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Letters to Investors
February 10, 2005
We want to wish you a happy New Year and thank you for your continued interest. The added value of the Suncoast Equity Management-Disciplined Investment System (SEM-DIS) continues to accumulate as we pass the seven-year mark. Our results are listed below:
Time Period
(Ended 12/31/2004) |
SEM % Return* |
S&P 500 % Return |
SEM - Value of $1,000,000 |
S&P 500 - Growth of $1,000,000 |
| One Year |
+12.52% |
+10.92% |
$1,125,200 |
$1,109,200 |
| Three-Years |
+6.37 |
+3.56 |
$1,203,300 |
$1,110,600 |
| Five Years |
+4.77% |
-2 .33% |
$1,261,800 |
$888,800 |
Seven-Years
( Since Inception ) |
+10.24% |
+4.75% |
$1,976,000 |
$1,383,100 |
*Composite results of all SEM managed accounts, after all fees, versus the Standard & Poor's 500 Index. Note: Results for the three, five and seven year periods represent the annual average rates of return. |
The SEM-DIS is an investment decision making process that blends quantitative and qualitative factors to identify above average businesses. On the quantitative side, all of our portfolio holdings share similarly high quality characteristics such as (1) above average return on capital, (2) strong balance-sheet strength and (3) free cash flow accumulation. This compares favorably to the S&P 500 index of companies whose make-up consists of a mix of below average, average and above-average companies. The SEM-DIS in a qualitative way assesses if the quantitative results have a high probability of continuing. Qualitative analysis involves gauging the strength of the company's franchise, products/services, advantages/disadvantages of scale, competitive position and many other factors, especially management's capital allocation ability and track record.
Suncoast Equity Management (SEM) is ranked by Effron/PSN to be in the top 25% of all managers for investment performance in this country since inception. This ranking can be seen at our web site www.SuncoastEquity.com. We are thankful for the confidence and support of our clients as our assets under management have grown to over $100 million. We would enjoy the opportunity to work with you as well so please give us a call anytime.
Sincerely,
Donald R. Jowdy
President
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