Beyond the Bull Market: Smead Capital Management’s Cole Smead on Navigating Inflation, Exuberance, and the Quest for Value

Is the ongoing bull market in the US really justified? Or is it hype and over-valuation? Most investors and analysts appear to think the inflation genie is back in the bottle. But is it? What will the US Federal Reserve do in the foreseeable future – is it more loosening ahead, and is that wise or dangerous? Are private investors best advised to seek out value and avoid what some consider excess valuations driven by what might be called ‘irrational exuberance’ over the US equity market? These were some key issues at the heart of a Hubbis bespoke event in Hong Kong in late February co-hosted by Smead Capital Management and attended by roughly 20 guests, all wealth management decision-makers, family office representatives, EAMs and private bank gatekeepers keen to hear the firm’s views and discuss some of these key issues ahead. Smead Capital Management is a US-based value investment firm that is expanding its remit in Asia and that, amongst other strategies, runs the Smead US Value UCITS Fund that the firm is currently promoting to Asia-based private clients.

Main Speakers from Smead:

Cole Smead, Chief Executive Officer & Portfolio Manager

Cole oversees all activities of the firm. He is the final decision maker for all investment decisions in the firm’s international equity portfolios. Cole has been with the firm since its founding in 2007. Prior to joining Smead Capital Management, he was a Financial Advisor with Wachovia Securities in Scottsdale, AZ. He is a member of the CFA Institute.

Richard O’Connell, Head of Business Development – EMEA at Smead Capital Management, based in London

Richard works with advisors, family offices and institutions through the firm’s UCITS funds, sub-advisory and separate accounts for non-US investors. He is based in the London, UK office.

Prior to joining Smead Capital Management, Richard was Managing Partner, Head of Business Development and CEO for Columbus Point LLP. Previously he was with RO’C Advisory and UBS Asset Management.

A Short Introduction to Smead Capital Management

Smead Capital Management, headquartered in Phoenix, Arizona, is a US value investment boutique that was established in 2007 by Bill Smead, a seasoned professional in the investment industry whose career began back in 1980.

The investment process implemented by Smead Capital Management were originally developed by Bill Smead in the early 1990s. Since the founding of Smead in 2007 and the launch of its US mutual fund in January 2008, the firm has now managed money client money across multiple market cycles and consistently delivered alpha for clients.

The company prides itself on being a boutique business, with 90% of its equity owned by employees. This structure ensures a deep alignment of interests between the firm's management and its clients, highlighted by the significant investment of personal money by both Bill Smead and his son, Cole Smead, into the firm’s funds. Such commitment showcases a profound ‘skin in the game’ philosophy, which is critical for fostering investor confidence.

The firm is characterised by its focus on long-term investment strategies and maintaining concentrated portfolios. This approach, coupled with a partnership model with investors who share a long-term investment horizon and understand the firm's strategic objectives, positions Smead Capital Management as a differentiated entity in the investment management industry.

Portfolio Strategy

Smead Capital Management adopts a benchmark agnostic philosophy to portfolio management characterised by a portfolio concentration, embracing risk as an essential element to outperform in the highly efficient US equity market. The firm positions itself distinctively as a committed value investor, incorporating a pragmatic approach that does not limit its investment opportunities to specific industries or sectors.

This approach allows them to consider a broad spectrum of investment opportunities, diverging from the restrictive strategies of competitors who might focus exclusively on 'quality' investments or avoid sectors like energy.

Central to the firm's investment philosophy are eight meticulously defined investment criteria that guide the selection process for potential investments. This rigorous framework ensures that only companies meeting these comprehensive standards are considered for the portfolio, emphasising a disciplined and value-driven investment process.

Smead’s distinguished track record includes the successful launch and management of a US mutual fund in January 2008 - a period marked by massive global financial turmoil - demonstrating the firm's resilience and capability to navigate the most challenging market conditions effectively. Additionally, the firm has expanded its offerings to include a UCITS fund domiciled in Luxembourg in November 2013 that now boasts a decade of performance history.

Smead Capital Management’s investors are individuals, advisors, family offices and institutions globally who invest with the firm through the Smead funds, separate accounts and other investment vehicles.

Smead is in an expansive mood in Asia and recently achieved a milestone by securing its first client in Singapore, highlighting its ongoing efforts to engage with and serve a more diverse investor base. This expansion underscores Smead Capital's strong position within the investment management industry and its dedication to delivering value through its distinctive investment process.

The Smead US Value (UCITS) Fund

The SMEAD US VALUE UCITS FUND invests in US large-capitalisation companies and currently offers a range of share classes for different types of investors. Launched on November 29, 2013, the Luxembourg-domiciled UCITS fund manages total assets of $285.93 million (end Q4, 2023) and operates with the US dollar as its base currency. The minimum investment is US$1 million for the I Share Class. The average annualised returns per annum since the November 2013 inception are 11.21%.

The portfolio managers are Bill Smead and Cole Smead. Bill Smead is the founder and chairman of Smead Capital Management and created the firm’s investment discipline. As

Chief Investment Officer, he is the final decision maker for all investment decisions in the firm’s domestic equity portfolios. He has over 43 years of experience in the investment industry. He started his career with Drexel Burnham Lambert in 1980.

And Cole Smead, CFA, is CEO and Portfolio Manager where he oversees all activities of the firm. He is the final decision maker for all investment decisions in the firm’s international equity portfolios. Cole has been with the firm since its founding in 2007. Prior to joining Smead Capital Management, he was a Financial Advisor with Wachovia Securities in Scottsdale, AZ.

The Portfolio

The fund focuses on the US and comprises roughly 25-30 securities, usually with 50 to 55% of the portfolio in the top 10. Portfolio weightings are driven by the firm’s Eight Investment Criteria, and the buy criteria assume a 3-5-year holding period, with desired holding periods of more than five years.

The eight criteria mean that each company in its US Value UCITS Fund must have the following five characteristics over the entire holding period:

• Meets an economic need
• Strong competitive advantage (wide moats or barriers to entry)
• A long history of profitability and strong operating metrics
• Generates high levels of free cash flow
• Available at a low price in relation to intrinsic value

Additionally, the stocks would have these three favoured (but not essential) characteristics:

• Management’s history of shareholder friendliness
• Strong balance sheet
• Strong insider ownership (preferably with recent purchases)

The sell discipline dictates that as a risk management control, successful investments will be trimmed if their weighting becomes outsized (in the 7 to 9%range), if there is a change in thesis, if the companies violate their Eight Investment Criteria, if there is ‘maniacal’ pricing, and if any security falls 15-20% from the purchase price or relative to a peer group, the portfolio managers execute a formal, intensified review

As of December 31, 2023, the top 10 holdings were:

• Lennar Corp Class A (LEN) 6.98%
• D.R. Horton Inc (DHI) 6.83%
• Occidental Petroleum Corp (OXY) 6.07%
• Simon Property Group Inc (SPG) 5.67%
• Merck & Co Inc (MRK) 5.50%
• Macerich Co (MAC) 5.47%
• Amgen Inc (AMGN) 5.11%
• American Express Co (AXP) 5.05%
• NVR Inc (NVR) 4.77%
• Ovintiv Inc (OVV) 4.20%

And by sector, the portfolio allocation was:

• Consumer Discretionary 24.98%
• Energy 21.41%
• Financials 20.55%
• Real Estate 11.70%
• Healthcare 11.16%

At a Glance - Cole Smead’s Insights & Observations in Brief

Inflation and Fiscal Policy Dynamics: Cole articulates the complex relationship between ongoing inflationary pressures and fiscal policy, emphasising the bipartisan political reluctance to cut federal spending. He draws on historical examples to underscore the potential for a repeat of the 1970s-style inflation surge due to unchecked fiscal expenditure and a pandemic-induced 'wartime-like' spending mentality that shows no signs of waning.

Federal Reserve's Anticipated Actions: Despite mainstream expectations of stability or cuts, Cole posits a 15-20% likelihood of the next Federal Reserve move being a rate hike, influenced by persistent inflationary pressures and the fiscal situation. This perspective challenges the prevailing market consensus and suggests a closer examination of underlying economic indicators.

Equity Allocation Concerns: Highlighting the dangers associated with historically high equity allocations among US households, Cole believes the S&P will produce negative returns in real terms over the next decade. He compares the current situation to Japan's lost decade from the market’s peak of 1989/1990, attributing this outlook to a strong negative correlation between high equity allocations, high valuations and future returns.

Market Irrationality and Investment Trends: Criticizing the prevailing market irrationality, especially the frenzy around AI and technology stocks, Cole advises against following trends without a solid foundation in value. He calls for a more pragmatic approach to investment, wary of the hype that can lead to inflated valuations and subsequent market corrections.

Strategic Shift in Investment Approach: Cole urges investors to adopt a more cautious stance, recommending a shift towards value investments and greater international diversification. He identifies significant opportunities in sectors with lower current valuations but attractive returns, such as energy, homebuilders, and banks, contrasting with the high valuations in more popular sectors, especially the ‘Magnificent Seven’ stocks driving indices seemingly ever higher.

Smead Capital's Investment Philosophy: Cole details Smead Capital Management's commitment to value investing, focusing on undervalued assets and sectors with consolidation potential, and which do not suffer from intense and growing competition. This approach aims to safeguard against widespread market downturns while positioning for relative outperformance through disciplined, long-term investment approach.

Sectoral Investment Preferences: Expounding on his investment preferences, Cole points to the oil & gas industry, physical retail (especially Class A malls), housebuilding and banking as areas ripe for investment. He highlights these sectors' potential for high returns on equity and low valuations, making a case for their attractiveness compared to the overvalued tech sector.

Impact of Competition and Industry Consolidation: Discussing the dynamics of competition and consolidation, Cole argues that sectors undergoing consolidation, such as the sectors they are investing in, offer better prospects for profitability due to reduced competitive pressures. He uses historical and current examples to illustrate how consolidation can lead to more rational pricing and improved returns on capital.

The Misconception of Following the Herd: Challenging the popular belief in the safety and guaranteed returns of chasing the indices, Cole stresses the importance of individual stock selection in achieving superior investment returns. He critiques the passive and blinkered investment strategies that blindly follow broad market indices such as the S&P.

Navigating Economic Uncertainty with a Value-Driven Strategy: Cole underscores the necessity of a cautious, value-oriented investment strategy in the face of economic uncertainty, market volatility, and fiscal challenges. He advocates for a disciplined approach to investment, focusing on undervalued assets and sectors with growth potential, to navigate the complexities of the current economic and financial landscape effectively.

Key Insights & Observations (in more detail) from Cole Smead

Understanding Inflation and Fiscal Policy: Insights from a Historical Perspective, Past to Present

Cole first focused on the complexities of inflation and fiscal policy, drawing on historical crises and authoritative voices to illuminate current challenges. He cited Larry Summers’ recent comments on Bloomberg that there is a 15% or 20% chance that the next move is up for the US Federal Reserve, contrary to most expert pronouncements.

Why should that be? Cole surmised it is because there is such a robust bipartisan stance in US politics against reducing federal spending, which essentially translates to continuing inflationary pressure. He said that whereas the Global Financial Crisis saw fiscal restraint follow at the government level, the pandemic resulted in massive ‘wartime-like’ expenditure and stimulus, and that mentality persists on both sides of the House today with no signs of abating,

With the deficit ahead likely to be 6.5% of GDP, Cole explained that there is a dangerous disconnect between political rhetoric and economic prudence. He noted how no politician is going to win votes by telling people that they are going to reduce spending this next year.

Cole commented further on the US deficit, noting that it is at its highest relative to GDP since World War II, and questioned the justifiability of the fiscal response to the COVID-19 pandemic versus historical wartime spending.

And he warned of the dangers of not taming inflation, looking back to historical parallels from the late 1960s and early 1970s when political policy and dovish Fed strategy (pushing rates lower against common sense, realistically) helped dangerously reignite inflation, which surged even higher than in its first iteration.

Cole said he considers the possibility of a scenario akin to the 1970s, where inflation resurges and affects all asset prices, as having a greater than 50% likelihood, specifically estimating it at 60%. He said he assigns a mere 20% chance to a path where inflation does not emerge as a significant problem. And he said there is a significant 20% chance of a scenario where, with inflation again surging, there is a loss of confidence in the Federal Reserve's capacity to manage the situation, which could lead to major problems.

He concluded that something resembling the inflationary and associated troubles of the early 1970s represents the most likely outcome. He accordingly called for a more balanced monetary policy, remarking that lower inflation currently is more by luck, but the dangers remain significant of another bout, possibly worse than in 2022.

Cole’s Core Concern – Excessive Equity ‘Exuberance’ Amongst Investors

Cole highlighted how the US Federal government's response to economic challenges, particularly through stimulus spending, means the government has huge potential problems. But he said his big worry is the very high equity allocations amongst US households, which are at record levels, indicating a significant potential risk, especially given the historical evidence that these types of very high equity allocations often precede poor equity returns.

He pointed to the strong negative correlation of -0.85 between current equity allocations in US households and the 10-year forward returns of the S&P 500, suggesting this pattern forecasts poor returns for the S&P 500 over the next decade, including dividends. He said this could be like past market conditions in Japan, back in 1989/90, especially as US investors show no signs of wanting to reduce their exposure to stocks.

He said while historically high return on equity (ROE) and return on capital in the US market, especially evident since the lows of 2008-09, have driven dramatic demand for US equity for many years, as these returns peak and subsequently decline, investor willingness to pay high prices diminishes, especially for the smaller number of mega-stocks that dominate the major US indices.

The Sensible Response to this Environment - Increase Exposure to Value and to International Diversification

Cole said that investors should be more rational and cautious and take their US equity blinkers off as well.

For example, he said that he estimates an 80% chance that businesses in sectors with historically recent lower returns - such as banking or energy or homebuilders - which are now generating attractive returns relative to their history and trade at considerably lower valuation multiples, offer more opportunity for investors compared to high-valuation sectors.

As to international diversification, he explained that there is plenty of value and opportunity overseas, for example, in Europe. He used UniCredit, a major international banking and financial services company based in Italy, as an example of a business with a 15% return on equity and trading below book value, contrasting it with the high valuations in the US. He critiqued the notion that only American companies can generate high returns as a fallacy, pointing out that pragmatic and profitable business practices, including buybacks, are not exclusive to the US.

He argued this misconception is perpetuated by Wall Street's tendency to market what is currently popular, which poses a real danger to investors by overlooking valuable opportunities in international markets. Moreover, he worries that Wall Street will go crazy on new trends, such as AI-related investments, to the detriment of potentially focusing on value available in other sectors.

He said he does genuinely worry that the US market has in fact been irrational for some years already and shows no signs of becoming rational. He strongly advised investors to avoid the widespread tendency to irrational or nonsensical investment strategies and take a more pragmatic and realistic approach to navigating potential market irrationalities.

He added that considering the choice between investing in a 10-year Treasury at a 4% yield or the S&P 500, he would opt for the Treasury paper for its predictability and manageable volatility, despite acknowledging it might not outpace inflation. He said people still think they're going to make great returns in equities today, but the downside outweighs the potential upside by some margin. The dangerous combination of fiscal weakness and vulnerability could also pressure the US dollar for some time ahead, he warned.

AI – A Case in Point for Irrational Exuberance?

Responding to a question from a guest, Cole pointed to the dramatic escalation of investment demand for AI stocks as a case of excess in the making.

He said he looks at AI’s societal and business impacts with a blend of historical insight and cautionary foresight. He views AI as the latest in a long line of technological advances that, while introducing efficiencies and new capabilities, ultimately serve as tools enhancing rather than replacing human creativity and ingenuity. He critiqued the notion of "chronological snobbery," challenging AI hype by drawing parallels with past innovations to argue that technological progress does not render contemporary society superior to its predecessors.

Concerns over the regulatory landscape and the monopolistic tendencies of tech giants lead he said to caution against underestimating the potential for significant industry shifts due to government intervention and regulation of AI, as seen in historical cases like Microsoft's antitrust experience. He explored the geopolitical dynamics between major powers such as the US and China, emphasising the investment risks posed both by regulatory uncertainties and geopolitical tensions.

His perspective suggests a balanced view of technology's role in society and business, and leading him to advocate for a more prudent investment strategy that acknowledges both the opportunities and challenges presented by AI and the broader tech industry.

Smead Capital Management’s Approach – Seek out Value and Opportunity

Cole said as long-only investors, Smead Capital focuses on seeking out attractively valued companies. He argued that, ultimately, a US market correction would result from a collective decision by investors to stop buying at high prices rather than due to a specific catalytic event. By positioning themselves in Smead Capital’s value strategies, they would protect (but, of course, not entirely insulate) themselves from widespread market weakness ahead and retain the opportunity for outperformance.

In a strategic overview of their investment philosophy, Cole told guests that their overall strategy is one of hunting for undervalued assets across the market, giving significant upside in an inflationary environment or as market sentiment shifts.

He highlighted their UCITS strategy, where at the end of Q4 of 2023, the fund’s allocation read:

• Consumer Discretionary 24.98%
• Energy 21.41%
• Financials 20.55%
• Real Estate 11.70%
• Healthcare 11.16%

And in terms of key data on the fund, the following:

• Weighted Average Market Cap $112.2 Billion
• Portfolio Price/Earnings 14.20x
• Portfolio Price/Book 2.32x
• Price/Cash Flow
• Size of fund (December 2023): $284 million

He also explained that they have strict criteria for navigating their portfolio of roughly 25 to 30 companies through volatile conditions, based on their Eight Criteria (see section above on the fund).

This he said had greatly helped the fund through very different conditions from, for example, the pandemic of 2020 until today. Despite facing severe challenges in 2020, they made only a small loss, followed by a 45% gain in 2021 and limited their losses to just 3% in 2022 - a year marked by general losses of nearer 20%. Then, last year, the fund made double-digit returns, not as high as many with a more risk-taking approach, but solid and robust.

He said the performance underscores the importance of prudent risk management to achieve sustainable returns, arguing that their strategy effectively balances risk and reward over a long-term horizon.

Key Sectors of Preference for the Smead UCITs US Value Fund

Cole then articulated more detail around their current investment approach, emphasising a focus on sectors often overlooked by mainstream investors, specifically the oil & gas industry and ‘physical’ retail, particularly malls.

He said that their portfolio allocates slightly over 20% to the oil & gas industry because they like the potential for 20-25% returns on equity without needing to pay more than twice the book value for those stocks. He said this strategy flows against the backdrop of a general market preference for tech stocks, highlighting a deliberate contrarian stance based on both valuations and return potential.

He pointed to past missteps in the drive for energy independence within the US, such as excessive enthusiasm for shale as the future of American energy and its subsequent disappointing returns for investors. He said that the traditional energy sector holds merit again, as the sector offers value, and the leading players have a highly disciplined approach to capital expenditure. With energy companies spending only about 30% of operating cashflows on CapEx, he indicated that suggests a future shortage in supply and, as a result, potentially higher-for-longer prices.

Additionally, he elaborated on the investment opportunity in malls, noting a "massive renaissance" driven by consumer demand for retail communal experiences and with high occupancy rates, including a major resurgence in luxury brands. He cited specific data points such as occupancy rates at 95%-96% and very encouraging revenue per square foot metrics to illustrate the financial health and potential of these investments. He said there is an ongoing shift of online brands to physical retail as a cost-effective customer acquisition strategy, further underscoring the attractiveness of mall investments.

Nevertheless, Cole said he recognised that when markets fall, everything tends to fall, and that is clearly a danger in the US, with its major indices bloated by huge demand and optimism. He said we must all acknowledge the importance of being intellectually honest about the unpredictable nature of markets, and downturns take in even those who are more risk-averse and value-centric, noting that outperforming the main market could still mean losses, just less.

Emphasising that investment decisions should be based on the specific securities one chooses to buy and highlighting that the composition of one's portfolio ultimately determines returns, he critiqued the common misconception that investing in broad indices like the S&P 500 guarantees a certain return, pointing out that such investments are actually bets on the collective performance of the index's constituent companies at their current market valuations.

He said that careful consideration of individual securities and geographical diversification should lead to better investment returns. One such case in point is the cyclical housebuilding sector, he remarked. He looked back to the 2008-2009 credit crisis, highlighting how builders have since adapted their strategies to mitigate the risks associated with cyclical and capital-intensive businesses.

He pointed to their holdings in NVR Inc., known for its Ryan Homes brand, as an example of a company that successfully shifted its approach by avoiding land ownership. Instead, NVR opts to pay for options on land, purchasing it only when ready to build, thus shortening the asset term and enhancing return on capital. This strategy has influenced other homebuilders, including D.R. Horton and Lennar, the UCITs fund’s top two holdings, to adopt similar practices, leading to a significant portion of their homes being built on land they do not develop themselves.

This shift has contributed to the industry's resilience against rising interest rates and housing affordability challenges, as companies are not burdened by the same level of interest costs as in the past. He noted the industry's increasing concentration, with the top homebuilders, including the three companies they own shares in, now producing a significant portion of new homes in the US. This consolidation has led to more rational pricing, higher returns on capital, and improved profit margins, albeit at the expense of housing affordability.

Another interesting sector he pointed to is banking, where they predict significant consolidation in the industry, with a reduction of 30% or more. He said they have a strong strategic preference for investing in industries where consolidation enhances profitability and reduces competitive pressures.

He cited a comment from Charlie Munger that "competition ruins competence” to underscore the challenges that arise from intense competition, even for the most capable individuals or firms, and said that is a reason they like to engage in sectors where achieving a leading position is more feasible, for example, the oil & gas sector with its potential of more sustainable success.

The Final Word

Cole's comprehensive analysis stressed the critical need for a strategic shift in investment approaches amid prevailing inflation and fiscal challenges. He advocates for a more cautious and rational investment stance, emphasising the importance of diversification into value stocks.

Highlighting the risks of current high equity allocations amidst very high valuations and the potential for stagnant US market returns ahead, Cole suggested that investors look beyond popular trends and consider opportunities in underappreciated sectors like banking, energy, housebuilding and physical retail, and asked guests to consider their Smead US Value UCITS Fund.

He explained that Smead Capital Management’s success, deeply rooted in hunting for undervalued stocks and focusing on sectors ripe for consolidation and with lower competition, underscores the effectiveness of a value-driven, prudent investment strategy in today’s volatile economic and geopolitical environment. Cole's advice is a clarion call for investors to adopt a more discerning and diversified approach to safeguard and grow their investments in uncertain times.

Disclaimer

The information contained herein represents the opinion of Smead Capital Management and is not intended to be a forecast of future events, a guarantee of future results, nor investment advice.

This does not constitute the solicitation of an offer to purchase or subscribe for any investment, financial instrument or service in any jurisdiction where such a solicitation of an offer is unlawful. The Fund is only available for investment by non-US citizens who are not residents of the US. The Fund is not offered for sale or sold in the US, its territories or possessions. The Fund is not registered for sale to the public in all jurisdictions. The information contained herein has not been reviewed in light of your personal circumstances. Subscriptions will only be received and shares issued on the basis of the current prospectus for the Fund, the most recent financial reports and the simplified prospectus. Smead Capital Management is the investment manager of the Smead US Value UCITS Fund.

Smead Funds - Smead US Value UCITS Fund, incorporated on December 4, 2015, is a UCITS organized as an investment company with variable capital, with one sub-Fund (Société d’investissement à capital variable, “SICAV”) under the laws of Luxembourg, and is regulated by the Commission de Surveillance du Secteur Financier (“CSSF”) which is the Luxembourg supervisory authority. Further information about the Sub- Fund, including copies of its prospectus, the last annual reports and any subsequent half yearly reports can be obtained free of charge, in English, at the registered office of the Fund, Central Administrator, the Custodian Bank, the Fund distributors or online at www.smeadcap.com. These agreements may be amended by mutual agreement of the parties involved. Luxembourg taxation regime may have an impact on the personal tax position of the investors. Depending on your own country of residence, this might have an impact on your investment. For further details you should consult a tax adviser. Lemanik Asset Management S.A. was appointed as Management Company of the Fund with effect 1 October 2020 and may be held liable solely on the basis of any statement contained in this document that is misleading, inaccurate or inconsistent with the relevant parts of the prospectus for the Fund. Smead Capital Management is the Delegated manager of this sub-fund. This fund is authorized in Luxembourg and regulated by the Commission de Surveillance du Secteur Financier. Lemanik Asset Management S.A. is authorized in Luxembourg and regulated by the Commission de Surveillance du Secteur Financier.

Information provided does not constitute investment advice and no investment decisions should be made based on any information provided. Information reflects the views of Smead Capital Management as of a particular time. Such views are subject to change without notice. Information regarding holdings, allocations and other allocations are for illustrative purposes only and may not be representative of current or future investments or allocations. This information is not a recommendation to purchase or sell a security or follow any strategy or allocation. Any forward-looking statements or forecasts are based on assumptions and actual results may vary from any statements or forecasts. While Smead Capital Management has used reasonable efforts to obtain information from reliable sources, no representations or warranties are made as to the accuracy, reliability or completeness of third-party information presented in this material. This material is not to be duplicated or recreated without prior written consent of Smead Capital Management.

Smead Capital Management UK (LTD) is authorised and regulated by the Financial Conduct Authority.