From Nuveen

A BOTTOM-UP, ANALYST-DRIVEN FUNDAMENTAL APPROACH

The NWQ investment process is based on a bottom-up, analyst-driven fundamental approach that focuses on three key tenets: attractive valuation, identifying catalysts and inflection points, and favorable risk/reward.

ATTRACTIVE VALUATION

NWQ’s corporate finance approach and cash flow analysis helps us to identify potential investments. Our analysis will often include breaking down a company’s financial results by business segment to determine a valuation for the whole business. Importantly, our valuation analysis focuses upon absolute valuations, rather than relative valuations; we believe this “absolute” focus helps to limit losses and downside risk.

Qualitative measures and quantitative measures assist us in determining attractive valuations. While judging management strength and changes within a company’s business are examples of qualitative measures, quantitative measures may include price-to-cash flow, price-to-sales, and price-to-book analysis. All of these elements contribute to assist us in determining the appropriate valuation for an investment and its respective return expectations.

Identifying catalysts and inflection points

NWQ seeks to uncover the factors that will drive business improvement three months to a year in advance. This way, portfolios can fully benefit when these inflection points and catalysts emerge and are recognized.

The ingredients for change can come in many forms. For example, the outlook for an entire industry may improve, or the regulatory framework may change. NWQ prides itself in its ability to think independently and avoid “herd mentality.”

Importantly, our emphasis upon seeking a measure of downside protection leads us to investments in companies with attractive valuations. We believe this emphasis limits our loss potential should the catalyst not materialize.

Favorable Risk / Reward

Downside protection is key to our investment process and is managed by evaluating and quantifying the risk/reward for every investment in the portfolio and through continuous on-going monitoring.

The NWQ investment process emphasizes deep analysis

Indentify Investment Opportunities

Overview
  • Analyst-driven process
  • Bottom-up, fundamentals-based company research
  • Ongoing primary research including rigorous financial statement analysis

Analysis

Valuation
  • Cash flow modeling (Holt/EVA)
  • Business segment/intrinsic value
  • Downside protection analysis
Qualitative
  • Competitive advantages
  • Management quality
  • Incentive structure
  • Financial strength/earnings quality
Catalyst
  • Management changes, restructuring opportunity
  • Improving fundamentals, free options
  • Under-followed/misperceived fundamentals

Buy Decision

Investment Recommendation Evaluation
  • Approval process
  • PM/Analyst consensus
  • Adherence to client’s guidelines
  • Diversify portfolio

This material is not intended to be a recommendation or investment advice, does not constitute a solicitation to buy or sell securities. The information does not take into account the specific objectives or circumstances of any investor, or suggest any specific course of action. Investment decisions should be made based on an investor's objectives and circumstances and in consultation with his or her advisors. All investments involve risk and there is no assurance that an investment will provide positive performance over any period of time. There is no assurance that downside protection will be achieved.

NWQ Investment Management Company, LLC

2049 Century Park East, Suite 1600 Los Angeles, CA, 90067

(310) 712-4000
(310) 712-4100 (fax)