Fiduciary Management, Inc. Quarterly Review – June 30, 2021

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414.226.4545 FMI Large Cap Equity www.fmimgt.com

Performance Quarter YTD 1 Year 3 Years 5 Years 10 Years Since Inception Large Cap (Gross) 4.24% 10.70% 38.39% 13.20% 14.12% 12.84% 11.25% S&P 500 Index 8.55% 15.25% 40.79% 18.67% 17.65% 14.84% 8.03% Russell 1000 Value Index 5.21% 17.05% 43.68% 12.42% 11.87% 11.61% 7.47%

Inception: December 31, 2000 Performance is preliminary and subject to reconciliation. Top 10 – Portfolio Holdings: Berkshire Hathaway Inc. Cl B 6.7% Investment Philosophy: Purchase durable business franchises that are selling at a Masco Corp. 5.0% discount to their intrinsic value. Comcast Corp. Cl A 4.6% Dollar General Corp. 4.6% Investment Process: We utilize a business owner’s approach to investing, Charles Schwab Corp. 4.3% thoroughly investigating the economics of the business Quest Diagnostics Inc. 4.1% and the quality of the management team. Some of the Sony Group Corp. Sponsored ADR 3.9% characteristics of good businesses include strong JPMorgan Chase & Co. 3.7% recurring revenue and attractive returns‐on‐invested capital (ROIC). We have a strong orientation to low UnitedHealth Group Inc. 3.7% absolute and relative valuation,e which ar key to the Unilever PLC Sponsored ADR 3.6% execution of our investment strategy. A new idea will come from a variety of sources including company visits, Portfolio Characteristics: (1) screens, conferences, trade periodicals and general P/E Ratio (trailing one year) 23.7x reading. All members of the research team are responsible for fundamental research. FY1 P/E Ratio (forward 4 quarters) 20.4x P/S Ratio 3.3x Once an investment opportunity is identified it is put P/B Ratio 4.4x through an extensive due diligence process, which EV/EBITDA Ratio 18.5x typically includes management interviews and site visits. When an acceptable level of conviction is achieved, the Number of Holdings 32 appropriate weighting (considering liquidity, valuation, Active Share 88% etc.) is discussed and determined. A new company purchased in the portfolio will usually have an initial Recent Purchase: position size of 2‐4%. The portfolio generally consists of Facebook, Inc. Cl A Ticker: FB Added: May 2021 20‐30 companies and is well diversified across sectors. Each day, there are over 2.7 billion people using Facebook’s platforms: Facebook, Instagram, Messenger, WhatsApp, and Facebook Reality Labs (which houses Facebook’s augmented We are long‐term investors, a typical holding period for reality/virtual reality efforts). The company’s revenue is almost all from advertising, the majority our companies is three to five years, and portfolio of which is on mobile devices. Digital advertising is a secularly‐growing market driven by share turnover averages 20‐40% per annum. gains from traditional advertising and expansion of the overall pie, and Facebook has a dominant position in digital advertising, with around 25% share. Facebook has proven its ability in both Research Portfolio Management Committee (PMC) growing and weak economies; the balance sheet is strong with $64 billion of cash and marketable Team securities, and no debt. If you adjust for cash, the stock is trading near an all‐time low, and over one standard deviation below its 5‐year average next 12 months relative multiple. The valuation Jonathan T. Bloom, CFA √ discount is based on concerns surrounding Apple’s app tracking transparency change with its John S. Brandser recent software update, and uncertainty surrounding regulation. However, our research suggests that Facebook will be able to manage through Apple’s shift, given its leading first‐party data and Patrick J. English, CFA √ modifications the company is making to its advertising technology to mitigate the impact. We Robert M. Helf, CFA √ recognize that there could be significant regulatory hurdles erected in the future, but we believe management will continue to evolve the business to address any new regulations. Ultimately, the Julia L. Jensen √ investment thesis is simple – Facebook is one of the strongest businesses in the world, with a great Benjamin D. Karek, CFA √ balance sheet and strong growth prospects, and is trading at a discount to the market. We Andy P. Ramer, CFA √ estimate that over the next five years, Facebook can grow revenue and earnings in the mid‐to‐ upper teens. The current valuation undervalues these prospects, which provides the opportunity Daniel G. Sievers, CFA √ for us. In May 2021 we initiated a 2.5% position in the portfolio. Matthew T. Sullivan, CFA √ Recent Sale: Jordan S. Teschendorf, CFA √ Nestlé S.A. Ticker: NSRGY Sold: June 2021 Dain C. Tofson, CFA √ Nestlé is among the world’s largest consumer goods companies with a focus on food, nutrition, and wellness. In 2020, the company generated $84 billion in sales. Nestlé’s product portfolio For a detailed explanation of the FMI Large Cap Equity includes Powdered & Liquid Beverages (, , , Coffee mate, , Composite, please refer to the attached GIPS composite report. Ovaltine); Nutrition & Health Science (Gerber, Boost); Petcare (Purina); and Ice Cream; Prepared Dishes & Cooking Aids (, DiGiorno, ); Confectionary (KitKat); and (1) Estimated valuations are based on a representative account Water (, S.Pellegrino, ). Nestlé also owns approximately 130 million shares of from the FMI Large Cap Equity Composite, and are weighted L’Oréal, currently valued at $57 billion. The FMI Large Cap portfolios have owned the stock since average calculations, not reweighted to exclude cash, and August 2009 on the thesis that the business is generally a model of consistent revenue and margin financial companies are excluded from the EV/EBITDA expansion benefiting from category and geographic expansion and the “premiumization” of its calculation. Valuations for the portfolio are modified based on products. Over the years, the management team has done a good job of portfolio management criteria identified by FMI. For more detailed information into higher‐margin, higher‐growth categories. We have viewed the stock as defensive, and have regarding these valuations, please contact FMI. been generally trimming the position in recent periods, as the market has valued the business favorably due to these characteristics. We sold our remaining 1.1% in June 2021.