Police Officers' Pension Plan Board of Trustees Regular Meeting

>> You call cannot be completed as dialed. Please check the number. And I again. Welcome to open voice audio services. Please enter your car and threw it. >> Conference room number excepted. If you do your to please enter your pin fall. ? ? ? ? ? >> For >> a menu is available. Command press star one. There is one other color on the call. >> Good We'll go ahead and call the general ploys pension plan Board of trustees regular meeting of 9/25/2025 to order. We're going start with the Pledge of Allegiance. >> But it really is high. And America One nation under God, indivisible, with liberty and justice for all. >> Next 7 pledge of civility. We may disagree, but we will be respectful to one another direct all comments to issues and we will not engage in personal attacks. Roll. Call Miss Martin. >> Chapter laying there. chair Nicholas Secretary Griggs your treasure Strickland hear Rusty Riordan. Trustee, Keeler, trusty Thornburgh here. >> Thank you for public input. Seeing I did. There was a request to change since they were the Days Inn on here. But I'll just take the liberty of I'm mentioning it. item 11.4. >> The a proposal to services for fiscal year ending like to see there's another meeting that they have to attend if they can, we could bump that up. >> are any objections. Board. Okay. What we just go and do that before the prove minutes. That's right. the ready, OK? Good morning. Mister Chair certainly appreciate the flexibility with me up on the agenda. >> I'll try to be very quick with my remarks, but obviously available for any questions that you guys may have. My name is Daniel Anderson on the audit partner with moment. Jenkins, he's going to have overall responsibility for the plans 2025 fiscal year, an audit. You should have a copy of the engagement letter is part of your agenda packet really? Just a couple comments in regards to the engagement letter. No significant account or auditing standards are being implemented in the current year. No significant accounting standards that will impact the plan will be implemented in the current year. So I do want to say business as usual because we obviously come in each year and performing on it with fresh eyes. I like to say we perform 2 different audits. One, we're all getting actual financials most significantly. The investments that you're holding in the valuation of those. And then the 2nd half of it is really what I look at as a compliance audit were actually selecting samples and making sure that benefit payments are made according to the plan provisions as well as contributions and things of that nature. So we'll certainly come in with fresh eyes as far as that goes this year again to perform your audit for the 2025 fiscal year and our timeline is going to very similar to where it's been in prior years. So the bulk of our testing will be in December so we can get the actuaries, the information to prepare their final reports and ultimately plan on our issuance being towards the end of January. Early February. So we can get everything to the city because obviously that the plan financials roll into their financials, that's all that up that with my remarks, if you have any questions about the engagement letter, the audit process, I'm happy to answer those at this time. What is needed from this body to prove it motion. Okay. Motion you. >> I make a motion to approve the. The all second. >> Okay. We have a motion from Treasure Stricklin second by Krista Killer too. Approve the to services for fiscal year ending September 30th 2025 by of and Jenkins. All those in favor say Aye. I posed chair votes. Aye. That motion passes unanimously. Thank you. guys very much. Have a great morning to you. OK, moving back to the regular agenda here we have the approval of minutes from a 6/26/2025 meeting. A move to approve. I'll second that. The motion by Trustee, Keeler second by Vice Chair Nicholas to approve the meeting minutes of 6/26/2025 of those in favor say Aye. votes. Aye. That motion passes unanimously all On to the nomination of board officers. Ms Greg's. time. I don't the nomination aboard officers. >> I had to go the for red at the It is far quickly >> with start with the selection of the chair for general employees, pension board and the floor is open for nominations. >> I'd like to nominate to chair kept going to continue as I'll second that motion. All right. All right. >> All right. So we have a consensus. Yes. All right. Well, we'll move forward Joe it. It continued confidence. Thank you. >> Now selection of a vice chair. >> Alright, we'll move forward with the selection of the vice chair for the general plays pension board and open the floor for nominations. An effort to not mess things up, keep the flow going. Okay. the moment Martin Nicholas is the vice chair. I second that. All right. Okay. We have a census. Is everybody good arsenal move forward? Mister Nichols is being a vice chair right? >> Alright, easy Right? >> Panic. When I walked in and the audit >> of like I did a good time what >> OK, I'm moving on to the approval of retirement We'll turn over to MS Martin. We have 3 of them here for consideration. >> Yes, I'm the first one is the vested deferred retirement for Belinda Hartselle. After 10 years of she actually separated in 1998. That became eligible at the age of 65 for her vest and deferred benefit. And she has selected the lifetime option. >> I'll make a motion to approve the vested deferred retirement requests for Belynda Hartsell. I'll second. >> We have a motion by trusty Nicholas second by a Secretary. Greg's for the best to time. Request a blend hartsell. All those in favor say Aye. posed chair votes. Aye. The motion passes unanimously. >> The next one you have is for a normal drop retirement for Michael Matthews. After a little over 20 years of service, he is requesting to enter the drop program as of July. The first 2025 and he has selected the option to change the Newton. >> A move to approve the retirement requests to Mike Matthews. I will okay. Motion by Trusty Cuellar. Second by by Nicholas to approve the dropper time request of Michael Matthews. All those in favor say aye. I suppose chair votes. Aye. That motion passes unanimously last one. Okay. The last one is the normal retirement. I'm Doug Jeffcoat. >> Wanted to retire and the in there. He did a while longer. He has selected the 66.0. 67% to join a Newton with the option to change. >> Motion to approve >> second Yeah. Haha. And it certainly did. Yeah. know. okay. So the motion, but Rusty Thornburgh, second by Secretary. Greg's to prove the norm over time request of Douglas Jeffcoat. All those in favor say Aye. >> I was sure votes. Aye. The motion passes unanimously. OK, moving on to the investment performance review. we have some went, OK, so we have the first discussion is regarding Geneva Capital management, their performance review. As of 6/30/2025 and with us magic. Jeanne, the capital. Good morning, sir. Can you hear and morning? Alright, we can hear you. Great. Thank you, If you hear me, yes, sir. >> Perfect. Alright. Well, thank you all for taking the time this morning to a go over the performance of the Geneva Small-cap growth strategy. So again, my name is Matt. I'm the client portfolio manager for Geneva. I Trust everyone has hard copy of the presentation and I won't take up too much for your time. Going through give you a quick update on the firm. It's performance. Give a quick out. Looking at to be happy to answer any You know I'm going through it or at the very end. So Page 2 of the presentation that was bent over that, overview of of our firm in Geneva. And I know that I mentioned some of the last year, but just to reiterate we're the Milwaukee, Wisconsin. You know, we have about 6.4 billion in assets under management. We focus exclusively on us small-cap Smid, cap and mid cap growth. Equities it. We've been doing this for quite a while and then business 1987 here you know, over the, you know, from change perspective, it's there have been many changes since we spoke last The only ones been positive. We have a higher to another salesperson. So continue to build our sales team and even where it gets that manager with only 20 we had one person before adding another individual or doubling our efforts here. But it's of that. We're very excited about the investment that are really did want to make. And then we have one new employee owner of the business. So >> Geneva Majority employee on. We've talked about having more employees joined the ownership group in June the end of June this year, one of our analyst Arjun Valley up and he's been with us for 5 bought into the firm and its not employee owner. So we now have. 10 of our 20 employees that are owners of the of the business. Now moving on through the presentation, I will over a 3 here just in the interest of time. Page 4, this is the overview of the investment team. Again, there are no changes here. That the same investment team today that we had last year and may have very few changes over the years. So led by Scott previous Jose Munoz supported by the team of research. our head of trading and then myself and it's the kind of team work together for a long, long time here. So maybe and flipping to the next stage with his performance in him even before we go into performances that a refresher on what we do here for a full of perspective. I mean, we're focused on investing in high quality, small-cap growth, businesses. So high quality mean companies with great management team companies with conservative balance sheet. So low that the that the event that how we want to measure it. But companies that don't have too much debt and then companies that are profitable and can consistently grow their revenue and earnings. You know, we're we're targeting companies on average. They can grow revenue, you know, 10 to 15% grow earnings. You know, 15 to 20% but consistently so year and year out, trying to find that kind of 15 to 20% earnings growth. What that means is that, again, we don't invest in speculative businesses. We don't invest in companies that don't make money. We don't invest in highly cyclical businesses are risky business. Is that a bear up 100% one year. Then down 10, the next 10 up 15 here after 8. We're trying to screen those things out. So I think important contact as chat about the performance here Page 5. This is the performance of the strategy over different time period here and the more recently the the strategy has has struggled as you've been in a period of very speculative, low quality but quality kind of performance you know, thinking about what's happened over the you know, year here we started out the of absolute return perspective. It was it was very poor, right? I mean, the market was after the election of President Trump and there was a lot of excitement, but that or 2 in 2024. that way and beginning of 2025, as there was talk of tariffs and some confusion about how that was going to play out with the tariffs are actually going to be and what the impact is going to be on the U.S. economy. you know, throughout the 1st quarter, markets are down quite a bit, but we protected very well. Our perform fast forward to April 8th kind of peak uncertainty. That small cap growth index is down 20%. But we were outperforming, right? We're out before buy 5, 6, 100 basis points. A kind of the top of our peer group because we have we have on businesses that will do well right now. No matter the economic environment, welcome to help perform their higher quality investors fled to that high quality during that period of of uncertainty. For April 9, which was the day that the president announced that it was going to pause the reciprocal tariffs and looks like they're going to be some negotiation. The market was off to the races. All right. Since then, we've been in one of the strongest for market period that we've seen in the last yea, again, feel 30 years here it's since that market bottom on April, 9th, you know, the stocks, the high beta stocks, unprofitable have all outperform it's been a big headwind to our our relative performance, which is why see here, the one-year period, you know that the strategies underperform the benchmark fi. 600 and you know, 50 year basis points, give or take you know, I if we kind of look at the money pay get out of 8, people over this is just showing how consistently performed the last 30 years. And we've never underperformed in a rolling five-year period. 87 is the updated performance. Their strategy, although this is more updated, the Mystics 30th actually through August 31st. Again, showing how the year to date one year and simply stopped and performance but I think it may be fast forwarding and going to 88 in the interest of time. It would be just too. Show you in a couple of charts. What what experienced here? This one is the performance charged essentially were just measuring risk like other risk. It stocks performing well or they not higher. Beta mean again, higher risk. More speculation, fact effect price movement there are more than that of the benchmark and what we measured recently is that kind of a 99% Taliban, so kind of risk. Metrics that are almost off the charts, right? If you look at this. Graph here, the only other time that the beta has performed as well is the back half of COVID back of the 2020 excuse me during COVID 2009 during the Great Financial crisis. And then prior to that, it was the tech bubble. So in that period of speculation and risk that we're seeing here is that is a unprecedented but only happened every now and again and that that they, you know, 30 year chart here. And this is just the 4th time that it happened. So to say, this is kind of why the strategy is You know, just maybe a couple of other quick statistics here. You know, if I look, you know, since the bottom of the market and an April 9th, unprofitable, technology companies are up 100% I related data center and kind of data center related stocks are up 117%. Power, alternative power stocks and some of these nuclear energy company. Those are up, you know, close to 110%. So again, these are businesses that we don't on because and small cap. These companies are profitable. They're highly speculative. And some cases they don't even have revenue when it comes to some of the quantum computing companies. So it's definitely been a struggle for us. On Page 9 here, I guess is maybe just give you some perspective. periods have happened before. We've always come out of them and we high quality historically performed very, very well. This chart here and it was a couple of things going on here on Page 9. But the Blue Bar is just the performance of beta. The gold line is the performance of high quality stocks. First is low quality stock. And you can see the goal line kind of goes up into the rights over quality outperforms low quality. But during great bars here, these are the high risk high Beta rally period. You can see quality doesn't do well quality underperforms during the period of high beta high risk. But coming out of them. You know, high quality outperforms in in. You know, when we look out 6 months, 12 months, 24 months, you know, we're confident you know, our our style of acting will come back. Investors will focus on fundamentals. the biggest question is just kind of when will that be right? Because we've been in this low quality market here for. Now, 5 months going on 6 months now as you can see by the size of these great bars in the one we're in now kind of typical the tech bubble with a little bit longer. So the heat can persist for, you know, 3 months, 6 months, 9 months. And in some cases, you know, more than more than a year. but inevitably it always on the same way, which is polity coming back into favor, then outperforming so I thought a lot. I know Romo's was able keep up with wasn't talking too fast. I'll pause there to see if there's any questions before maybe give an outlook or talk about a couple stocks. >> Thank Yeah, this is. I did have one on slide 3, which have noticed, too. And the information that Sky gives us about your story. Cleese appeared outside protection. That's the that's the the bullet point there on on slide 3. But maybe just talking about that. And that's something that gets my attention and something that, you know, I think when we won the board. Said ago, Geneva, that was why the one of the compelling reasons, at least from a so if you could maybe just talking about that and what you see in the future, too. >> Yeah, no, that's a very good question, right? I so historically that the strategy has protected on the downside. I'm on Page 5. We talk about that. There's that table where we show how we do and bull markets bear markets and speculative markets. And historically speaking going back to the inception of the strategy in 1999, we've outperformed every bear market. So the market down 15, 20% plot. We tend to outperform. You saw that happen yet again and beginning of 2020 when you had kind of the beginning of COVID in the pandemic market sold off. We protected very well. We have performed by 1000 basis points. The 1st half of 2020. Well beginning of this year from the beginning of the year through again, April 8th, one small cap equities are down more than 20%. You know, we're outperforming by, you know, 6, 7%. So, you know, our downside protection continues to be It sometimes with the opposite. I know when you see v periods of rampant speculation were unprofitable. Companies are doing well and and fundamentals don't matter. We tend to lag a little bit. But yes, we think about what's going to happen here in the future. And maybe that ties into the outlook okay, with what I think that this is going to be like the tech bubble in 1999, 2000 per se. But I mean, there's some definite similarities. You see a lot of speculation. I mean, there's some quantum computing company that are in our benchmark better. You know, 8, 10, 12 billion dollar businesses but have no revenue. Not not not know earning they don't have any revenue and they won't have any revenue or earnings for for years and years. And it definition speculation and kind of like a lottery ticket right? When and those are extreme examples with his other parts of the benchmark to do it extremely property no one. Those names eventually correct. And you see a pullback in the market I would expect based on historical performance that we would do quite well because we don't own these companies, right? We don't profitable businesses. I mean, the last quarter you know, our our strategy has lagged, but our companies on average grew earnings almost 20% right? They beat expectations like they have, you know, historically for the last, you know, number of years I've been so the underlying fundamentals are businesses continue to be good. They're just not being rewarded. So we would expect that if you do see a market pullback, in, you know, run of the mill kind of 10% pullback something more significant where the that some of the AI trade quantum computing at some of the other speculation really comes out of the market. You see a larger. Draw We would expect to be quite well and outperform and outperformed the benchmark a good margin because that's again, historically the type of performance that we but up and the types of companies that are buying today are just just like those companies that we've all done in the past. So no reason to believe that would be any different. >> Mister Owens is here. He may have some questions. Yeah, think you've as it does a great A couple questions. I guess the first question is if we look at the quarter ending June 30, the so you're talking about. >> How some of the things that have been driving the market have been. There's been a low quality rally, which means the price of companies who are low quality don't have earnings lower earnings, negative earnings, high debt have gone up more then quality companies. Is that what understand? >> That's correct. >> And then that's fair. So off of the bottom, a lot of times you see that. >> The companies that fall, the most are usually the ones that are the most low quality. And so those are the ones that bounce back. >> And that's what you see a lot. >> But I do have a question if we look at your attribution analysis. >> You your stock selection is what really hurt you for the for the in quarter. Ending June 30 and it wasn't that other things have gone up so much more. But in your in your consumer, Staples, you had a negative return in health care. You had a negative return and the big I guess the big dispersion was in materials so at the sono is like I can I can see in it where you just didn't go up as much. And that's fair. But in some of these other other spaces, you can can you talk a little bit about that of the what happened and was it was just the whole sector or what what happened in that space where the dispersion and the poor fuller return versus the benchmark return was so significant. >> Yeah, there those good questions. So I mean, I guess that the clarified. So if I look at the 2nd quarter performance for the strategy, I mean, there was a big difference between the performance of like and High Beta and Low Beta. As you mentioned, it was pretty remarkable to see kind of the high beta company up 40% and the lowest were actually flat. It's odd to see that you typically will see a high beta outperform low beta speculative rally, but that the lowest paid a company's flat was was really different. We knew the risk tool called Barra. We will run our portfolio through what's called the Bar Risk Model that attribute the performance, meaning what? percentage of the outperformance or underperformance is due to stock selection. What percentage was due to kind of industry allocation and then what was due to factors. And I think factors that bar I can remember 12 or 15 different factors. One of them being beta, one of them being >> earnings quality, profitability, but think that our company specific, right. But but but fact is that the market is rewarding and we run our portfolio through the bar risk model for the 2nd quarter of a model that that 96% of it was actually due to factor exposures. So being overweight quality underway, beta. And then there's some other more technical factors called residual volatility and some other things. But that model tell that that underperformance wasn't necessarily stocks. We own, but it was the market is rewarding, not rewarding. Are types of companies. So again, we talk about maybe kind of stock option, an attribution and why we didn't do as well as is the benchmark and again, it really I think comes down a little bit more to just the factor headlines that we saw a rather than the company that that we own when you called out a couple of different sectors and industries, right? And and talking about a stock selection then and again, this was more a function of what we didn't own first, company that we needed on. So again, in DOS trails, there was, again, a negative selection There's some industrial businesses that are related like they the felt like sterling infrastructure companies that the the construction company that designed data centers and build the data centers. You saw a lot of performance and strong performance in and names like that technology you mentioned. I mean, there's a lot of companies that we just didn't own companies like credo. Other names and then in other parts of the market, whether it's materials, I mean, there's probably and I don't know if this is where some of the nuclear energy companies are that might be there. Some of them might be but I again, some of those companies that we just didn't own also detracted from from I do know kind of that what you're looking for from a response. we think about the 2nd quarter inch and try to reflect on why we underperformed and like, is there anything that we could have done to outperform the kind of come to the conclusion that, you know, a lot of the companies that drove the performance of the benchmarks are to businesses that we wouldn't want to own and we feel having them. So that gives us a little bit of comfort that again, eventually this hopefully will reverse and fundamentals will come come back into favor. >> In the material space, what was your absolute return? >> I'm feeling the materials space >> I have are at sort of a look at the 2nd quarter Iver absolute return of 9.7%. >> And how about I'm consumer Staples. >> In Staples we were down we were down 9.9%. We have one one consumer Staples holding name, change a snack foods that was one again that consumer Staples is a well, small part of the of the benchmark or that the name that yeah underperformed in the did for forever and dedication changes that crude is the company they make super pretzels. High seas. >> Dippin dots. A lot of those types of food that you find that movie theaters, amusement parks, convenience stores, things like that and yet the company just didn't have a great quarter from a fundamental perspective. They missed that a little bit of a lower conviction idea for for us in the portfolio. So yeah, that's why it was down about 13% in the quarter. >> Matt, did you so I know you think maybe we're in the middle the presentation. And if you have more to present. >> I mean, look at it. want to respect everyone time so I can talk for as long as you want. in the interest of time, I guess I would just leave you with our outlook. And I know I said that the couple times already. So but I say it again, right? That the quality of the businesses we own continues to be very, very strong. The fundamental continued to be strong. It's just that we're not being rewarded for it. What's being rewarded in the market is speculation talk computing AI related names. Companies that don't make money into Those are businesses that on AI is very real. I will again, eventually hopefully create some great products and impact everyone's life in a positive way. This is the hype cycle. is really high right now. just like during the dot com bubble, a lot of those businesses ended up not making it them. But again, some of the big right do some great companies that came out of it and a lot of technological change. And it's likely the same in the sense that there's a lot of companies that are going to make it a lot of valuations that just don't make sense now. So from an investment perspective, we just don't see how some of the things make sense even if the and the and technology end up it again. Kind of game changing for for us. The last day on this mentioned is economy, right? I mean, it continued. That should be pretty strong. We saw good GDP number. I get that. There's a second revision today or to the 2, 2, to number in GDP. Gross, a 3.8%. 3rd quarter looking for a number that's over 3%. So I know the cutting rates, which again, should be a little bit of a tail into the market. But we're cautious that are skeptical that they're going to be cutting rates too much more kind of going into the future here. I think the economy actually looks to be OK right now, maybe not great because you obviously some employment had winds, but it looks to be OK right now it and what the most will see, how the rest of the year plays out in the next year. But again, hope that. period of speculation will kind of end sooner rather than later. And we can kind of get back to fundamentals and get back to doing what we've done for the last, you know, 30 years and the strategy, some there, anyone has any additional questions. I'm happy to answer them. >> That just one more question. So historically, with the exception of let's say, called the last 10 years, small-cap has had a higher return, then large cap or mid cap last 10 years. That hasn't been the case for a variety reasons. Do you see what would be the catalyst? Force, the small-cap asset class to start having outsize returns relative to mid cap and large cap. The CDC that just not happening again since you these larger companies are the AI leaders and they're the ones that have the information and how information expensive commodity. >> No, the that the really is a great question, right? I mean, if you see a spot on small-cap has underperformed large cap over the last 10 years, if you get to you what back further than that, right? It does go in cycles. I mean, there's the you know, 5, 7, the 10 year periods where large cap performance, small cap and large cap back and forth right. >> Made today small cap 13 in large cap. Looks very expensive right? It no matter you look at valuations look property and in small cap from a relative look quite attractive. Now. Absolute valuations. So they look kind of normal in small cap, a firmer out that look pretty cheap. And I think if you take out some of the froth in the small-cap benchmark, they look even and expensive. We were expecting that small cap earnings are actually going to part of the part of the reason that large campus done so recently is that earnings growth has been very robust, right? I mean, a lot of the Piper scale is whether the Amazon's Microsoft's Meadows of the world, right and growing earnings and and they. On average, the large cap benchmarks a a growing earnings at a quicker pace than the small-cap benchmarks. But we actually see that If you look at some of the expectations for later this year and into 2026 is going to be a little bit of a rotation here from a large camp leaving Texas small-cap companies leading the way which we will be beneficial over the long-term earnings growth is what drives market and returns for stocks. And if we get this acceleration and in small cap, earning that, that should bode well for the for the asset class and again, I mean we think that again, whether it's kind of shore in here into the U.S. being a global its market companies thrive. The vast vast majority of their revenue from here in the U.S. unlike the global counterparts that, you know, businesses all over the world are companies on average 82% of the revenue comes from United States we think that that could be a little bit of a tail and as well. So the pop that they won the cycles, that Turner what it is. But again, if you look back at history, you know that this is pretty normal for for large cap to take the lead for a while and eventually small-cap, we think will will take its place back. >> All right. Any other questions from trustees me? I'm just noticing. I'm just looking at the versus what's reported in. The report. First, what Scott has and his just discrepancies like on the net number for one year and the Geneva buckets. 3.3 for Scott spoke. It's 3.4, 2 and then. And I just looked the other and have Jay report also on those numbers a little bit off just want to have like a reason behind that. It's not unusual for there to be small discrepancies. >> If you look at them over a ten-year period that tend to wash out if it starts trending in a direction, then, you know, then we dig into that. There was a period. Because of the different manager some years ago where >> it started off. There's about a, you know, couple basis points difference and over to your just kept going in that direction. And what happened was the manager and we caught it. We call them out on it. They fixed it. But the manager, they were put, they have their total return. And then they were adding their income. Well, you're totally turn already includes income. So they were double dipping on the income. So every got further and further away. But something sometimes when you look at them on a on a shorter term and that could be a quarter or year, they they, you have a little bit. But usually that discrepancy shrinks up over time. >> get to that point. So there's there's. Maybe it's rare. It's not unusual that you're going to have some discrepancies in the quarterly reports that you're providing versus the quarterly report. And the managers providing. Thank there's there could be different kind. Find out exactly what the answer is if you're like me, too. But a lot of times counting. >> account one way. We kind of different way and then and that's why do it all comes out? And when you look at it over a longer period of time. But I make a note just looking to the long-term numbers for an FDA to like the 10 year numbers just different as well from which reported. And there are reports out. >> Just wondering the reasoning staff. Okay. Well, Mister Story of thank you for comprehensive presentation and and euro great answers to these questions. Much appreciated. >> again, appreciate the opportunity to present If you have any further questions, please don't don't have to follow up. >> Moving on to item 9.2, we have a presentation and from an F J. And we have J Garth Riley and Krista Hill that will be via telephone. Welcome. >> Everybody, thank you for having Before guard want to perform and new strategy before I get started. I did want to mention Chris tonight and I kicked off the call white to drop. So it that that does happen. We will call back in immediately. I just wanted to give you guys a heads up. That is the case. Thank you. >> On that, do you know we're sorry, John, I know you've got the Met with John Mowery multiple are becoming to be there this But for being there next year and that seen you in person. A quick preview. The team are about for portfolio performance and what I personally think of The most important takeaway of this call, which is why we had a J believe small-cap value in particular is actually the single most compelling as class of months. Just equities right now. I thought I uncovered if out, I know we have limited time, but that fed trying question that any point. 5 thick of the presentation, our team fly. And you can see on the myself and John we are co-lead the small-cap strategy. We've been working together for a long time now. I actually just hit my 20 year anniversary at the from last week, John. And you can see on the page of the approaching his 20th as well. And then same for the rest of team. Pretty much we've all been working. You know that with each other for at least a before. And there's been no team changes to your a portfolio. One thing all just briefly touch John mentioned this in the past. But point out again, I think it remains the important point and a key focus for Jay, that any new talent that we we are calling are requiring that they be mandate. Not only that, are they need to be profession and finance and county, but as well and data. In fact, we now have one 3rd of the investment team with the Green in advance fate of science, including a are 2 recent hires. weighing in interest Haro 4 analysts on the strategy. And Jeffrey does occur PM on your stretch. We just believe that it's important that is Haim. And technology of all that. That managers of all with We think that, you know, with a lot of man and you are not doing that. And that's something that's always been really important or process. You know, I would give the basic example of our research list, which, you know, when the firm started, you know, probably around when you guys were infected and can get from it great time such a long time. You know, a lot of our research was was created, just cutting unpaid. And add to that of that, we get on a monthly basis. Sometimes a quarterly basis. And then you could contrast that's where we are today. You know, we're pulling in and processing millions of data points. Bailey, in some cases weekly. So we have all the most accurate real-time financials, real-time, valuation metrics, where you can bet that a creator Cup to peers, all of which we incorporated into a process. So been a real focus of our since Strong took over as back in 2017. From there all jumped to 5, 9, and just give a brief review of the process. There are 3 pillars to our investment process. Valuation shareholder yield and quality valuation, we always say is the most important step of the process. You have to get the valuation right in order to get a solid return on the name. We look at valuation, 3 dimension relative to its history relative to the market. And most importantly, re-took the Peer group, which we customize the through the use of big data. So we're going to another step first, other managers to find as many valuation fact as we can get. I mean, name and create unique investment opportunities in the portfolio. One thing that particularly important for small caps strategies. We only focus on positive burners, you know, in the small-cap value space. If you look at the benchmark, nearly 40% of the name do not earn any money. So we're eliminating those for you numbers. The second killer shareholder This is always found in huge component of our vets and process. We are always by in towards things fit in. went good dividend growth, inconsistent buybacks we can find them. You know, we're in different sizes, consistent. we can find a track. We've got you names with good. Did that in good dividend growth? growth? We've some more that we can touch. More characteristics. But we think these meantime, very important expression and count like yours. The key element to fight inflation and the way the opportunity for finding now within value particularly when it comes to regional banks, which will touch more on a bit or finding really good dividend growth opportunities. Quality is the 3rd of our process. We have a higher quality emphasis, particularly which I think is particularly important not only for long-term returns, but, you know, in periods of economic uncertainty, which and that inevitably will happen from time to time. We look at quality in 2 ways a qualitative and quantitative and the qualitative side. I think you get the final looking for things like low balance sheet stress. So we knew Nicole, the balance sheets. We don't think there are, you know, 2 highly levered, a consistent and by average return on capital solid margins and then expected and historical earnings for. On the quantitative side, which is very need to our process. We focus on 2 things, price momentum in short interest. We use price to avoid stocks with the war. Who had the worst momentum, you know, falling knives, value traps, etcetera. If we you know, we can do research on a name that attractively valued but if the name is one of bottom decile momentum, we will wait for that momentum to improve. Therefore, initiate a purchase on the flip side, if a name is getting pretty stretched on valuation. >> But has topped that momentum. We might drag our feet and that they little more. See if we can squeeze out a little more term before we ultimately sell. >> The second element for quantitative cited short interest we pull in short interest daily across the globe and then a right to our own custom calculations and that filed the names. So at any point, any given day, I can tell you the highs, shorten stock and in the country and then he sat there in any industry and we're really using that the check to make sure we're not missing anything in our fundamental We can go to our whole process like a name and this is kind of like a last check. So if we But we like it. But we know high shortly. Maine will will do more research or we might even have name. We do think that know there's people out there getting paid a lot of money, taking a lot of risk to shorten aims. So there is high short interest on a name. We you know, we've been going to the name and trying to find out why. Any questions team are processed before I jump warrant, If not all jump to slide 14. The portfolio. page. This is the fact all of our process, so we're not targeting any of these metrics or did you know this is just the role of of stock about purchasing? I think the the P e the 4 P's a little higher than the index right That really a function of the benchmark calculate and even governor's can they can't. They're not predicted their money. And futures of those numbers could take into account more. The trailing number and the theme that you know, we're at nearly and tender and then turn discount P e dividend yield in line with the benchmark with better getting growth and you, you know, as you see any type that shot of your portfolio, you should 10 see that more. You know it and minor higher. But more importantly higher that came from. In terms of profitability again, that's more of focus. We kind of knew that the quality metric so better are we better are in the portfolio and growth to be next. And then earnings growth up in the 3 your head. That is a little behind on the 5 year, the 5 year numbers in the small space for a little walk you right now when consider where we're coming from, kind of the COVID bottom or basically all the already got taken away and then all and shot back You know that here. The end of 20. So but over time, you can see with a consistently high earnings are out work. Next The performance and you can see the fence and Senate in session number remain strong. Giving it you know, kind of a one-year review. year to date, the one-year units are lagging by about 2 to 300 basis points respectively rose periods. I point out that most of the Thunder before and host Liberation Day in April, as I'm sure you've heard will hear other managers talk about in the markets got which saw a little bit. Obviously the huge sell off during the initial tariff announcement and then a few days later, rally really hard and a market able to, you know, just what occurred and that some of those Tara terms for lack of a lot of cases and small cap particular is coming back with more. Speckled names are rising really quickly. And then the rising kind of junk here, small-cap rallies, our strategy that tends to lag in the short term due you know, kind of a high quality bias. But again, we think that Baez, wind over time and most importantly will protect We need to get returns. Regarding the tariffs and we think we'll know more. And that's what why why we think it creates a really unique opportunity for small caps, actually is. So I got companies are more heavily impacted by that, you know, in areas like Consumer discretionary, which is one of the areas we lag, then, you know, you think about like a lot of the apparel retailer's on our manufacturing stuff overseas. Bringing them over those kind of company, you know, are getting more impact that they just don't have the to poll flights. Yeah, Apple might impacted by tariffs right there, manufacturing overseas and bring it over. But they've got a few more, you know. Think they can move around the kind of mitigate that small-cap companies are little more exposed to that, which means they get hurt a little more but also creates a and and really attractive entry point repair. 5.15, the next slide. Power of active management. And I know we John of showing his side in the past. You know, we think of the passing of active management and a long-term returns. However, it's also a huge compliment you know, the power of a committee like yours that is willing to stick to strategy over the over the years. And you can see what as you're consistently allocated toward equity and taking advantage of that compound. as you go out over time. So though, is one of our favorite finds to show clients a vacancy. You know true impact on their portfolio. The next 5.17, on touch on current position in a little bit. Couple things that point out on this slide. One of you can the left which start more of our current position we've moved to an under way in. Technology. >> I get know your year. The are you at him? And he's in. We can hear you. But it isn't like you can hear us or you can hear. You can hear me tell everybody hear me? >> Yes, we can hear you. >> had their that I get that I think been dropped a couple times. I want to make sure I didn't hear anything on the other end of Sorry about that. The start of a So in terms taking on I think that we moved to an underweight in technology, the valuation, but I'm pretty stretched. A lot of those names kind of craze is continuing this year. I'd also point out that 30th or away a little higher. in show that our Financial condition had that really new much it's important to know that financials, we moved to a material overweight and small-cap regional banks we think that is a huge opportunity for small cap value. And for whatever reason the market is most likely because when you turn the other, thank Talk about second that coin. But area the market is currently not focused on. And this created this location to really. Compelling investment case, particularly for small cap value. And that's why we think it has an app and clap and set up a the one of the most interesting areas. I'll give you an example of the bank that that we're talking about we currently have 25% allocation regional banks one that we really Cadence bank based in shooting and have rain, ice age in the South. Exposed to growing. Stay Think tail winds including power statement actors in years, Florida Hayden haven't been able. It's currently trading at 11 times earnings. 3% that get in and growth over 9%. On top of that. And that's what I think is most important. Kate, and a lot of these regional banks are growing, came to figures growing at 2030, to 20 23% a year. We have regional banks and portfolio that are growing at 30%. And 35%, I'm Cayden. say, again, 1123% that sort. And then if you compare that to the which currently trade that 27 times during and near all time on multiples. And it's growing at 60. The market is not talking about this, but a lot of the regional banks are growing at faster rate than the Nasdaq. And you have this huge valuation, this location so really sets up an interesting opportunity could essentially what you're doing in case cadences, you're getting more growth for a 3rd of the price and a much higher dividend yield and growing dividend a pop up. So that's a really compelling. And that's case for small-cap And that's why we're really, really excited. >> When you say when you say >> to that, all right. You say the growth. For a 3rd of the price growth in what? >> Earnings per share. if you look at kind of the forward expected earnings per share came in and then even the trailing growing over 20%. And that's the case. And a lot of these regional banks and you're just setting up the perfect environment for them because it was only to recall the 1st quarter. 23, the things went through major crisis right here in the the run on Silicon Valley bank. And it just kind of took, you know, there there was no discrimination of quality. That point. It just took all the regional banks down. Nobody knew there was talk of the regional banks for going going to go away. There was talk. It JP Morgan, you know, Bank of America needs to be our only banks one, all that noise settle down. The capital Our great the businesses are great. Each had to get through that period of, you know, you had 2 very specific. And this is that what first from public and so come Bally Bank, which like the thing to that that failed. Once that noise come down. Now you have business of doing fine again. And they're growing really rate really fast rate. And on top of the huge tailwind. Potentially coming, which is the Fed just as sure everybody is aware of this week. They're most likely going to continue to cut this full speed in the yield curve, which will improve net interest margins for these banks and should further accelerate revenue growth. So they are in a really good spot training at the historically cheap valuations with business fundamentals that remain. Extremely attractive. And then on top of that, you'll also have eventually the market will notice warned them and you could have a thing influx of money into things, which should get. The opportunity for us all about Just to go. It just kind of hammer home that point. I know. And it here and were when that whatever questions you may have been happy to answer. Oh, and by. 22 we are now essentially levels not seen in the past couple 20 years ago. And what? All the stuff I just mention is in re bank Campbell. I'm actually not going to say you might hear other managers say, I don't know they're going to be But I do believe that the valuation. So the rubber bands stretch so far this point that it's going to create a huge opportunity for small cap value. And we don't talk about absolute returns not bad but classes not been great. Over last decade. Small-caps really struggled and you just a cat just led the way for decades. Now you're back to 2000 levels any to last time you got back here. still been pretty well. You know what White that, you know, 2000, but up? And you can get a page 600%. But the relative outperformance of small caps and your portfolio in particular with its just huge. And I think we could be setting up an environment like that. And I like that the markets are really talking about it. As much they should be but, you know, regardless of what heck does from here, I think and large cap in particular, I think small caps are set up really nicely. >> Soak up a couple things. So when you think about valuations stretched, especially the large cap space and I don't think anybody disagrees with your analysis of of the difference between the 2 but in in in this arena today in today's world, valuations are stretched. But earnings are growing as well. So so so the the price cuts continue to go up and have stretched valuations where back in just wasn't happening. everybody everybody was betting on that that there would be profit like now these companies are at especially the, you know, the Max 7 >> are are profitable and growing. >> And so that's just that's a significant difference, especially when you know, you have a lot of analysts and economists saying where in the, you know, the first pitch of the first inning in this whole AI revolution which you know it. No one can argue with the with the valuations in the small-cap, especially in the banking. But the court, the question becomes what's going to get the investor to take their money out of there. Their tech, which is highly concentrated and put it in this other because that's the only thing is going make the price grow. Earnings can grow, which would compress the multiple. But the price has to go up at some means or somebody has got to sell out of. What they've had tech by these banks and and my question always, what's the catalyst for that change? >> Yeah, that's a great So there there's one thing I can do. I mean, it was but talk about value I like that I'm not one of these people who like others the crazy tech bubble because you're you're totally right. You know, some of the you know, Google, for example, know, we identify profit, for some of our other product. huge by a couple of months. I mean, people are saying, you I was going to take away searching. All been nonsense or earnings continue to grow. You know, names as chief to the SNP's it and 10 years. I mean, it a pretty case. But to your other point of how are you going get people interested? In small cap? Well, they should be interested, right? So that's one area where it's like I'm giving you the same growth rate has a lot of the big tech companies and a lot of maze, much cheaper multiples. Okay. also point out that and we we from having to provide that. We don't have presentation. We we've done it for other clients. It doesn't take a lot. 2, 2, movies May and the asset class starts to perform and people start to get on board which staying out of inevitably will, you know, Paul Magnuson who around running for strategy during the tech bubble likes to say it's a spoonful from the ocean. And if you think about big tech names of ocean, the size of their market cap, it's a trillion dollars comes out of that, which is not really that much in the grand scheme of how big these companies are collectively and goes into small cap. What that would do for those returns. Typically the catalyst for that. I just think it's going to be performance. But I also think the rate Small-caps benefit more from rate cuts. Why is that? You know, you think about Apple. They can essentially pay the balance sheet. U.S. government thanking officially borrow money for hero. So cap companies cannot do that because they just. They have paid. Like I said earlier, many levers to poll, you know, that they don't do the same size revenue and all that. So. Any significant drop in rates will help their balance sheets and help for income statement. You just battle take over the banks. The banks make up such a large portion of small cap value and they have all these pale and just lining up for So once that Kurds and the name start performing and you get some investor interest and gets just told him to get just a little bit of that money coming out of the big tech names. It could be another huge challenge for small cap. Thank you. >> All right. Any other questions from trustees? All right. Well, thank you, Mister Ali, for the presentation. >> All right. Thank you, everybody. >> Moving on to a 9.3. Greystone Core. The performance review. You know, it's we had 0 interest rates. Which is beneficial to small and smoke out. We were just saying and they did not perform. You know, we had in 2000 when you had companies that were losing money, but people were pouring all of their money into it. You know, so there's you know, there's there's there's a difference between. Hitting the home run, right and a pension plan. You all. target is a 6.2%. And you've exceeded All-time high 185 million dollars with all-time high. So dealers, there's to you as a board. We have to consider. Are we OK with having a lower return of the market's up 17 and were up 12? When our target 6? We okay with that or do we want you know, do we want to try to touch maximize returns rather than get 6.2 with the lowest amount of risk. And so I'm in agreement with his analysis regarding the small-cap valuations are really good. Profits are looking to everything you said is accurate. My question is that the prices get the price of the stock has got to go up right in until the market decides they were going to sell out of this. And by this, then it's the year you're not going to you have good returns. 10%. You know you go into That's going to be fine. And these managers are also, you know, the talk about the high quality bias and all you have to do is look at their up and down capture to recognize that that's exactly what you would expect last quarter. They outperform bad as bad quarter, but they outperformed its exactly why you have them and the up market low quality mark markets that the thing that falls the most, they don't own it. So they're going to outperform as usual. The thing that bounces the most right. And they're going to they're going to they're going to fall behind on return over the long term. So, you know, we have to ask ourselves, are we okay with that? And I think in the context of your portfolio yes, you have some passive investments in the large cap space. You know, you're you're you're you're achieving all of your return objectives. You have a positive often your portfolio. So for the not a risk you're taking, you get a higher return than what you would expect. So the question is always how much risk want to take. You want to take a little more risk to try to get more return. You want to take a little less risk. Knowing that you're going to give up some of the return I think we're kind of in a sweet spot right now. You know, there's some things I want to talk about some education today, which might give us diversification benefit, maybe reduce the overall volatility. The portfolio, which would then allow you to do something somewhere else. That's just an education piece. Before we get started. Are there any any questions, comments, concerns, anything that? Anybody has any issues with great? I'll get started. It's interesting if we were to take a look at the returns over a 6 month period. We're up a little bit. If you take a look at the quarterly returns, this quarter were lot. Compared to last quarter. We were down a lot in the point, is it just so happened that the Liberation Day happened at the end of the 1st quarter? The market's up 30% off of that That's remarkable. If you, you know, again over 6 month period, it's it's a non event. It's just that thing. And that's what's been going on. The market, you know, can really be attributed to, you know, this is a part of you as you try to talk about, you know, interest rates and earnings and PMI. And then in mind, all of that. But the markets really been driven by 4 things. Tariff taxes, tweets Trump and that's and I to say it. But that's what's driving the market with the big drop in the big increase was because Trump's and we're going to put 50% tariffs and 75% tariffs and 100% tariffs and >> and then market fell. And then a couple weeks later, how are going to put a moratorium on that? So not to actually nothing happened. And that's still kind of where we are you know, it's it's interesting. You obviously that the president once low interest rates and we've we've all seen the stuff with all the pressure on the Fed to lower rates, lower rates and inflation is. She's not where they want it to be. So they're kind of has a tenant and part of the process. And get into part of the reason for that. But inflation hasn't come down as much but this well, but the unemployment rate started you know, go up a little bit for unemployment rate goes up. I can combat that is with lower interest rates. When you read today that the that the government shutdown. They're not going to put. The government employees on furlough. They're going to fire him. The firemen make some point or a goal. The unemployment rate goes up. The Fed has pressure put interest rates down. It's just interesting how he man is that was that was a part of the plan are. But the point there is the markets really being driven by social media and information like this, people are acting on that information, there's investors acting on that information right now. And so that's what's really driving the market. What what is the implication then what I know when that shutdown supposed to be, but 2 or 3 weeks. All right. So the implication to the market. >> They've been so it would be more of just a few more pressure on the Fed to lower rates, which is what which is what Trump wants. Whether that's right or wrong. I don't know the answer really right now. It is a coin toss. If you talk 10 analyst, they're going to say you can drop a quarter, maybe half your talked. The other like white. Why take the risk of creating inflationary environment? We just got out of it. Let's we're doing fine. We are. We're doing fine. We have. 6 and a half percent mortgage rates. That's pretty good by historical standards. We have full employment, you know, GDP ease plotting, right? there's not really a lot of bad things going on. If the I thing works out, you would ex but productivity to go way up. Companies can make more money. There is a debate of whether that will cost jobs or not. I don't know the answer. You know, when they used to be a operators use to pick up the phone, there is an operator on the phone and you say, hey, I want to talk to Janet me, you know, you'd that connection when they had the the Dow foam. All these things are going put everybody out of work. No, they just change jobs, that they didn't go out of work. You know, when the airlines remember Braniff air and and some of these airlines when they went out of business, all these people are going to now they just got hired by someone else. So you know that the world is constantly evolving and that's the uncertainty is what creates the volatility. And we're seeing a lot >> I do think that you know, I think it's interesting. I travel a lot and there's coffee shops in airports and I'm seeing more