1Q16 Quarterly Commentary

The dollar weakened slightly as expectations of future Fed hikes were reduced in the wake of weak International economic growth and turmoil in capital markets thus reversing a long period of dollar strengthening. Oil prices soared in March, but ended the period roughly the same. U.S economic growth remained decent at a low level, benefiting from solid consumer balance sheets. Net worth has rebounded to 2008 highs. High Yield spreads ended the period flat after January widening. U.S.  Treasury yields followed other developed markets downward. U.S. yields are now very wide versus Germany. Defensive stocks, particularly utilities, which our style rarely finds attractive, led the way. High quality (B+ or better) led low quality (B or worse) stocks.  Momentum, low volatility and defensive stocks continue to be very expensive. These factors led to macro headwinds to our deep value philosophy.