EFTA01087282.pdf

BERN DYNAMIC LLD The Bern Lucerne Fund Bern Omemic LAP I 41 Peeedito Walk I London 51314JI. UK I P7one .44 20 7745 2435 Offshore — name 1 EFTA01087282 Disclaimer THESE MAMMALS DO NOT CONSTITUTE AN CfFER OF SECURITIES. SUCH ME OFFER WILL ONLY BE MADE BY MEANS OE A CONFCENTLAL MEMORANDUM TO BE FURNISHED TO QUALIFIED INVESTORS UPON REQUEST ALL INFORMATION CONTAINED HEREIN IS SUBJECT TO REVISION AND COMPLETION. THESE MATERIALS ARE CONFIDENTIAL AND INTENDED SOLELY FOR THE INFORMATION CF THE PERSON 70 WHOM DELIVERED. RECIPIENTS MAY NOT REPRODUCE Cf TRANSMIT. IN WHOLE OR IN PART, TO THIRD PARTIES. %On, Performance results are destribtal berms we net of fees latest amt.Is prellnwoey and 'aced le revroon 2 EFTA01087283 Bern Dynamic LIP /stems) A boutique advisory and brokerage firm since 2011 Partner: Lars A. Christiaanse ▪ Bern offers clients access to a pool of world-class. senior experts with a global reach. along with the experience and ability to provide advice across the broadest range of issues: geopolitical. security and business. In tandem with its advisory role. Bern Dynamic will use its unique international network to benefit its clients: creating. managing and executing the ambitions of investors and entrepreneurs. • Team of 16 in London. UK 00,04 (moot UP 3 EFTA01087284 Lucerne CapitalManagement LLC ("Lucerne") An SEC-Registered Investment Advisor since 2000 Partners: Pieter Taselaar (founder) and Thijs Hovers European long / short equity management ▪ Firm assets under management: $230 million (00.30.2013) x'i- 10-year track record compounding 13.6% net of fees annually, +259.0%cumulative net since inception (May 2003 through April 20131 > Team of 6 in Greenwich, CT Unique management skill attributable to Unique expertise in uncovering value in global leaders and local leading-edge companies within Continental Europe Y. Four decades experience interacting with a focused list of 250 European management teams ▪ Evaluate companies in a proven and repeatable private equity investment style, considering dynari for above-average market growth, free cash flow, hard assets, and valuation ▪ Tactical trading around positions with defined entry and exits 4 %am °muse LLF• 4 EFTA01087285 Lucerne Cumulative Returns vs Indices a Met c.e.tount Antuottard 20C4 20115 2/01 12121 XCO 2210 all alt ffi I [nun Rae- k Pie intr.: <COS MOOR, K. boat Pkt tam AP Wilt Ot4e(Wrat ur la 19M 1t7% MAC 259% •1 5% 4346 %9% M3%.111% 16S% 1S4% 198% 112% 241% 191% SO% al% 277% SW .1YA ISO% 123% 22" /C19% 4% LS8% SW • PC% 261% 15,1% 11% MO% 1968 2822% 1011% 126.6% 5 EFTA01087286 The Bern Lucerne Fund Strategy— European Long / Short Equity Opportunity ratircup*antril • Capitalize on the inefficiencies in the Continental Europe that result from cortert • Invest in a fund with well-established operational and administrative 1./..suovIer0:01 I've* ar.1 "la OW0.1 controls both internally and through service provider partners CbanOniin.1.0") • Maintain a highly liquid portfolio allowing for flexible risk management dynienti a-cog and active management coTprilei n the 7,- - VIIVeitvon ▪ Focus on making money on the buy by being mole nimble than other European equity investors. of which there are few true competitors chavioiremiv, Portfolio Construction PW00.04,0r4.4,. Chargn lot. > Universe of Continental European large, mid- and small-cap companies arrow.. > Currency exposure is monitored and hedged to the USD / CO 0(49 Etat,. 1.'41 4 Lcutuv > Opportunistic management of exposures > 20 to 50 positions with sector and country diversification > Normal holding period: 3 to 24 months for longs, 1 to 6 months for shorts > long positions are usually less than 10% of NAV and short positions less than 3% • At least 70% of the portfolio can normally be liquidated over 5 to 7 days, measured as no more than 25% of average daily traded volume 'sem Osirome 6 EFTA01087287 Investment Process Bottom-up value research Research requires watching for a private equity style opportunity Afacnxecnomtc with a potential 30% return scenario AlignMent of portfolio to mxreeconornic t. m.cre of toDJ Eutwee. *tea, cnilliannfeet • Potation between meters quality filter using metros that have proven to be good indicatorsof companies' financial a nd companies with performance varying SernitiviteS to c- -.catenary versus non cv.crebonary spending Dynamic use of the screening tool to lows oil bottom.* research efforts Established database of research on economic Apply inclepth bottom-upvaluation-driven research to selected group of 100-200 seeds Meta sensitoityl durable/nen durable OW Typically Exhibit •Cromng Cash gems doe to a nrcing Shorts TypkalPy CAM -?Miring mOinents. mitten:he pan en iilketerturtnet to expand demote are returnritepittl employed • industnalicontbow menet share nigh <warty managen'tom tocused on Balance short el <mh flew issues - born. cornoetpt, OPPMIUAltiet to expand Merkel share while thither:ga Lop Wining to teilni %leggin landscape tontnuously high fete of return •Capotete events thM ate MORA< Mgh multiples on eatalyststo chin. nomrea eamrgt estimate: Ofert emote Li, 7 EFTA01087288 ▪ •ry•17.1•113.• ••I0 ussoalomsa Wal• SSP •••••••010 SO••• ••••• SOY lin In WM taaa. •• sy SI 00 in aili •OSS 1.0.0 IS LS ••010 0.0 la t aa aaarat - la s 00 0••• 40•01 0 000 0.0.0•S• CEP if wow* wuro•unro“as lc, . vow OesswasS 0•• INIS •00•000 0 SS 0 SS% 0 il O nabliS000 leetsassI0I0 0 0 •OSSIS 40•104.00S IS 00 OSI0as, 0 •• 0 a...Sala:a a a ataaLaa 1 a." alai a a•Saaa a TS , 00•• 10.090/00 OS O O O O 00... 0.0 00000 0001 1.0. Ssmss•••••••• U0s000.0 •••••••liss 0 ,0 SIS CS -- 0 IS km s • 0 0 to is, ••• SS 0000. sysiV0•••••• S is, •••• t0L4 VsI csa S la On COO0.•••••• . 45 alai , aa aan a ONSI 000 •••••000 a WS INOMS 0•90100•• Oa la0 SOS SoIsla Isseco. a II • v..• “.....t.ivmwar 10000•01•• 0 0000 NI 00••••slys •Kif 00010•001 WM ail a Sala •••••••••00 ••• Weif Vs, SS • Ns WaSS: lessilssmw ... 8 EFTA01087289  Multiple Contraction, Cheap Global al Players Rkhemont LVMH Isla Tao tow- *ill* eastgm. MX MX 11,06,4001.1 MY PV• lolreCh1419.1.001.2.04oj Cagenta ran.whic.cea eitabiall 4 Inv en 1101104 1,110.9% tsnoinak, 0Otc CI ORA 1. OK 1CH M. LS% BefeoCrosoileuP 9 EFTA01087290 Europe: Pockets of Excellence Pockets of Excellence • Aped Spirts Automotive S V / • Wary Goods Focus Countries • OA Senices • Germany tkralhem 'ta • En®ncaing6 Industrial Sconces France S inioncoing Telocom Catli rig • Sasinvear4 luftra Despite the maturity of the European capitol markets. value dislocations and inefficiencies persist 13Efa.0.unaCur 10 EFTA01087291 Example Worldwide automotive industry —global unit sales Exposure to growth markets is key Allows for acceleration in growth despite challenging domestic markets 70 6% uo• 2% COM to IkJ' i 50 40 20 10 moo eam eon tan ma • Oevalowl mato% • Emenne nuclei s %fa OThINIC LLP 11 EFTA01087292 German 2 yr Government Yield French 2 yr Government Yield • .‘"s-ff.c.pciAdfc - brio Colatene UP 12 EFTA01087293 Corporate Bond Yields to All-Time Low European BBB Corporate Yield EURO 600 Stock with Div Yield > Credit i 1939:0:0X01Z002200,130‘203SKOS203/X03X09201020112012 —14ccevir a air ....while dividend yields over credit is at on oil time high e9w.mw.wOUP 13 EFTA01087294 Europe is Investable Again The Droghl Effect Italian and Spanish 10 yr Yields • Credit market takes view European system is well underwritten • Growth periphery remains subdued • However, our companies are positioned to benefit from global growth Austerity and tax hikes widen gap between winners and losers Europe ISM breaks through 50 again after 4 years Second derivative in Europe improving • We have counted over 50 companies \•-•••,,‘ that are turning positive on Europe in their earnings reports BEANOoavoC 14 EFTA01087295 Leading German engineer with globalfoot print and secular growth trends ➢ World market leader in paint shops for automotive industry > Unique footprint after decades of expanding in growth markets Summary Financials > Unique skillset helps lower cost and energy efficiency at OEMS Sik>2012 15bx 0111211 170n > Volkswagen, Daimler and BMW among largest clients EMMA 2012.201S 20% > German OEM Capex plans reveal > 10% growth per annum Istikel cap 10o > High investments in more energy efficient plants nerdebillten On > As well as expansion in Emerging markets (v/(B12013 Sb OwdeinvieldlOt3 Mk > Valuation suggest Duerr at peak profitalnity, while we expect ROK In many years of +10% growth Unique GlobalFootprint Ceunwv Founded (mph/vets China Expansion bey, 48 years 250 KOS 2011 CAGR% Mexico 46 yews 210 Orders 146 168 33 South Mica 41 was 50 Sales 83 575 38 Korea 30 was 115 Onployees 119 487 co Ova, 28 veers 1550 Incia ave.*, 410 kead 14 yeses 30 '400 ("dome ue 15 EFTA01087296 MostPremium Aged Spirits Company in Europe tvith Global Reach • Sales dominated by cognacs, Remy Martin is main br.:• : Strong presence in China and other growth markets .•-• Growth is supply constraint, so pricing power is high 1 Huge entry barriers due to 'aging' and strong brands .•-• 3.5% dividend yield, 30% EPS CAGR, EV/ EMT 13x Mar-14 • Strategic value confirmed by industry transactions above 30x EBIT Examples: Magee -United Spirits & Period VHS M Sales Breakdown TheArt of Compounding 400 360 300 260 200 150 100 50 0 2010 2011 2012 2013 2014 Oxi ~.vnCLLY 16 EFTA01087297 Shorts: Fake Yielders, Contractors & Accounting Irregularities Utilities & telecom incumbents, risk dividend cuts and right issues Recent examples ale RM. EON, and KEN Many contractors took too much risk to 'survive' recession Hochtief receivables rise Fir Saipem and imtech: recent examples where aggressive accounting masked cost overruns and loss making contracts. 90 r Hochtief has a high risk of being next contractor to warn due to: 00 .ro Dramatic rise in working capital driven by funbilledi receivables signal either: '70 io Cost overruns preventing billing their clients 60 io Aggressive revenue recognition 50 .a° Trade receivables rose to record 93 days in 1Q13, up from 79 days in 2012 and 75 days in 2011. 40 - 102010 102011 102012 10201 .a° Hochtite has lent EUR 60Orn to Dubai subsidiary to cover high amounts of overdue receivables following the DS.0( 941/4) —VOY0444.4 property bust. None of the debt has been repaid. ersitcnisaacur 17 EFTA01087298  ►Appendix 'r Monthly Returns 'r Terms and Service Providers 'r Bios 'r Valuation Metrics 'r Back Office Processes 'r Top 5 Holdings AUM History 'r Investor Base 'r Awards& Press 'r Investor Relations *CO. OThAVIC LLP 18 EFTA01087299  MOW The Lucerne Capital In fob u., hpx Mn 1. Si Ay lop on Sat C4i Ti., Iva. Offshore Fund, LTD I. TR MO% : • . AI% LI% 10% ap, NnY4 114, .304 RV% 43% 03% .lam tr , t S0 Hn 30.1% 45% n% /4 3% • 4,n 113% 101% .11111. 40% 33% Mg% 1) P. 131% .110% Us 4014 Mt% 1 HO1 10% •111 2.11 .02% 3.111. .34.1% .33% a 14$ ZS% 33% 14' • )4 01% 37% 13% 33% 1.3% )" He 14% .4333 OA% 2 to 2 4.7% in 34% 33% 17.146 .14 4, :744 44% 30% '343 0.3% 14% LS% 0M 01% 2,4 103 45% 43% S3% 11.13. ::<1 41% 13% 3/113 11% In 50% 31% 14% 1•116 HM (woo.). Owe Oxen., 211.2% f04:N Offshore — returns, name, inception date 19 EFTA01087300  Terms and Service Providers The Bern Lucerne Management fee: 1.5% Incentive fee: 20% Liquidity Monthly, with 60days notice Minimum Investment $500.000 Early Redemption Fee First year, 2% Administrator Otco Fund Services (Bermuda) Ltd Prime Broken Morgan Stanley Goldman Sachs Auditor PricewaterhouseCoopen Legal Paul, Weiss, Rilkind, Wharton & Garrison Walkers Offshore - LTD from factsheet 20 EFTA01087301 PIEM111.111A0.11 fanGNpPm.xra Poslio.%Mompf~2002 Pera02212.T.ssoc..00,Pozinvaluehou2402.29202 (15.~0CtOffillftWer011. • •522of li.~ .€0222:12.2 1.104 02.020222.2.0.22.1. 2,00.2222 • Co'cv:,..el., 2noe trOCOPL311.1a.lieti.ASHAM120finyterclim • r2222.201.2012221.12122~10 ~~~11ffiffill • P,2•,...,22.00, 0.2A520Cute, 00050.02010 • 2,2 Wiver9w, lhe Ne.e.11021$ 111115 IlOYERS Ponlelà, M0n0Oof gon F ILAMMOMO" NrNW freanq mic e 2007 910E '22 02~000 02 02 <2 en. E Lr•p••• Stn011and C.:N0V 1120.22211t A821., 2.222) 22 Mexi 11t0e2... (0002 222~0. ASH AMR0 YOHAHE 5 YIAHYVOE 22. 5.0002 tpuiy Analest. AS11AMIC 2.204.2~1,10.010012201. .22.2111.2.2átak 40.212211.4224121•022 22. MgMNmnrnYfnarol 22. 21.2.Eualomts.Untantly 01210222~a" 0.22 N•02201.2•21. 22 0 Rt0100 .1/0221122. 2006 22. Tleoffison faial . Benthu,SnalCaps R2.2022012. 2026 Woods Too G," 2010 m01011 :2. Ironia,. Woods 11.2, Min]. o Constrnsr 1.20.221; 2011 BEM. Cromme uP 21 EFTA01087302 Valuation Metrics Absolute fair value metrics (rather than relative value analysis) enhances the selling discipline Strict valuation multiples at entry to invest in pricing inefficiencies with limited downside Identify attracthe entry points wnh a potential 30% return scenario Typically l0nEVABIT for strong global franchees. generating high returns and have a low capital intensity to support growth ▪ Typutly Si ENT for more capital ritensherycical stals • Key variables are cash cwweision, capextuoma, ROM, fat cowry risk premum, cost of debt ▪ Assess risk (petal by the wciatility of a company's ca?. now and earnings growth Cash flow based valuation model Focuses on key &nen to generate cash under a variety et market circumstances: . Top Reheardgross marpn resilience . Cott. woebng capital and capes flexibility ▪ Potential risks n tax, interest charges and hc4ng ',oboes Ongoing testing of assumptions ".• Models incorporate revenue line input from external macro achtsor. . Sell if growth a priced in of if investment ere fundwnental/g [hang,. 00,40YroseCtii• Oulperformance as due to our ability to identify and value cornpanies focused on reinvesting or distributing strong and growing cash flows ■ 22 EFTA01087303 Committed to protecting client capital while providing the team enough support to effectively manage the Fund Operational Control Features Internal features - Clear roles. redindancies and abarty to adapt External features - Service providers, NAV confirmation, and third.party custody Process Documentation ▪ Trade processes - Daily reconciliation. Multi layered system both in.house and at administrator Research mosaic -Doctenentatkin to record our multilevel research process • Valuation policy - Month end formal review including external input away from investment professionals ▪ Risk management policy - Daily review of position sues Cash control policy -Neal signatures and maintaining cash away from brokerage account Registered investment advisor best practices - Documented policies/ procedures and compliance oversight T.. Privacy policy for investor information Counterparty Agreements Extenswely negotiated term and facilities with all counterparties Disaster Recovery & Backup Procedures ▪ Daily backup. offsite data : storage, and rt. — . .. - L to the Due Diligence Questionnaire for detail Itt.0000IttrAVICUP 2) 23 EFTA01087304  Top S Positions as of lune 2013 (in alphabetical orderl ZOld ValwallOn MALMO " %%km a nibers mdwins Dower • maflulanuntrof Maw mdingial PE II 3. Remennia0 marten NS M.siµGemn mohniandii somas & Hun webal tpleat rain Wi menvn sumpacol:laghOldeadd.o• •01111.1611111 mdec AM ICA) Ont2 Kim milers:bpi wpm{ puelh, mold urns. with PE 146, Indent, eternal aliviboon. Oro past/R1 hamar% mown: high KT kit ado.. acquatliera. glib • global nSo:SN CO lociaans to 70 Ire IA NemnM months..Maw Bellt 0,044,41 alp Weet•tiAISOUNS04,44 any 10%tie.r.methIs (we seculareion cyclical Ont2 Oikiribm• ol•lonical nuope•ra, in:hiding %bunldun.X in the LIS:thav tunpwanpuelhot nm Hilo mewl SA Ill'esma) emit, tain s dua,..00mry t *Nam prodmb nt priced it l. openling Swingemm.1d bet ;CY% apploano.lha.: nnnnnuthmiltiplo ben from ',endwise Bowls Dor 4 ro. C•willopeg, earolorlunr, madam, el send citric bpi.. pc &alma. low HIS, ACC" H.1"... Orman...was illosocabcproonb inwasim. re% WIC, SS% doveabo ler • ICY. 6C f4) ROO WI sine ants ;mutiny comostonlineml, and Mid Div, 6% OtartaffOnutiaitttelntie,011,4 somas anotehoesteocia DOM wentden Marne 9*, IXII Gros, NV An IT. teleart, tlectlembroal togneentg 8. sheet to prop Vasa.PII600011ry Won, Kr 10% Mit (flohnlanch) Mason, pNMNonITattnoma holt/tote aid nos In Ilt40$ 0.0111% •Delada (Sneed," ”Tentan Camp Ctownentigannt.IllelpeOnuu/er20144,0.0.430.11aMay taws Isehre0. kyrcflomosti lopeolauw. 6W•Itto. taro% Si P55 stfe.0Thavi0LLP 24 EFTA01087305 AWN History • Lucerne Capitol Management Current Funds tea (raceme W. 25 EFTA01087306 Firm Investor Base as of August 1, 2013 Employe* 4.4410440• 01/ 5.9% fandation 0.1% Mul0444444 office, 4.6% Fuld of funds 22.1% HO.% worth IndNiluak e€4440, 64eaC us. 26 EFTA01087307  2010 2011 2012 Brendan Wood International'. Brendan Wood Intcenationars Woombeie Baer. Hedge i.ic, Top Gun Award lop Gun Award June It 2012 rho Pones, ornono the 75 most rnus Haven. Amon? top 11 buys.* lucerne Beeson European infuennal buys4r soecioAsts M Eutope invegmen: mIMs in the Oaten Mader ware SnOttina 84kafen Bardayeledge Award Brendan Wood Internadonars Barclay Managed Funds Report Recosnitacel Award Bert Investment Rends 3" quarter 2012 Annual Fop JO Thus Hovers, Worldwek•Consvenet Barclay Roundtolage No00MS Soke•ea Me Lucerne CopRol Fund, LP P duns is or Hand to Reso&e Europe's Credit Crlas Sector. Coney lono/Short - Europe Effect Institutional Investor Aug 2012 (Dutch onside' Feb 2011 Monne Artx lel Oe torte 4nr)es von een neederlonds• Hon sedge Funds Generate Returns in Amerdeoon hedgefonds (Me Short lines of Europe Overt, AfnefROO Hedge fund) Benin/Hedy Award RecogNtIon Award Annum, Top JO the Lucerne Capital Fong LP Sector Eatery Lonp/Shart - Europe Beam OwParCuP 21 27 EFTA01087308  BERN DYNAMIC LLP CONTACT tars A Christiaanse Routine Reporting Monthly. Day 1 Estimate. Newsletter, Statement Annual Audited Fesancial Statements and Kts. both mid-April Beferommeur 28 EFTA01087309