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“Independent Thinking Produces Extraordinary Results”
Aletheia Research
Aletheia Research and Management, Inc.100 Wilshire Blvd.
Santa Monica, CA 90401t: 310.899.0800 f: 310.899.0700
Friday, October 17, 2008
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March 24, 2008
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April 25, 2008
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October 17, 2008
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May 28, 2001
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May 3, 2004
BusinessWeek (May ’04)
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December 24, 2007
BusinessWeek (Dec ’07)
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March 7, 2005
Fortune (Mar ’05)
July 3, 2008
September 8, 2008
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January 7, 2008
Aletheia purchase @ $5 per share
Aletheia sale @ $33 per share
Forbes (Jan ’08)
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Volkswagen AG (VLKAY)
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Aletheia Research and Management, Inc.Aletheia Growth Composite Performance ($USD)
17.48%-0.15%9.10%5.93%1.80%2007
-19.53%-18.44%4.49%-5.58%2008
31.40%3.95%14.10%5.55%4.95%2005
20.81%5.99%-0.75%2.36%12.19%2006
18.06%12.72%5.60%-3.20%2.46%2004
63.34%15.78%12.49%25.97%-0.45%2003
-26.10%5.21%-14.35%-12.94%-5.80%2002
-11.68%10.32%-13.90%11.87%-16.89%2001
0.31%-17.15%2.81%-0.91%18.85%2000
69.50%46.98%-0.33%12.94%2.44%1999
26.75%31.70%-13.89%-2.05%14.11%1998
Annual4th Q3rd Q2nd Q1st Q
Annualized Returns Aletheia Russell 1000 Growth
Year To Date Return:
One Year Return:
Three Year Return:
Five Year Return:
Seven Year Return:
Ten Year Return:
Cumulative Returns Aletheia Russell 1000 Growth
Year To Date Return:
One Year Return:
Three Year Return:
Five Year Return:
Seven Year Return:
Ten Year Return:
-19.53%
-19.65%
18.73%
105.13%
135.93%
322.94%
-20.27%
-20.88%
0.13%
20.14%
17.22%
6.07%
-19.53%
-19.65%
5.89%
15.45%
13.05%
15.51%
-20.27%
-20.88%
0.04%
3.74%
2.30%
0.59%
Performance as of 09.30.08
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Aletheia is the classical Greek word for “truth and disclosure,” of bringing facts into the open. Aletheia Research and Management, Inc. is a
proprietary investment company dedicated to uncovering the truth.
• Aletheia was founded in 1997.
• The company’s research disciplines anticipate investor perceptions rather than reacting to them.
• What sets Aletheia’s research apart is its lack of reliance on traditional channels of information.
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Aletheia Research and Management, Inc.
John McDowellFirst Vice President
Research
Sheila CuVice President
Trading, Operations
David AttieVice President
Trading, Operations
Chris RoperVice President
Trading, Compliance
David BunzelPortfolio Management
(Chairman, Irvine Capital Partners)
Patty BarnesSenior Vice President Operations, Research
Chad CookFirst Vice President Inst. Sales / Research
Elizabeth SandersSenior Research
Director
Roger B. PeikinExecutive Vice PresidentCFO, General Counsel
Peter J. Eichler, Jr.Chairman, CEO,
Chief Investment Officer
Steven SoboroffSoboroff Partners
Santa Monica, California
John S. HamiltonShelby Investors
Bel Air, California
Brian KennedyPresident, CEO
Regency AdvertisingHollywood, California
Herman MuhlsteinVP Packeteer, FMR Sales Mgr
Apple Computer, Network Appliance, Digital Eqmt
Bruce A. LeeSr. VP Expeditors Int’l
Chicago, Illinois
Dr. James E. DavisChatauqua Partners
Pacific Palisades, California
John M. EichlerSVP Cushman & Wakefield
Los Angeles, California
Robert GeisResearch Associate
Rina Echavez Vice President
Sales
Research Advisors
Energy, Health Care
Real Estate Development, Retail
Homebuilding. Real Estate Investmt
Advertising
Computer Sftwre, Storage, Internet
Commercial & Industrl. Real Estate
Transport., Int’l Trade, Logistics
Organizational Chart
Bill KennedyFirst Vice President
Institutional Sales
Christa McMullinVice President
Trading, Operations
Roya SalehiradVice President
Trading, Operations
Alyssa Kennedy First Vice President
Research
Marketing / Sales OperationsResearch / Portfolio
Management
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* Aletheia Shareholders
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Aletheia Research and Management, Inc.Firm Ownership
Peter J. Eichler Jr., Chairman, CEO
Roger B. Peikin, EVP, CFO
David Bunzel, Founding Shareholder
Patty Barnes, VP Operations
Other Employees
Initial Aletheia Clients/Shareholders/Outside Ownership
90 % ownership
10 % ownership
43%
26%
4.7%
3%
14%
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Aletheia Growth Portfolio:
Aletheia Value Portfolio :
Aletheia 150 / 50 Portfolio :
Aletheia Income/ ICM Portfolios :
Aletheia Insider Index, LP Fund:
Other Portfolios/ Custom Accounts :___________
Total AUM:
$ MM
$ MM
$ MM
$ MM
$ MM
$ MM
$ 11,257 MM
8,520
1,200
780
157
425
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Aletheia Research and Management, Inc.Assets under Management
June 30, 2008
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Aletheia Research and Management, Inc.Types of Clients
Corporate Funds
Public Funds
Endowments/Foundations
High Net Worth Individuals & Family Offices
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Aletheia Research and Management, Inc.Representative Client List
• General Motors
• RBC Financial Group
• Goldman Sachs
• Oregon, State Treasury
• Kansas State University
• Western Growers Pension System
• Morgan Stanley
• ITT Corporation
• Raytheon Corporation
• Florida, State Treasury
• Oklahoma, Teachers Retirement System
• Austin Police Retirement System
• State Street Global Advisors
• Queensland Investment Counsel
• Santa Barbara Cottage Hospital
• Hauck & Aufhauser (Munich)
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Aletheia Research and Management, Inc.
“Instead of spending time with analysts, the institutions should spend it with the companies. They should bypass Wall Street.”
- Herbert Allen-
“Most people invest and then sit around worrying what the next blowup will be. I do the opposite. I wait for the blowup, then invest.”
-Richard Rainwater-
“Fortunately, there is another course which the investor can pursue. If properly handled, this method will provide the clues that are needed to find really outstanding investments. For the lack of a better term, I shall call this way of proceeding the “scuttlebutt” method.”
-Phillip A. Fisher
“We read a lot – we read daily publications, we read weekly or monthly periodicals, we read annual reports, we read 10-Ks, and we read 10-Qs. Fortunately, the investment business is a business where knowledge accumulates…The managements are not the best reporting parties in most cases. The figures tell us more than management. But we don’t give a hoot about anybody’s projections – we don’t even want to hear about ‘em – in terms of what they’re going to do in the future. We never found any value in anything like that. We never look at any analysts’ reports. It’s far overrated. I don’t think I.....If I read one, it was because the funny papers weren’t available. I don’t understand why people do it.”
- Warren Buffet-
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Aletheia Research and Management, Inc.Investment Process
TOTAL SECURITIES UNIVERSENYSE, NASDAQ, AMEX, OTC, Etc.
SEC FORM 4Buys & Sells
FORM 13D, 13G,Corporate Activity
Derivatives &Options Transactions
FORENSIC ACCOUNTING ANALYSISBALANCE SHEET, CASH FLOW, CREDIT PROFILE
INDUSTRY RESEARCH
ALETHEIA PROPRIETARYINVESTMENT PRODUCTS
PORTFOLIO RISK CONTROLS
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Aletheia Research and Management, Inc.Buy Discipline
• Buying by corporate officers, employees and corporation• Consensus buying• Absolute dollar amounts of buying• Corporate stock buybacks (actual, not simply announced) with emphasis on
large percentage reduction of shares outstanding• Option exercise behavior• Hedged transaction analysis
• Empirical balance sheet and cash flow strengths and/or improvement
• Aletheia accounting and balance sheet analysis• Outside forensic accounting analysis and support
• Aletheia “Industry Research” indicating aberrational improvement in earnings, revenues, asset values, or industry position
• Aletheia direct industry contacts corroborating proprietary research findings
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Aletheia Research and Management, Inc.Sell Discipline
• Selling by corporate officers, employees and corporation• Consensus selling• Absolute dollar amounts of selling• Corporate stock issuance (actual, not simply announced) with emphasis on
large percentage increase in shares outstanding• Option exercise behavior• Hedged transaction analysis
• Empirical balance sheet and cash flow deterioration and weakness• Aletheia accounting and balance sheet analysis• Outside forensic accounting analysis and support
• Aletheia “Industry Research” indicating dramatic overvaluation, negative industry trends, new competition or shifts in technology
• Aletheia direct industry contacts corroborating proprietary research findings
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Murphy Oil (MUR) vs. Chevron Texaco (CVX)
30-Dec-02 Deming, Claiborne purchased 943,976 shares at $ 21.58 $ 20,371,00030-Dec-02 Deming, Claiborne purchased 943,976 shares at $ 21.58 $ 20,371,000
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Wynn Resorts Ltd (WYNN)
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The Coca-Cola Company (KO)
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Titanium Metals (TIE)
Apr-05 Simmons, Harold purchased $ 4,116,000Jul-05 Simmons, Harold purchased $ 4,940,000Sep-05 Simmons, Harold purchase $ 2,053,000Oct-05 Simmons, Harold purchase $ 6,659,000Feb-06 Simmons, Harold purchase $ 15,180,000Apr-06 Simmons, Harold purchase $ 4,000,000
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Freeport McMoran (FCX)
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XM Satellite Radio (XMSR)
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Sears Holdings Corp. (SHLD)
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IBM (IBM)
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May 8, 2000
Stock Price Then:
$36.15
Stock Price Now:
$13.76
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Sun Microsystems (SUNW)
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Tenet Healthcare (THC)
16-Jan-02 Barbakow, Jeffrey sold 2,000,000 shares at $65.03 $ 130,060,000
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Countrywide Financial Corp (CFC)
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Aletheia Research and Management, Inc.Portfolio Composite Characteristics
Strategy Snapshot / Portfolio Constraints
Primary Capitalization: Large Cap
Primary Style Emphasis: Growth
Preferred Benchmark: Russell 1000 Growth
Number of Holdings: 45 Current
ADR’s Utilized: 3 - 5 % of portfolio
Derivatives Utilized: No
Max. Position Size: 5% at cost, 7 ½ % market
Maximum Sector Wght: 25%
Fundamental Characteristics
Wgtd. Avg. Mkt. Cap ($Mil): $49,044
Median Mkt. Cap ($Mil): $8,470
Annl. EPS Growth Rate ( 5 years ): 25.00%
Current P/E: 12.55x
Avg. Cash Position: 0% - 10%
Current Cash Position: 0.25%
Annl. Turnover (By Wgt.): 45%
Current P/B (12-mo Trail): 2.26x
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Aletheia Research And Management, Inc.
AletheiaPeriods Growth Bmrk Excess Std Dev Alpha Beta Tracking Error Info Ratio Sharpe Ratio
1 Year -19.65 -20.88 1.22 --- --- --- --- --- ---2 Year 0.09 -2.82 2.92 --- --- --- --- --- ---3 Year 5.88 0.04 5.84 15.75 6.29 1.08 8.75 0.67 0.124 Year 14.04 2.82 11.22 15.69 11.27 1.08 9.26 1.21 0.665 Year 15.45 3.74 11.71 15.36 11.86 1.01 9.81 1.19 0.80 6 Year 20.38 7.14 13.24 17.03 12.21 1.13 10.16 1.30 1.037 Year 13.04 2.30 10.74 19.05 11.05 1.00 10.20 1.05 0.548 Year 5.75 -5.48 11.23 21.53 11.83 0.97 9.60 1.17 0.139 Year 12.05 -2.63 14.68 25.77 15.94 1.11 11.48 1.28 0.34 10 Year 15.51 0.59 14.92 26.17 15.41 1.09 11.29 1.32 0.46Inception 13.95 1.40 12.55(1/1998)
Calendar Years MRQ YTD 2007 2006 2005 2004 2003 2002 2001Product Returns: -18.44 -19.53 17.47 20.80 31.39 18.06 63.33 -26.10 -11.69Benchmark Returns: -12.33 -20.27 11.82 9.07 5.26 6.30 29.75 -27.88 -20.42 Excess Returns : -6.11 0.73 5.66 11.73 26.12 11.76 33.58 1.79 8.74
- Information as of 09/30/2008
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Aletheia Growth Portfolio Sector Breakdown vs. Russell 1000 Growth Index
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5
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15
20
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technology healthcare ConsumerDiscret.
ConsumerStaple
Energy Materials &precious metals
producerdurable
financials Utilities
ALETHEIA GROWTH PORTFOLIO
RUSSELL 1000 GROWTH INDEX
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Aletheia Research and Management, Inc.Key Personnel
Name: Peter J. Eichler, Jr.Title: Chairman, CEO, CIORole: Chief Executive of Company, Chief Portfolio ManagerYears with the firm: Founder in 1997Years investment experience: 30 yearsEducation: Santa Clara University, B.S. History
Name: Patty BarnesTitle: Senior VP, OperationsRole: Operations, Analyst, Portfolio ConstructionYears with Firm: 8 yearsYears investment experience: 23 years
Name: Roger B. PeikinTitle: EVP, CFORole: Financial Operations, General CounselYears with Firm: co-founder in 1997Years investment experience: 11 yearsEducation: Villanova University, B.S. FinanceSouthwestern University, Juris Doctor
Name: Elizabeth SandersTitle: Senior Research DirectorRole: Research Oversight / Portfolio SupportYears with Firm: 10 yearsYears investment experience: 30 yearsEducation: Certificate of Management,
Graduate Business School, University of Washington
M.Ed., Boston University B.A., Wayne State University
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Aletheia Research and Management, Inc.Key Personnel
Name: Rina EchavezTitle: VP SalesRole: Marketing AssistantYears with Firm: 6 yearsYears investment experience: 13 yearsEducation: Pepperdine University, B.S.
Name: John McDowellTitle: First VP, ResearchRole: AnalystYears with the firm: 3 yearsYears investment experience: 5 yearsEducation: University of Southern California, B.S. Electrical EngineeringNew York University, M.B.A.CFA Level III Charter Pending
Name: Chris RoperTitle: VP Compliance / TradingRole: TradingYears with Firm: 7 yearsYears investment experience: 37 years
Name: Joe Boskovich Jr.Title: First VP, Institutional SalesRole: MarketingYears with Firm: 5 yearsYears Investment Experience: 6 yearsEducation: University of Southern California, B.S. Finance
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Aletheia Research and Management, Inc.Key Personnel
Name: David AttieTitle: VP Trading / OperationsRole: OperationsYears with Firm: 3 yearsYears investment experience: 7 yearsEducation: University of New York at Buffalo, B.S. International Business
Name: Sheila CuTitle: VP, Operations, Administration Role: Operations and AdministrationYears with Firm: 2 yearsYears investment experience: 8 yearsEducation: Pepperdine University, M.B.A.
Name: Chad CookTitle: First VP, Sales / Research Role: Marketing / AnalystYears with Firm: 2 yearsYears investment experience: 2 yearsEducation: University of Southern California, B.S. and M.A. Accounting
Name: Roya SalihiradTitle: VP, Trading, Operations Role: Operations and AdministrationYears with Firm: 1 yearYears investment experience: 11 yearsEducation:California State Fullerton, B.S.
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Aletheia Research and Management, Inc.Key Personnel
Name: Christa McMullinTitle: VP, Trading, Operations Role: Operations and AdministrationYears with Firm: 1 yearYears investment experience: 6 yearsEducation: Loyola Marymount University, B.A.
Name: Bill KennedyTitle: First VP, Sales Role: MarketingYears with Firm: less than 1 yearYears investment experience: 20 yearsEducation: Loyola Marymount University, B.A.
Name: Alyssa KennedyTitle: First VP, Research Role: AnalystYears with Firm: 1 yearsYears investment experience: 1 yearsEducation: Cornell University, B.A.Harvard University, Juris Doctor, Northwestern University, M.B.A.
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