Large Cap Growth 1Q 2019 Commentary

Markets Review Growth Index. Since its inception on November 1, 2016, the Large Cap Growth Composite has posted a total return of 21.19% gross of Markets (total return) performed as follows: fees (20.72% net of fees), while the Russell 1000 Growth Index has Index Returns registered a total return of 19.59%. First Quarter 2019 Performance Scorecard WTI Crude Oil 33.70 First Quarter 2019

NASDAQ Composite Index 16.80 Large Cap Growth Composite, gross Russell 1000 Growth Index 16.10 19.74

Russell 2000 Index 14.58 Large Cap Growth Composite, net 19.62

S&P 500 Index 13.65 Russell 1000 Growth Index 16.10 Russell 1000 Value Index 11.93 S&P 500 Index 13.65 Dow Jones Industrial Average 11.80 Russell 1000 Value Index 11.93 Bloomberg Barclays U.S. Aggregate Index 2.94 Gold 0.77 Russell 2000 Index 14.58 0 5 10 15 20 25 3-Month U.S. Treasury Bill 0.60 0 10 20 30 40 Total Return (%)

Total Return (%) Sources: SS&C Advent; Russell Investments; Standard & Poor’s

Past performance is not indicative of future results. Returns are presented gross and net of Source: FactSet investment advisory fees and include the reinvestment of all income. Aristotle Atlantic Composite returns are preliminary pending nal account reconciliation. Please see important Past performance is not indicative of future results. Please see important disclosures at the disclosures at the end of this document. end of this document.

Financial markets rallied in the first quarter of 2019, with performance Security selection accounted for nearly all of the strategy’s for most indices resembling annual figures. A more dovish Federal outperformance relative to the Russell 1000 Growth Index for the Reserve and optimism over the potential for a United States-China quarter. Security selection in Health Care, Information Technology trade deal helped offset concerns of slowing economic growth. and Industrials added the most to relative performance. Within each of these sectors, Guardant Health, Alteryx and Roper Technologies Overall, the S&P 500 Index gained 13.65% during the first three were the main relative contributors, respectively. Conversely, security months of the year—its best quarter in nearly 10 years. Gains were selection in Communication Services, Financials and Consumer broad-based, with all 11 sectors in the S&P 500 Index advancing at Discretionary detracted from relative performance. Within each least 6%. of these sectors, Take-Two Interactive Software, Intercontinental The latest economic data provided a mixed picture. Fourth quarter Exchange and Expedia were the main relative detractors, respectively. GDP grew at a slower annual rate of 2.2%. Rising consumer spending and business investment were partly offset by weaker housing data. Top Five Contributors* Top Five Detractors* February nonfarm payrolls came in below expectations; however, the Guardant Health Take-Two Interactive Software labor market remained quite healthy overall, with the unemployment Alteryx Intercontinental Exchange rate at just 3.8% and wage growth above 3%. Roper Technologies Expedia Estée Lauder Prologis Performance and Attribution Summary Avery Dennison Celanese For the first quarter of 2019, Aristotle Atlantic’s Large Cap Growth *Securities listed had the best or worst relative performance within the best- or worst- Composite posted a total return of 19.74% gross of fees (19.62% net performing sectors relative to the benchmark. Past performance is not indicative of future of fees), outperforming the 16.10% total return of the Russell 1000 results. Please see important disclosures at the end of this document.

New York | Los Angeles | Newport Beach | Boston 1 1Q 2019 Large Cap Growth Commentary Aristotle Atlantic Partners, LLC

Top Contributors largest financial companies are launching a low-cost rival trading platform. The new venue is called Members Exchange, or MEMX. Guardant Health, Inc. Nine entities, including , Shares of recently purchased Guardant Health increased after the and Citadel Securities, will maintain control over MEMX. Other company released the results of a head-to-head test, comparing investors include Bank of America Merrill Lynch and UBS, as well its Guardant360® assay to standard tissue biopsies of previously as retail brokers Charles Schwab, E-Trade and TD Ameritrade. untreated lung cancer patients. Guardant’s blood tests were able to find mutations at a similar rate to tissue-based testing while providing Despite being a relative detractor, Intercontinental Exchange a faster turnaround time and offering a less-invasive procedure. reported strong financials during the quarter, achieving strong top- Guardant Health’s stock also benefited after the company reported and bottom-line growth for the full year, its 13th consecutive year strong fourth quarter sales. Revenue spiked 64%, beating forecasts. of revenue growth. For all of 2018, the exchange operator grew In addition, Guardant Health expects full-year 2019 revenue to be its revenue by 7% year over year to just under $5 billion, while its in the range of $130 million to $135 million, representing 43% to adjusted net income was $2.1 billion and adjusted earnings per share 49% growth over full-year 2018. came in at $3.59, up 21% year over year. Strong performance was primarily attributable to robust growth in trading volumes across Alteryx, Inc. asset classes. In addition, the company returned nearly $1.8 billion Data science company Alteryx was once again a top contributor to stockholders in repurchases and dividends. in the portfolio. Alteryx reported strong operating performance, Total Contribution to Relative Return by Sector benefiting from a continuing global demand for analytics. For all versus Russell 1000 Growth Index of 2018, sales were $254 million, a gain of more than 90% year First Quarter 2019 over year. The company reported a profit of $28 million during that period. Alteryx ended the fourth quarter of 2018 with 4,696 Communication Services -0.81 customers, a 38% increase from the fourth quarter of 2017, and added Consumer Discretionary -0.10 381 net new customers in the fourth quarter of 2018. Also during Consumer Staples 0.42 the quarter, Alteryx announced a new strategic partnership with Energy 0.00 Thomson Reuters to streamline data analysis for tax professionals. Financials -0.14 Partnerships Alteryx already has in place include Amazon Web Health Care 2.95 Services, Microsoft, Salesforce, Oracle and Tableau. Industrials 0.59 Information Technology 0.93 Bottom Detractors Materials 0.20 Take-Two Interactive Software, Inc. Real Estate 0.13 Take-Two was a primary detractor. Recent trends suggest that Utilities 0.00 growth could be slowing, in part due to competing offerings. Apple Cash -0.21 announced during the quarter that it will bring a new subscription -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 gaming model (Arcade) to its devices, while Google unveiled Stadia, Total Contribution to Relative Return (%) a gaming service that allows players to bypass consoles and stream video games from the cloud into portable devices and smart TVs. Source: FactSet Past performance is not indicative of future results. Attribution results are based on sector Meanwhile, the online version of Red Dead Redemption 2, one of returns, which are gross of investment advisory fees and include the reinvestment of all income. Take-Two’s most popular games, is not expected to be released from Please see important disclosures at the end of this document. beta until the second half of 2019 and the next installment of the Grand Theft Auto franchise is not expected until 2022. Free-to- Recent Portfolio Activity play “battle royale” games, including Fortnite and Electronic Arts’ The table below shows all buys and sells completed during the recently released Apex Legends, continue to exceed user count and quarter, followed by a brief rationale for the final two buys and sells revenue expectations. Take-Two has yet to announce a competing that occurred. offering, and we are concerned that a secular shift is occurring in the industry in terms of how video games are distributed (shift to free- Buys Sells to-play) and monetized (shift to in-game purchases). Ball Celanese Intercontinental Exchange, Inc. Guardant Health Celgene Shares of Intercontinental Exchange, one of the largest exchange Illumina Charles Schwab operators in the world, declined on news that some of Wall Street’s Twilio Take-Two Interactive Software

New York | Los Angeles | Newport Beach | Boston 2 1Q 2019 Large Cap Growth Commentary Aristotle Atlantic Partners, LLC

Buys commercial since 2014, provides genomic results from a blood draw to match patients with the best treatments. The test covers Ball Corporation all gene mutations/biomarkers associated with the tumor types Headquartered in Colorado, but serving customers worldwide as profiled by the National Comprehensive Cancer Network through over 100 locations in about 30 countries, Ball provides (NCCN) and the 73 genes most relevant to clinical care options metal packaging for beverages, foods and household products. It in non-small cell lung cancer (NSCLC). The company expects to also supplies aerospace and other technologies and services to achieve full FDA approval in 2019, which could unlock additional commercial and governmental customers. Ball’s packaging revenue payer coverage and pan-cancer Medicare coverage, which would (more than 90% of its net sales) is derived from a relatively few major further accelerate adoption and testing volume through a national beverage-producing companies and brands, such as Coca-Cola and coverage determination. The GuardantOMNI platform is currently Unilever, while its aerospace segment provides an array of aerospace commercial in R&D settings for use as a comprehensive genomic systems and services (such as spacecraft, instruments and sensors, profiling tool to help in the development of tailored immuno- and data solutions), mostly to the U.S. government. oncology and targeted therapies.

We believe Ball offers fast growth and strong upside potential given The next leg of the company’s story will revolve around addressing its position as the market leader in the beverage can industry with an the larger cancer recurrence and residual disease detection markets approximately 33% share following its takeover of Rexam, ahead of with its LUNAR-1 program, currently under clinical development. competitors Crown and Ardagh. Collectively, these three companies The goal is to be able to screen for early detection through an accurate, account for approximately 65% of the market, and the beverage affordable blood test for widespread use among asymptomatic market is anticipated to see an uptick in growth, with compound higher-risk individuals. Guardant’s LUNAR-2 program is in annual growth rate forecasts of 3.2% from 2018-2022, up from 2.4% development to address this even larger potential market. from 2013-2018. In our view, another catalyst is the increasing awareness and demand for environmentally friendly packaging. Ball Sells is acknowledged as one of the leaders in sustainability efforts among Celanese Corporation packagers, listed on the Dow Jones Sustainability Indices World and We exited our position in Celanese, a producer of acetyl products, North America for the sixth year in a row for achieving industry- due to increasing concerns around the slowdown in the Chinese leading scores on criteria such as product stewardship, occupational consumer and industrial economy and the impact that will have on health and safety, codes of business conduct, and environmental Celanese’s acetic acid business. In addition, the slowdown in the reporting. To further its sustainability commitment, Ball recently global auto market could have a greater-than-expected impact on invested more than $115 million in a new state-of-the-art beverage the company’s engineered plastics business. can plant in Europe. Finally, Ball management is shareholder friendly. Following the Rexam transaction in 2016 and deleveraging The Charles Schwab Corporation in 2018, the company announced plans to return all free cash flow to We decided to sell our shares of Charles Schwab, the bank and shareholders through 2019 and beyond by way of a combination of brokerage firm. While we recognize that Charles Schwab is one of share repurchases and dividends. the best asset gatherers in the industry, we are selling our position due to a lack of near-term catalysts. Importantly, we believe the Guardant Health, Inc. more benign interest rate outlook following the recent Federal Guardant is an oncology company dedicated to identifying and Reserve meeting could weigh on the company’s stock price, as its conquering cancer through proprietary blood tests, vast data sets balance sheet is highly levered to movements in short-term rates. and advanced analytics. The company’s liquid biopsy initiatives are focused on three solutions in the treatment paradigm of cancer Outlook patients: treatment selection for advanced cancer patients, recurrence In the first quarter, the equity markets priced in a large portion of and residual disease detection, and early detection/screening. We the more accommodative stance taken by the Federal Reserve. The expect liquid biopsy to increasingly become an area of interest for the U.S. economy, we believe, should settle into a slower-growth stage health care sector as these less-invasive techniques seek to optimize marked by a period of moderate earnings growth. A trade deal with therapeutics (personalized medicine) and reduce costs, risks and China, while mostly priced into equity markets, should provide more time delays associated with current tissue-based biopsy procedures. stability to global economies. We have once again entered a period of additional monetary easing in many regions, including China Our investment case centers around the belief that Guardant can and Europe. While large fiscal issues continue to be ignored by help patients to find more personalized therapies which could developed economies, a combination of moderate economic growth provide better patient outcomes and fewer side effect than broad- and neutral-to-accommodative central bank policies should provide based chemotherapy. Its Guardant360® assay, which has been support for equity markets.

New York | Los Angeles | Newport Beach | Boston 3 1Q 2019 Large Cap Growth Commentary Aristotle Atlantic Partners, LLC

Aristotle Large Cap Growth Composite Performance All Periods Ended March 31, 2019

25

21.19 20.72 19.74 19.62 19.59 20

16.10 15.63 15.16 15 12.75

10 Total Return (%) Return Total

5

0 1Q19 1 Year Since Inception (11/1/2016) Large Cap Growth Composite (Gross) Large Cap Growth Composite (Net) Russell 1000 Growth Index

Large Cap Growth Composite Large Cap Growth Composite Russell 1000 Year (Gross %) (Net %) Growth Index (%) 2019 YTD 19.74 19.62 16.10 2018 -0.93 -1.34 -1.51 2017 29.53 28.99 30.21 11/1/16 - 12/31/16 3.49 3.49 3.44

Composite returns for all periods ended March 31, 2019 are preliminary pending final account reconciliation. The opinions expressed herein are those of Aristotle Atlantic Partners, LLC (Aristotle Atlantic) and are subject to change without notice. Past performance is not a guarantee or indicator of future results. This material is not financial advice or an offer to purchase or sell any product. You should not assume that any of the securities transactions, sectors or holdings discussed in this report are or will be profitable, or that recommendations Aristotle Atlantic makes in the future will be profitable or equal the performance of the securities listed in this report. The portfolio characteristics shown relate to the Aristotle Atlantic equity strategies. Not every client’s account will have these characteristics. Aristotle Atlantic reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. There is no assurance that any securities discussed herein will remain in an account’s portfolio at the time you receive this report or that securities sold have not been repurchased. The securities discussed may not represent an account’s entire portfolio and in the aggregate may represent only a small percentage of an account’s portfolio holdings. The performance attribution presented is of a representative account from Aristotle Atlantic's Large Cap Growth Equity Composite. The representative account is a discretionary client account which was chosen to most closely reflect the investment style of the strategy. The criteria used for representative account selection is based on the account’s period of time under management and its similarity of holdings in relation to the strategy. For a full list of all holdings since the strategy’s inception at Aristotle Atlantic, please contact us at (212) 652-4150. Returns are presented gross and net of investment advisory fees and include the reinvestment of all income. Gross returns will be reduced by fees and other expenses that may be incurred in the management of the account. For example, a 0.5% annual fee deducted quarterly (0.125%) from an account with a ten-year annualized growth rate of 5.0% will produce a net result of 4.4%. Actual performance results will vary from this example. The Russell 1000® Growth Index measures the performance of the large cap growth segment of the U.S. equity universe. It includes those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. This index has been selected as the benchmark and is used for comparison purposes only. The Russell 1000® Value Index measures the performance of the large cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected growth values. The S&P 500® Index is the Standard & Poor’s Composite Index of 500 stocks and is a widely recognized, unmanaged index of common stock prices. The Russell 2000® Index measures the performance of the small cap segment of the U.S. equity universe. The Russell 2000 Index is a subset of the Russell 3000® Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2,000 of the smallest securities based on a combination of their market cap and current index membership. The Dow Jones Industrial Average® is a price-weighted measure of 30 U.S. blue-chip companies. The Index covers all industries except transportation and utilities. The NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite includes over 3,000 companies, more than most other stock market indexes. The Dow Jones Sustainability Index World is based on the largest 2,500 companies in the Dow Jones Global Total Stock Market Index (DJGTSMI) and covers the top 10% of these companies in terms of economic, environmental and social criteria, which equals about 300 companies. The Dow Jones Sustainability Index North America covers the leading 20% of the largest 600 North American companies in terms of sustainability from the DJGTSMI. The Bloomberg Barclays U.S. Aggregate Index is an unmanaged index of domestic investment grade bonds, including corporate, government and mortgage-backed securities. The WTI Crude Oil Index is a major trading classification of sweet light crude oil that serves as a major benchmark price for oil consumed in the United States. The 3-Month U.S. Treasury Bill is a short-term debt obligation backed by the U.S. Treasury Department with a maturity of three months. While stock selection is not governed by quantitative rules, a stock typically is added only if the company has an excellent reputation, demonstrates sustained growth and is of interest to a large number of investors. It is not possible to invest directly in these indices. The volatility (beta) of the Composite may be greater or less than its respective benchmarks. Aristotle Atlantic Partners, LLC is an independent registered investment adviser under the Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Aristotle Atlantic, including our investment strategies, fees and objectives, can be found in our Form ADV Part 2, which is available upon request. AAP-1904-25

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