23rd AnnualInvestment Conference & Luncheon

Opportunities In Challenging Markets

Presented by:

Tim Moore, CFA®, Portfolio Manager

Dennis Wassung, CFA®, Portfolio Manager

Craig Goryl, CFA®, Analyst

Productivity & Efficiency Theme

Timothy Moore, CFA®

Portfolio Manager

Cabot Money Management, Inc.216 Essex Street

Salem, Massachusetts 01970800-888-6468 eCabot.com

What is Productivity?

Productivity = Ratio of Output for each Input of Labor, Equipment and Capital/Cash

Efficiency = similar to Productivity but takes into account Effectiveness & Wastage (input focus)

You can be Productive but not Efficient if you consume a lot of resources to perform something quicker!

Measured By: Minutes Per Good Produced or Revenue per Employee or Revenue Per Total Comp

US Productivity Improvements = +2% Annually (Peak was ‘00-’07 at +2.5% average annually)

Technology is #1 Driver of Productivity due to Innovation (Tech = ~25% of Cabot Equities exposure)

What is Productivity?

US derives 80% of its GDP from Services (Only 20% from Manufacturing compared to 36% 1980; World Bank)

What are the Benefits of Productivity/Efficiency?

Higher Standard of Living (#1 benefit) Better Innovation (#2 benefit and underappreciated) Time & Cost Savings (from a reduction in work hours per project or lower overall cost per unit of achievement) Improved Education More Availability of Medicine Improved Social Programs Increased Real Incomes (more so in emerging markets)

Productivity Examples In Our Lives?

Computer Internet Ecommerce Cell phones Software Applications GPS Navigation Devices Mobility Blogging & Text Messaging

Tablets & Smartphones (every 2.5 cannibalize 1 desktop or laptop) Digital Wallet/Dollars Electronic Medical Records Laser or Robotic Surgeries MRI’s Extended Battery Life Automobiles (not horse & carriage) Air Travel Alternative Energy (Solar & Wind)

Stock Specific Trends?Datacenters Storage

Mobile Devices

Enterprise Relationship Software

Global Sharing Capabilities of Data & Health Records, etc

Cloud Computing (Virtualization & Software As a Service)

Cyber Security & Privacy

3D Printing

Solar Panels or Wind Farms

The Downside of Productivity? Loss of Work hours & Jobs = Higher Unemployment because not as many workers needed to be hired to replace others (Outsourcing to Asia, etc)

More Distractions (constant online news flow, too many emails, wasted time browsing internet, online video games, social media overindulgence)

Easily Impacted by Cultures (countries or workplace), Location, Optimization, Resources Availability

Cyber Security Issues & Identity Theft

Need to address Bottlenecks, Workflow Inhibitors & Unmotivated Workers

Not Easily or Objectively Measurable (3 different models/formulas to measure it with each having its own merit and validity)

Dennis Wassung, CFA®

Portfolio Manager

Cabot Money Management, Inc.216 Essex Street

Salem, Massachusetts 01970800-888-6468 eCabot.com

Big Data & Mobile Revolution

The World Is Changing

Investment Opportunities

Mobile Devices & Components Internet & Data Infrastructure Security – Network & Data Cloud Computing & Internet Software

Craig Goryl, CFA®

Equity Analyst

Cabot Money Management, Inc.216 Essex Street

Salem, Massachusetts 01970800-888-6468 eCabot.com

Genomics and Personalized Medicine

Genomics – What is it?Genomics – The study of organisms’ hereditaryinformation. An organism’s genome is its complete set of DNA.

DNA – The chemical compound containing instructions for developing and directing all the body’s activities. An identical copy is in each cell.

DNA Sequencing – The process of determining the exact order of the chemical bases that make up DNA, about 6.2 billion in total for a human.

The map of a person’s DNA can tell us a lot about them, from their eye color to their likelihood of developing cancer. Scientists understand parts of the map, but most of it is still a mystery.

Genomics – Why is this Important?

Predictive Medicine – Based on my DNA, what are my chances of developing a particular disease?

Diagnostics – What disease is this? Is it an aggressive form in need of treatment, or is it better to wait?

Therapeutics – What causes this disease, and what drugs will cure it?

At the heart of genomics is the promise of personalized medicine. Because of differences in DNA, treatments do not work the same for everyone. Someday our current practice - prescribing the same drug for everyone who has a given disease - will seem archaic. This is truly a revolution in healthcare.

Genomics – Key Trends

Sequencing – Getting faster and cheaper every day

Bioinformatics – Managing and analyzing huge data volume is a problem

Commercialization – What knowledge is public domain? What is proprietary?

Genomics – Key Trends

Privacy and Ethics Your DNA map is deeply personal; you wouldn’t want to share

it. Yet insurance companies can’t operate with “information asymmetry.” They need to know what you know, or their

business model falls apart. Infants and DNA sequencing – Where should we draw the line

on unnatural selection or modifying DNA? Where will other cultures draw it?

Is it helpful or harmful to know my chances of developing Alzheimer's? Who else should know? What is the accuracy of

this prediction?

Genomics – Investment Opportunities

Sequencing equipment – This is an increasingly competitive space with some parallels to personal computing. But sequencing companies are positioned to expand into other products like DNA analytics, informatics, storage, etc.

Diagnostics – the most advanced area in terms of commercializing our knowledge of genetic information; a beneficiary of cheap sequencing.

Ongoing research – We are always learning and searching for new ways to help our clients capitalize on this important theme.

Market Research

Craig Goryl and Rob Lutts tour The Broad Institute

23rd AnnualInvestment Conference & Luncheon