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Berkshire Hathaway SP investment May 2020
- 2. Overview 1. How to take advantage of deep value investment opportunities 2. World class investment manager 3. An investment with capped downside
- 3. Disclaimer Any advice contained in this communication is general only and does not consider your objectives, financial situation or needs, and you should consider whether it’s appropriate for you. This might mean that you seek personal advice from a representative authorised to provide personal advice. If you are thinking about acquiring a financial product, you should consider our Financial Services Guide (FSG) including the Privacy Statement at www.reachmarkets.com.au and the relevant Product Disclosure Statement or Prospectus (if there is one available) first. Past returns do not reflect future returns, and it is also possible to make significant losses. We employ expert traders and use strategies that maximise returns and minimise risk. However, there is always a risk of loss when trading and investing. Reach Markets Pty Ltd (ABN 36 145 312 232) is a Corporate Authorised Representative (CAR No:431191) of Reach Financial Group Pty Ltd (ABN 17 090 611 680) who holds Australian Financial Services Licence (AFSL) 333297. Please refer to our Financial Services Guide or you can request for a copy to be sent to you, by emailing admin@reachmarkets.com.au
- 4. Disclaimer Units in Sequoia Launch Units – Series 56 are issued by Sequoia Specialist Investments Pty Ltd (ACN 145 459 936) (the “Issuer”) and arranged by Sequoia Asset Management Pty Ltd (ACN 135 907 550, AFSL 341506)(the “Arranger”). Investments in the Sequoia Launch Units – Series 56 can only be made by completing an Application Form attached to the Term Sheet Product Disclosure Statement (“TSPDS”) dated 8 May 2020, after reading the Master PDS dated 14 August 2017. A copy of the TSPDS, PDS and any other information can be obtained by contacting Reach Markets Australia on (03) 8080 5795 or contacting your financial adviser. You should consider the Term Sheet and Master PDS’ and the full product risk disclosures before deciding whether to invest in Units in Sequoia Launch Units – Series 56. Capitalised terms on the webpage have the meaning given to them in Section 10 “Definitions” of the Master PDS. The shares offered by this Product Disclosure Statement (PDS) should be considered highly speculative. An investment in the fund is not risk free and potential investors need to consider the risk factors described in the PDS and to consult their professional advisers before deciding whether to apply for shares.
- 5. How does this end?
- 6. GFC 2020 47 Weeks 5 Weeks
- 7. How does this end?
- 8. Why now? “... I like to buy stocks, so I don’t wish ill on anybody else. But if they want to sell them to me cheaper, I prefer it.” Warren Buffett
- 9. Why now? “Every decade or so, dark clouds will fill the economic skies and briefly rain gold” Warren Buffett
- 10. One day this guy will be back Event 1st Year after Low 2nd Year after Low Global Financial Crisis 71% 15% Dot-Com Bubble 35% 7% Black Monday - 1987 27% 21% S&P 500 Berkshire Hathaway Event 1 Year after low 2 year after low GFC 75% 3.8% Dot com 72% 1% Black Monday 77% 70%
- 11. Why US?
- 13. Who is this investment for? If you want international exposure
- 14. Who is this investment for? If you want world class investment management
- 15. Who is this investment for? If you want an investment with capped downside
- 16. • $22,950 Net outlay How does this investment work?
- 17. • $22,950 Net outlay • $100,000 Exposure How does this investment work?
- 18. • $22,950 Net outlay • $100,000 Exposure • Three year investment term How does this investment work?
- 19. • $22,950 Maximum Risk • $100,000 Exposure • Three year investment term How does this investment work?
- 20. • $22,950 Maximum Risk • $100,000 Uncapped Upside • Three year investment term How does this investment work?
- 21. • $22,950 Maximum Risk • $100,000 Uncapped Upside • Can Pay Annual Performance Coupons How does this investment work?
- 23. Berkshire Hathaway One of the most successful investment companies in the worldAccording to the Forbes Global list and formula, Berkshire Hathaway is the 4th largest public company in the world and the largest conglomerate
- 24. Why Berkshire Hathaway? 1965-1975 = 300.6% 1975-1985 = 1,321.6% 1985-1995 = 809.4% Book Value Gain
- 25. Why Berkshire Hathaway? By the end of FY 2016/17 it would have been worth around $162 Million If you had invested $10K in Berkshire in 1965… Please note: Past returns do not reflect future returns
- 26. Why Berkshire Hathaway? Fast forward and that same investment would be worth approximately $255 Million as at May 2nd , 2020 Please note: Past returns do not reflect future returns
- 27. Warren Buffett Chairman of Berkshire Hathaway Arguably one of the greatest investors on the planet Has outperformed the market decade-after-decade
- 28. Warren Buffett
- 29. Investment approach • Pick companies with Competitive Advantages • Invest in what you understand well • Long term value investing – don’t let fear and greed change your mind • Buy with a large margin of safety, below its ‘Intrinsic Value’ Warren Buffett
- 30. How is the investment designed?
- 31. Investment Amount Prepaid Interest Risk Management Fee Adviser Fee Total Net Cash Outlay $100,000 $17,850 $2,100 $3,000 $22,950 Investment cashflows at commencement
- 32. Scenario Total Net Cash Outlay over 3 years Investment amount Investment Performance over 3 years (net of 10% performance fee) Final Coupon at Maturity Net Gain/(Loss) % return on Total Net cash Outlay 1 $ 22,950 $ 100,000 -25% $ - - $ (22,950) -100% 2 $ 22,950 $ 100,000 0% $ - - $ (22,950) -100% 3 $ 22,950 $ 100,000 100,000 25% $ 25,000 25,000 $ 2,050 2,050 5% 4 $ 22,950 $ 100,000 50% $ 50,000 50,000 $ 27,050 27,050 118% 5 $ 22,950 $ 100,000 75% $ 75,000 75,000 $ 52,050 52,050 227% 6 $ 22,950 $ 100,000 100% $ 100,000 $ 77,050 77,050 336% *Please note: The above represents a range of investment returns possible under alternative theoretical scenarios and is no way an indication of future performance. Case study
- 33. *This shows the % based investment return generated on an investors Total Cash Outlay (including prepaid interest, currency & risk management fees and Application fees) over the investment term. This return is magnified compared to Gross Performance due to the leverage effect. **Investors should note that past performance is not a reliable indicator of future performance. Future volatility and returns may vary. Investors must read PDS before investing. Returns net of fees, in AUD Past Series Performance - MATURED
- 35. Why we believe Berkshire can continue to outperform 1. Warren Buffett 2. His approach to value 3. Berkshire’s proven method 4. Their ability to handle difficult market conditions “Every decade or so, dark clouds will fill the economic skies and briefly rain gold”
- 36. Why we like this investment 1. U.S. and Broad International Exposure 2. Limited Downside Risk* 3. One of the most successful investment companies in the world** *The maximum loss is limited to your initial investment. There is no exposure to the amount geared. **According to the Forbes Global list and formula, Berkshire Hathaway is the 4th largest public company in the world, and the largest conglomerate.
- 37. • $22,950 Net outlay How does this investment work?
- 38. • $22,950 Net outlay • $100,000 Exposure How does this investment work?
- 39. • $22,950 Maximum Risk • $100,000 Exposure • Three year investment term How does this investment work?
- 40. • $22,950 Maximum Risk • $100,000 Uncapped Upside • Three year investment term How does this investment work?
- 41. • $22,950 Maximum Risk • $100,000 Uncapped Upside • Can Pay Annual Performance Coupons How does this investment work?
- 42. Date Reference Asset Level Indicative Unit Value Gross Performance 30-Jun-2017 103.83 $1.0192 1.92% 31-Aug-2017 114.62 $1.1252 12.52% 23-Oct-2017 119.89 $1.1769 17.69% 31-Dec-2017 128.31 $1.2596 25.96% 28-Feb-2018 133.188 $1.3074 30.74% 18-Apr-2018 COUPON PAID 12% Gross 11.64% 31-May-2018 126.405 $1.1209 24.09% 29-Jun-2018 124.413 $1.1013 22.13% Please note – Past returns do not reflect future returns Performance Coupon – Series 25 Example
- 43. Additional Features • 100% borrowing low interest rates (5.95%) • Exposure to the AUD/USD exchange rate • SMSF Eligible • No further obligations. All amounts paid upfront • Quarterly liquidity • Limited downside* • 3 year term
- 44. Next steps Contact an advisor on (03) 8080 5795 or admin@reachmarkets.com.au
Notas del editor
- What is the current val – 15/.11/2019 MC will help out on this.