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1605 Main Street, Suite 904 • Sarasota, FL 34236

Review & Outlook April 2014 Harald Hvideberg, CFA Tyler Pullen, CFA Robert Stovall Sr., CFA Colleen Kenefick Mat Lepak. 1605 Main Street, Suite 904 • Sarasota, FL 34236 Tel: 941.361.2195 | Fax: 941.906.9494 | www.woodasset.com. What we will cover today : Asset Class Review

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1605 Main Street, Suite 904 • Sarasota, FL 34236

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  1. Review & Outlook April 2014 Harald Hvideberg, CFA Tyler Pullen, CFA Robert Stovall Sr., CFA Colleen Kenefick Mat Lepak 1605 Main Street, Suite 904 • Sarasota, FL 34236 Tel: 941.361.2195 | Fax: 941.906.9494 | www.woodasset.com

  2. What we will cover today: • Asset Class Review • Macro Monitor • Portfolio Update

  3. Asset Class Review Flip-flop: March was an up month for US equities; the S&P 500 Index finished the 1st quarter up 1.8%. However, this left equities in last place versus bonds and commodities (see table to the right) -- a complete reversal in leadership compared to 2013. This reversal continued at the sector level during the quarter with the standout being Utilities, which climbed 9.0% while Discretionary pulled up the rear, dropping 3.6%. Last year discretionary surged 41% and Utilities delivered a 6.5% total return. Source:Wood Asset Management, FactSet, Bloomberg Q: So why the reversal in leadership and how long will it last? A: Macro forces at play; some new headline:риск (Russian for “risk”); weather

  4. A mix of less favorable economic data contributed to a “risk off” environment in 1Q14 Interest rates fell during the quarter (right axis) • Economic Surprises declined during the first quarter (left axis) • Housing • Retail sales • Employment • Manufacturing survey data • Oil and gasoline prices Source:Wood Asset Management, FactSet

  5. Three reasons why we believe economic data (and risk appetite) will improve going forward • ISI’s Company surveys have bounced. This data series has a strong correlation to changes in the economic surprise index, indicating possible improvement in the surprise index in coming months. • Real Consumer Spending Is Likely to Reaccelerate in 2Q. Real consumer spending in 1Q was depressed due to severe weather. Support for consumer spending includes pent-up demand from the months of severe weather, house prices are up 13% y/y (Case-Shiller), consumer confidence remains in a rising trend, the S&P is up significantly over the past year, average hourly earnings are up 2.2% y/y, private employment hit a record high in March. • Bank loan growth has been anemic, but starting in late ’13, growth has accelerated. Source: ISI Group

  6. China Watch Source: ISI Group

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