About PCM

MISSION

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Private Capital Management was founded on two essential principles that continue to guide all of our actions and the decisions we make for our clients:

1. Preserve our clients' capital.

We view capital as a precious, irreplaceable commodity. Our first objective is the capital preservation of the funds our clients entrust to us over the long-term.

2. Produce consistent appreciation in our clients' assets.

Since our founding, our goal has been to double our clients' assets every five years. This is tantamount to a 15% annualized rate of return. Over the long-term, achievement of this objective would allow us to meaningfully outperform the historical rates of return for equity and fixed income securities. Relying on our value-oriented investment approach, we seek to achieve this goal using a process designed to mitigate the risks and volatility that often accompany a high hurdle rate.

Absolute terms ... long-term results

Our objectives are expressed in absolute not relative terms. In our view, measuring investment "performance" against an index is a short-sighted, bull market approach. Relative return objectives create inappropriate incentives and shortened timelines for the investment manager, and can result in greater risks being taken to achieve performance matching the index.

Furthermore, relative performance violates our first principle: to preserve capital over the long-term. Moreover, it may fail to produce the consistent increase in our clients' assets that we aim to achieve.

Our Unique Disciplined Investment Approach

At Private Capital Management, thorough due diligence is the foundation of stock selection and is the hallmark of our company. While this process entails in-depth analysis of publicly available financial information, our determination of the intrinsic value of a business coalesces numerous quantitative and qualitative factors:

• What are the economic underpinnings of the business? Why is it a good business? What are the capital requirements? What is the franchise (how large, how durable, how lucrative)?
• What is management's background, operating philosophy, demonstrated competence and, most importantly, economic interest? Goal congruency between shareholders and management is an imperative.
• What is the competitive setting? Discussions with competitors, customers and suppliers provide dimension, color, and a feedback loop to cross-reference with management's comments.