December, 2009

Research-driven investment philosophy. Focus on intrinsic business value. Multiple approaches to valuation. Bottom-up portfolio construction. Disciplined decision process. Independent thinking can lead to better investment performance. 1

Investment Philosophy Three key attributes: High-quality businesses trading at a discount to intrinsic value. Businesses whose value will grow over time. Honest, capable management teams that think and act like owners. Would you want to own the whole business? If not, don’t buy the stock. 2

Price and Value Converge Over Time Value grows over time. Stock rises as price/value gap closes. Identify stock at a discount to value. 3

Example: H&R Block Information as of 12/31/09 Example: H&R Block Information as of 12/31/09. Not intended as a recommendation. High returns on capital near 20%. Strong free cash flow due to low capital needs. Tax complexity, pricing power and new office openings drive revenue growth. Tax business alone worth more than current stock price. Activist shareholder forced changes in management. New management team focusing on core business. 4

Portfolio Management Avoid over-diversification by holding 20-30 securities. Full range of market capitalization, no artificial limits. Weightings reflect risk, confidence in outcomes. Long-term time horizon reduces turnover. Asset allocation based on needs of client. Conservative bond portfolio reduces credit and interest rate risks. 5

Representative Equity Portfolio Industry holdings are based on clients portfolios as of 12/31/09. Holdings are subject to change and are not intended as recommendations. 6