low-risk surgical procedures in more costly outpatient
departments. Sheridan doubles the company’s revenue stream by
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adding physician services to more than 300 health-care facilities in
areas such as anesthesiology, pediatrics, radiology and emergency services.
September-quarter earnings grew 30 percent, beating the consensus estimate. Revenues jumped 87 percent. The new
physician services business accounted for most of the earnings upside, despite the fact that it was owned for less than the
entire quarter. Sheridan’s organic growth, recent acquisitions and cost cutting since joining AmSurg all contributed to results.
Your team met with Chief Financial Officer Claire Gulmi shortly after the Sheridan acquisition to get a sense of
potential synergies and changes to the company’s growth profile. In addition to an estimated $10 million in expense
synergies, the companies shared many hospital and physician relationships, creating cross-selling opportunities.
Sheridan’s organic growth profile is currently in the mid-to-high single digit range compared with low single digits for
AmSurg’s core ambulatory services. With acquisitions included, the combined company appears to have a clearer path
to double-digit revenue and earnings growth.
Your team purchased AmSurg at 15 times 2015 earnings estimates. Wall Street expects the company to grow earnings
24 percent next year.
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AmSurg Corp.
Bought
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Chipotle Mexican Grill Inc., CMG
Many restaurant workers never view their jobs as anything
more than temporary arrangements. Some see things differently
and protest low wages. At Chipotle Mexican Grill, corporate
practices feed long-term thinking behind the counter, fostering
Bought
a team-based culture that figures prominently in the company’s
long-running success. NYSE-listed Chipotle Mexican Grill Inc. is a pioneer in fast casual
dining, a category marked by food comparable in quality to full-service
restaurants delivered with the speed and convenience associated with
Cvol: 14 Avg: 455,449
fast food. The company operates more than 1,700 restaurants, which
focus on high-quality ingredients and a limited number of staple menu
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items that can be customized in virtually limitless ways. Revenue rose
26 percent to nearly $3.9 billion in the 12 months through September.
Chipotle enjoys one of the lowest employee turnover rates in the industry, building institutional expertise that
contributes to quick, quality service. The company promotes from within, with corporate leadership handpicking its
most elite managers called “restaurateurs.” Still, crew approval is critical to getting the title. Likewise, crew members
must approve new hires.
While Chipotle continues physical expansion, in-store initiatives promise to boost sales at minimal cost. Your team
spoke with Chief Financial Officer Jack Hartung about plans to expand catering and take-out ordering via traditional
and mobile means. Catering and take-out currently generate just 6 percent of sales, representing an opportunity to
better utilize secondary prep counters that already exist in most stores.
Chipotle exceeded the consensus estimate with 56 percent September-quarter earnings growth. Based on the consensus
estimate, Wall Street predicts the company will finish 2014 with 34 percent earnings growth.
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Pilgrim’s Pride Corp., PPC
Which came first, the chicken or the egg? In the chicken business,
the indisputable answer is the egg. Despite shared certainty in the
industry regarding that age-old question, debates about eggs and
chickens carry on in the investment community and, we believe,
create a climate that incubates opportunity for Pilgrim’s Pride.
Bought
NYSE-listed Pilgram’s Pride Corp. is the world’s second largest
chicken producer. The company provides chicken products to more
than 5,000 customers, including Chick-fil-A, Costco Wholesale
Corp. and Wal-Mart Stores. Revenue surpassed $8.5 billion in the
Cvol: 16,218 Avg: 1,417,159
12 months through September.
With beef and pork supplies adversely affected by drought, global
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demand for chicken is up due to its affordability versus competing
proteins. The conditions give chicken producers pricing power without threatening demand. Based on weekly “egg
sets,” which are reports on eggs added to incubators at commercial hatcheries, some investors argue that impending
supply will squeeze profitability.
Pilgrim’s Pride performance says otherwise. The company grew September-quarter earnings 57 percent, exceeding
the consensus estimate by 25 percent. An especially strong corn crop in 2014 promises to contribute to future results by
keeping feed costs down.
Your team spoke to Chief Financial Officer Fabio Sundri about why Pilgrim’s Pride is uniquely well-positioned among
chicken producers. Favorable conditions in the industry come at a time when the company is reaping rewards from a
focus on operational improvement that has increased yield per bird and lowered plant costs steadily since 2011.
Based on the consensus estimate, Wall Street predicts Pilgrim’s Pride will finish 2014 with 34 percent earnings growth.
Your team bought Pilgrim’s Pride at just 10 times current earnings estimates for 2015.
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Spirit AeroSystems Holdings Inc., SPR
Formed when a private equity firm purchased Boeing’s commercial
aerostructures unit in 2005, Spirit subsequently struggled with cost
overruns and execution issues related to new Boeing programs. Now
breaking some of its legacy ties, new management is focused on cost
control, profit-margin expansion and cash flow generation.
Bought
NYSE-listed Spirit AeroSystems Inc. is among the world’s largest
manufacturers of aerostructures for commercial, military and
business jets. The company builds multiple pieces of new Boeing
and Airbus aircraft, including fuselage sections, flight decks and
Cvol: 20,124 Avg: 1,381,565
front wing spars. Revenue increased 14 percent to $6.7 billion in
the 12 months through September.
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September-quarter revenue grew 13 percent to $1.7 billion
reflecting higher deliveries and elevated demand for large new aircraft worldwide. Order backlog grew to $44 billion,
a new record. Earnings grew 17 percent in the quarter, beating estimates by 19 percent. Profit-margin improvement
reflected rigorous cost management throughout the company.
Former Lockheed Martin executive Larry Lawson became Chief Executive in April 2013. Sanjay Kappor from
Raytheon joined soon after as Chief Financial Officer. We spoke with management about the company’s ability to
improve profitability and cash flow. Efficiency improvements have created favorable catch-up adjustments associated
with contract profitability in recent quarters. In December, the company sold its underperforming Gulfstream wing
program to Triumph Group, creating positive cash-flow implications for 2015.
We bought shares at less than 10 times 2014 earnings estimates. Following September-quarter results, management
raised its full-year guidance for both earnings and free cash flow. Based on the consensus earnings estimate, Wall Street
analysts predict Spirit will generate $3.51 per share in earnings this year versus a loss of $4.40 in 2013.
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Friess Associates
Chairman Starts a New Chapter
Bill D’Alonzo took a shotgun approach to finding a
job. The young student sent letters to more than 50
money managers in the mid-Atlantic region with the
hope of finding one who would take a chance on a guy
whose primary focus at the time was earning a master’s
degree in business.
Foster Friess, the founder of Friess Associates, received
one of those letters. The letter prompted a meeting that
culminated in an offer, launching a career that would
take Bill from part-time researcher to successor of the
firm’s founder as chief executive. Over more than three
decades, Bill served as an accomplished investor and a
trusted leader through market-moving events of historic
proportion, including the tech-stock bubble, September
11, war in the Middle East and the Great Recession.
Bill officially retired as Friess Associates chairman at
the end of 2014.
“I am very grateful to have worked with everyone
at Friess Associates,” he said, reflecting on a 35-year
investment career that included 33 years with the firm.
“It is time for me to do something different, to turn the
reins over to others.”
Bill started with Friess Associates in 1981, a time
when the firm consisted of Foster, five employees and
$90 million under management. A Widener University
graduate with two years of experience as a researcher in
the trust department of a bank, Bill earned an MBA from
Widener during his early years with Friess Associates.
According to Bill, working closely with Foster taught
him lessons far more valuable than anything he studied
in school. Foster, who now spends his time supporting
worthy causes and doting on grandchildren, was a
famously driven and charismatic boss who promoted
the firm’s success by equipping each Friess teammate to
succeed in his or her particular role.
“I honestly feel honored to have learned so much from
Foster about investing, business and life in general,”
said Bill.
As Friess Associates grew and launched the
Brandywine Funds, so did Bill’s responsibilities. He
worked alongside Foster for years before becoming the
firm’s chief investment officer in the 1990s. As CIO, Bill
oversaw three mutual funds and, at the firm’s peak, more
than 150 separately managed institutional portfolios.
Bill was among a small group of successful investment
managers tapped by the advisory firm Litman Gregory
to contribute portfolio holdings to two of the firm’s
Masters Funds, Masters Equity Fund and Masters
Smaller Companies Fund.
Friess Associates
Money magazine named Bill the “The Growth Guru”
in a package titled “The Ultimate Investment Club”
that was published in September 2002. Reflecting
the attitude he held throughout his career, Bill spoke
with unwavering confidence in the long-term promise
of stocks even while being interviewed in the midst of
market tumult.
“Five or 10 years from now we’ll all look back and
wish we’d put money in the market in the summer of
2002,” Bill told the magazine.
That same year, Bill officially became chief executive
officer in addition to his responsibilities as CIO. In
the years that followed, he made mentoring younger
researchers a priority, contributing to the development
of key members of the current team.
The mutual fund rating firm Morningstar nominated
Bill among five candidates for domestic stock-fund
manager of the year in 2007. Always a vocal proponent
of the firm’s team-based approach, he credited the team
around him for the results that attracted the positive
attention.
Bill became chairman in October 2013.
Bill looks forward to spending more time with family
and performing volunteer work. He is heavily involved
in land conservation, particularly through Ducks
Unlimited and Delaware Wild Lands.
Please join us in wishing Bill a happy and healthy
retirement. From your entire team at Friess Associates,
thank you, Bill, for a job well done.
6
On the Cutting Edge
Examples of innovative and interesting ideas that cross your team’s radar screen make it into this column each
quarter. The chance to capitalize on investment opportunities related to them may lie in the future or may never
materialize.
A Shot to Heal
Researchers at Texas A&M, Harvard and MIT are developing an injectable gel that uses synthetic nanoplatelets
designed to help stop bleeding during trauma situations. Once the gel is injected, the synthetic material bonds
with the victim’s blood platelets to coagulate and create a barrier. Studies show that the injectable gel can reduce
clotting time by 77 percent versus the body’s natural clotting abilities. Biodegradable, the body can absorb the
gel as a treated wound heals. Akhilesh Gaharwar, lead biomedical engineer on the study, hopes gel-filled syringes
become standard equipment for battlefield medics, enabling them to provide enhanced life-saving treatment to
injured soldiers. If development continues as he expects, gel delivery systems will become part of first aid kits in
the next five to seven years.
Windshield with a Better View
While the steel that surrounds a vehicle’s windshield is a structural necessity, it limits the driver’s forward-looking
field of view. Jaguar Land Rover aims to eliminate what has been a standard-equipment blind spot as long as there
have been windshields by adding heads-up display technology to project images where the vehicle’s structure obscures
them. Strategically mounted cameras transmit images of pedestrians, cars and other objects through embedded
video screens, creating an unobstructed viewing experience from the driver’s seat. The technology is functional, but
it remains too costly for widespread use. Jaguar Land Rover hopes to eventually incorporate expanded capabilities
that will allow the technology to be used to impart information on directions, fuel prices, weather and traffic, among
other things.
Incubator Innovation
About three-quarters of deaths among babies born prematurely in refugee-camp settings occur due to lack of
incubation, according to the World Health Organization. That’s why “MOM, The Inflatable Incubator,” is being
roundly applauded. MOM packs flat for easy transport and is designed to be manually inflated upon arriving at its
destination to support premature babies in developing countries. A low-power device, the portable incubator can
run via car battery should electricity be unavailable. MOM can be sterilized, dissembled and easily transported to
other locations. Strengthening their appeal, MOM incubators are expected to cost roughly $400 per unit, or less
than 1 percent of the price commonly paid for traditional models. MOM’s inventor, James Roberts, a graduate of
Loughborough University in England, won the James Dyson Award for young designers. He expects MOMs to be
commercially available in 2017.
Cell Phone and Registration, Please
Transportation officials in Iowa recently announced they are developing a new mobile app that could make
the physical driver’s license obsolete. The integrated app creates an electronic license populated with the same
personal information displayed on a traditional license – such as date of birth, gender and address – while featuring
a unique bar code that law enforcement officials can scan during routine procedures to verify information and
access driving records. The free mobile app will be accepted during traffic stops and at airport security checkpoints
in Iowa, giving motorists the opportunity to reduce the amount of plastic they keep in their wallets. Although
privacy issues are a paramount concern for skeptics, Iowa officials are conducting a broad testing phase to address
potential issues prior to launching the app to the public.
7
Friess Associates
Friess Associates, LLC
P.O. Box 576
Jackson, WY 83001
Friess Associates of Delaware, LLC
P.O. Box 4166
Greenville, DE 19807
Editorial Staff: Chris Aregood, Genevieve Cozzens and Adam Rieger
Definitions and Disclosures
Investors should carefully consider the fund’s investment objectives, risks charges and expenses before investing. For this
and other information, please call 800.835.3879 or visit www.amgfunds.com for a free prospectus. Read it carefully
before investing or sending money.
Any sectors, industries, or securities discussed should not be perceived as investment recommendations. There is
no assurance that any securities discussed herein will remain in a portfolio at the time you receive this information
or that securities sold have not been repurchased. The securities discussed do not represent the entire portfolio
and in aggregate may represent only a small percentage of a portfolio’s holdings. Any securities discussed may
no longer be held in an account’s portfolio. It should not be assumed that any of the securities transactions
discussed were or will prove to be profitable, or that the investment recommendations we make in the future will
be profitable or will equal the investment performance of any security discussed herein. Friess Associates will
provide a list of security purchases and sales for the past 12 months upon request.
Earnings growth rates quoted refer solely to the estimated earnings growth rates of the average investment
holding of Friess Associates based on consensus estimates and are not predictive of future performance. Past
performance does not guarantee future results.
As of December 31, Apple Inc., Chipotle Mexican Grill Inc., GoPro Inc., Nike Inc., Papa John’s International
Inc., Pilgrim’s Pride Corp., Regal Entertainment Group, Spirit Aerosystems Holdings Inc., TJX Cos. Inc., Under
Armour Inc. and VF Corp. represented 5.23, 1.90, 1.06, 0.31, 0.60, 1.62, 0.28, 1.64, 1.77, 0.89 and 1.82 percent
of AMG Managers Brandywine Fund’s assets. AMG Managers Brandywine Blue Fund held Apple, Chipotle
Mexican Grill, GoPro, Nike, Pilgrim’s Pride Corp., TJX Cos., Under Armour Inc., VF Corp. at 6.35, 3.13,
1.95, 2.44, 2.67, 3.63, 2.78 and 3.09 percent of assets. AMG Managers Brandywine Advisors Midcap Growth
Fund held AmSurg Corp., Chipotle Mexican Grill, GoPro, Pilgrim’s Pride Corp., Regal Entertainment, Spirit
Aerosystems and Under Armour at 2.53, 2.07, 2.09, 2.59, 2.81, 2.36 and 2.56 percent of assets. Earnings per
share, or EPS, is the portion of a company’s profit allocated to each outstanding share of common stock. The
Price-to-Earnings (P/E) Ratio is calculated by dividing current price of the stock by the company’s estimated
earnings per share for the current calendar year. “Bought” date highlighted in stock charts represents the initial
purchase date by Friess Associates. The S&P 500 Index is a capitalization-weighted index. The index is designed
to measure performance of the broad domestic economy through changes in the aggregate market value of 500
stocks representing all major industries. The index is unmanaged, is not available for investment, and does not
incur expenses. Friess Associates LLC serves as the subadvisor to certain mutual funds advised by AMG Funds.
Funds are distributed by AMG Distributors, Inc., a member of FINRA/SIPC.
Friess Associates
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