FUNDS Hesperian Capital Management Ltd.
Corporate Office - Calgary
Hesperian Capital Management Ltd.’s mission: To create favourable longterm outcomes for investors by applying sound investment strategies, leveraging highlycapable professionals, and providing well-designed investment solutions for inefficient markets.
Hesperian Capital Management Ltd. (Hesperian) was founded in 1995 by Randal L. Oliver, CFA after many years as a portfolio manager and executive in the investment management industry. At the core of the firm’s culture is: 1) a common belief that our proven and repeatable investment methodology leads to favourable investment outcomes, 2) a desire to offer a high level of portfolio manager accessibility for investors and their advisors, and 3) a commitment to prioritizing the interests of the fund’s unitholders. As a boutique investment manager, we recognize that not all investors and their advisors are a match for our niche products. The appeal is strongest for the group of investors and advisors whose needs are well matched to our offering and we work hard to earn and maintain their trust. To that end, Hesperian targets inefficient markets that are difficult for investors and advisors to execute themselves due to market barriers, time constraints, or the need for specialization. We make active management count in markets where it matters.
1.877.431.1407 | www.norrep.com
Investment Philosophy Since the firm’s inception in 1995, we have selectively introduced new products to areas where there are opportunities to exploit not only our strengths, but also market inefficiencies. These niches exhibit pricing inefficiency due to a combination of factors such as a lack of sell-side analyst coverage and investor complacency that distort prices. In turn, the distortion creates opportunities to make active management count for investors through the use of specialist portfolio managers. Our portfolio managers have significant personal capital invested in the products they manage and in Hesperian Capital Management Ltd. Our independent in-house research team utilizes a disciplined blend of fundamental and quantitative research to build portfolios with superior attributes focused on attractive valuations, high returns on equity, high cash flow to debt, and strong earnings momentum. This proven and repeatable investment methodology allows us to identify value before the market. Inefficient markets offer an opportunity for specialists. “The knowledge advantage is real given that inefficient markets rarely exhibit the consistent level of rational sentiment and the sufficient business understanding necessary to accurately price securities.”
Strive for disciplined long-term consistency. “To find a parallel in baseball terms, we value hitting more than our fair share of singles and doubles each and every season rather than an unpredictable pattern of home runs and strike outs.”
Manage risk by not overpaying for growth. “The quantitative overlay to our fundamental analysis moderates the emotional aspect of investing by ensuring that securities exhibit the attributes that have been proven to result in success. The overlay also places current metrics in the context of historical norms for the market, the sector, and the security itself.”
Size each fund to fit its market niche. “It is easier to earn a great long-term return on ten million dollars than it is on ten billion dollars as a smaller fund is more nimble and more likely to bring efficiency to the inefficient.”
Apply a proven and repeatable methodology rather than try to predict the future. “The key is not to be right about whether a number will increase or decrease over a given time period, but to profit from market psychology and the fact that the consensus forecast is often already built into security prices.” Too many holdings dilutes performance. “To deliver meaningful long-term performance that differs from the index, our funds generally hold 30 to 40 securities with the ten largest positions composing 40% to 50% of the portfolio.”
Our independent in-house research team utilizes a disciplined blend of fundamental and quantitative research to build portfolios with superior attributes.
The most important return for investors is after tax. “To maximize the after tax return for investors, many of our funds live inside a corporate class structure and we only trade when there is clear value in doing so.” The quality of a company is only half the investment equation. “Although we intrinsically prefer great companies to good ones, we would rather invest in a good company at a great price than a great company at a price beyond its value. No company is a great investment at any price.” Maintain a long-term view on short-term gyrations. “We view short-term volatility as a contrarian opportunity to take advantage of irrational markets by selectively adding to our favourite names.” Devote the resources to specialize in inefficient markets. “Our deep, independent in-house research team and support functions are structured to allow us to know a lot about a few niches, rather than a little about everything.”
Norrep Corporate Class Structure Hesperian Capital Management Ltd. manages the Norrep Group of Funds to bring efficiency to inefficient markets. Our well-designed investment solutions target markets where active management truly counts for investors — markets that exhibit inefficiency due to being underfollowed, undervalued, or simply misunderstood. To achieve the proven long-term benefits of investing in inefficient markets, our fund portfolios are concentrated and built to be more attractive than the market based on the key value and momentum metrics that have been proven to result in long-term favourable outcomes. Through a tax-efficient corporate class structure, ten of our thirteen open funds (those denoted with a * symbol below) allow switching to facilitate rebalancing without triggering a taxable event.
Our Funds Norrep Fund (closed) Canadian Small and Mid Capitalization Equity Norrep II Class* Canadian Small and Mid Capitalization Equity
Norrep Energy Class* Canadian and Foreign Resource Companies Norrep Entrepreneurs Class* Microcapitalization Equity Norrep High Yield Class* High Yield Fixed Income
Norrep All Cap Quant Class* Canadian All Capitalization Equity (Quantitative Analysis)
Norrep Global Income Growth Class* Global Equity Balanced
Norrep Income Growth Class* Canadian Equity Balanced
Norrep Tactical Opportunities Class* Tactical Balanced
Norrep US Class* US Micro and Small Capitalization Equity
Norrep Short Term Income Fund Short Term Fixed Income
Norrep Global Class* Global Small Capitalization Equity
Norrep Yield Fund Canadian Corporate Credit Norrep Market Neutral Income Fund Canadian Market Neutral
We identify and capitalize on undervalued securities, building concentrated portfolios that are more attractive than the market based on our key metrics. Through the corporate class structure, ten of our thirteen funds allow switching without triggering a taxable event.
One of Canada’s leading small cap managers, specializing in niche markets.* * On a fifteen-year basis, Norrep Fund is #1 of 40 Canadian small/mid cap equity funds at May 31, 2012 (Globefund).
Investment Management Team Alex Sasso, CFA Chief Executive Officer & Portfolio Manager alex@hesperiancapital.com Craig Millar, CFA Chief Investment Officer & Portfolio Manager craig@hesperiancapital.com Keith Leslie, CFA Chief Compliance Officer & Portfolio Manager keith@hesperiancapital.com Steve Smith, CA Chief Financial Officer & Portfolio Manager steve@hesperiancapital.com
Jeff Sujitno, CA Managing Director, High Yield Debt jsujitno@hesperiancapital.com Mark Russell, CFA Portfolio Manager mrussell@hesperiancapital.com Don Walker, CFA Associate Portfolio Manager don@hesperiancapital.com Terry Thib, PEng, MBA, CFA Associate Portfolio Manager terry@hesperiancapital.com Steve Ripplinger Equity Research Analyst stever@hesperiancapital.com
Kamran Khan, CFA Portfolio Manager kamran@hesperiancapital.com
For more information please contact a member of our Sales Team: Jeff Lucyk Vice-President Regional Sales jlucyk@hesperiancapital.com 416-640-6716
Andrew Eaton Vice-President Regional Sales aeaton@hesperiancapital.com 416-640-6728
Joseph Varone Vice-President Regional Sales jvarone@hesperiancapital.com 403-531-1410
Brad McMillan Inside Sales bmcmillan@hesperiancapital.com 416-640-6724
Geoff Parslow Vice-President Regional Sales gparslow@hesperiancapital.com 604-715-3327
Caroline Moncrieff Inside Sales cmoncrieff@hesperiancapital.com 403-537-5709
Mark Bardsley Vice-President Regional Sales mbardsley@hesperiancapital.com 416-640-4158
Grahame Roberts Insides Sales grahame.roberts@hesperiancapital.com 416-640-6788
Hesperian Capital Management Ltd. Suite 175, 601 - 10th Avenue SW Calgary, Alberta T2R 0B2 403.531.2650 phone 1.877.531.9355 client services 1.877.431.1407 sales & general 403.508.6120 fax
www.norrep.com