EFTA00803455.pdf

HONEYCOMB ASSET MANAGEMENT October 18, 2018 Dear Rich, Below please find Honeycomb's 3Q 2018, Year To Date, and Inception To Date Fund performance. Performance — Gross and Net' Inception To Date 3Q 2018 Year To Date (July'16-Septi8) Honeycomb Class A (gross) 4.4% 16.1% 52.6% Honeycomb Class A (net) 3.6% 12.9% 41.1% Honeycomb Class B (gross) 4.5% 16.6% 54.1% Honeycomb Class B (net) 3.7% 13.2% 42.2% Internal capital anchored our June 2016 soft launch which also eicluded select friends and family capital. The Funds June 2016 net performance was -3.4% and -3.3% for classes A and B. respectively. Past performance is not indicabve or a guarantee of future results. 3Q 2018 Performance Review July's positive contributions to performance came from both the long and short side after taking advantage of dispersion in the markets. Names across streaming music, growth intemet, software and digital media led our long performance. Our shorts in secularly declining media and advertising names generated alpha while the overall short book held almost flat. August was a positive month led by various long positions across software and US internet-related subscriber businesses. These gains were negatively impacted by long positions in online and digital gaming. Single name shorts in beer and a luxury jewelry retailer generated positive performance but were more than offset by our index hedges. September also delivered positive returns led by absolute performance from our short book and to a lesser extent our longs. Long positions across entertainment, software, video gaming, digital media and hospitality contributed to positive performance but were negatively offset by our long exposure to US cable. Our shorts in e-signature, social media, and beer companies drove performance for the month. We took profits in these short names as our risk/reward became less favorable. Our largest performance detractor in 3Q was our concentrated long position in The Stars Group (Ticker: "TSG"). As we wrote in our 2Q letter, Honeycomb invested in TSG based on our belief that the combination of core Stars, Sky Betting, and the Australian assets created online gaming's premier growth company. While that may still be the case, we teamed in the near term that there are some challenges. We had a 10% position at the time of writing our 2Q letter which we built over several months. We exited the position quickly when our estimates were lowered due to management's commentary on the earnings call. The company reported that top line growth for Sky had decelerated to mid/high-teens in 2O. This was well below +40% y/y growth in 2017 and our underwriting of mid-20%'s growth. TSG's stock price ended September approximately 20% below our sale price. For now, we will monitor TSG closely as our long- term thesis still seems valid, but the near term is less clear. ➢ Key Process Takeaway: To Honeycomb, discipline is more important than conviction and being tactical is an important part of our investment process. When the fundamentals of our investment thesis change we tend to cut risk quickly to reassess the new available information from the sidelines. This agnostic 845 Mato', Awnue. 1 Floor. New York. ICO22 - Not fa DisInbuban EFTA00803455  HONEYCOMB ASSET MANAGEMENT approach is a repeatable and scalable hallmark of our investment style. Being wrong is part of the game but acting rather than rationalizing is core to our risk management philosophy, and we believe it is one of our competitive advantages. Exposures for 3O averaged approximately 172% gross and 60% net, which compares to 166% gross and 62% net averages in 2O. We remained cautious operating at the lower end of our gross historical exposure range over the quarter. As many of our shorts worked this summer, we ended September with net exposure of 76%, which was on the higher end of our net exposure range for the quarter. Gross Long and Short Security Selection Contribution — Q3 2018* 7% 6.4% 4.8% -1.6% -3% Long Short Total 'The seemly zrerbuten above dolfers from the 2018 performance table as d does not consider management fee. incenbve atocabon. forwards or Fund expernes. Past performance is not indcative or a guarantee of MUM results. Co-Investment Update In 3Q we closed Honeycomb Ventures IV, a single company co-investment in Tencent Music Entertainment which is expected to go public in the fourth quarter. Business Update We are pleased to announce that Honeycomb hired Chief Financial Officer, Ken Chan. Ken was most recently the CFO of Blockhouse Capital Management. Prior to that Ken served as the CFO of Seven Harbour Global, Controller at Owl Creek Asset Management and started his career at Pricewaterhouse Coopers. Ken joins Dana Shakked, our controller, to fill out our finance team. We said farewell to our Director of Finance Anita O'Donnell who made great contributions to Honeycomb pre-launch and during our first 2 years in business. We wish her well as she looks to spend more time with her family. Additionally, we added Nan Li who had been a Honeycomb intern as a junior research associate focused on China. This grows our team to 11 employees. We remain committed to growing our business with the highest quality and institutional talent. Our 2019 business plan includes hiring 2-3 additional analysts. Please keep Honeycomb in mind if you know of any creative investment professionals looking for a growth opportunity at a young, creative, boutique firm. 2 Confidential - Not For Distribution EFTA00803456  HONEYCOMB ASSET MANAGEMENT Closing Remarks We are in the midst of another market drawdown and so we dusted off the February playbook by initially reducing gross and net exposure. We believe we have an opportunity to upgrade the portfolio with high quality companies at attractive entry points and even some mid cap names that were unattractive to us at prior valuations. We believe that being flexible and disciplined to our internal price targets has allowed us to re-establish some previous positions at a better risk/reward. We are sticking by our investment philosophy to 'Invest in the Future and Short the Past', our motto that we are in the process of trademarking. While Honeycomb is a new firm, we feel fortunate to bring over 20 years of investing and risk management experience to our partnership having successfully navigated various market cycles. We wish you a strong close to the year in all your investing activities and thank you for choosing to partner with us. Best Regards, PARTNERSHIP CONTACT INFORMATION: Dominique Ahumada Head of Capital Partnerships & Talent (646) 883-1128 3 Ccedidonuai - Not Io( Chsintutoon EFTA00803457  HONEYCOMB ASSET MANAGEMENT Endnotes & Important Legal Disclosure 'Honeycomb Master Fund LP (the 'Master Fund') includes all or substantially as inveslible assets from its feeder Mids. Honeycomb Partners LP ('Domestic rune). Honeycomb intermediate Fund LP and Honeycomb Offshore Fund Ltd. (collectively. the Wunds'). However. investors are expected to invest at the feeder fund not at the Master Fund level. The reflected returns assume a representative investor invested in the Domestic Fund in each of (1) the Class A interests that are subject to a management fee of 2% and incentive allocation 01 20% and (II) the Class B interests that are subject to a management fee of 1.5% and an incentive alocation of 20%. 'Net' reflects the performance of the Domestic Find net of management lee. expenses and incentive allocation. 'Gross' reflects the performance of the Domestic Fund net of management lee and expenses. but gross of incentive allocation. Returns assume the reinvestment of all dividends. Interest. income and profits. The management fee and expense tires used for performance calculations are pro-rated for the performance period. and incentive allocation calculabons reflect an investment since the Domestic Fund's Ally 1.2016 institutional launch dale. The reflected rains assume participation by the Glass A and B representative investor in 'new issue investments and no partlopabon in side pockets. Individual results will vary (potentially considerably) depending on, among other things. investing al the offshore feeder fund rather than the Domestic Fund level. new issue eligibility. sae pocket parficipation, the limn° of contributions/subscriptions and wandrawalsfredemptions. different fee arrangements and any accisnulatei loss cany-forwards. This performance information is estimated and Honeycomb Asset Management LP (the -Investment Manage() makes no representations as to the accuracy or completeness thereof. an such information should not be relied upon for investment related or other purposes. The performance information is based on ithaudited infonnation as of the date hereof and e subject to change as actual performance for the relevant period is finalized. Past performance is not indicative of future results. Ths investor letter is confidential, is intended only for the person to whom it has been provided and under no circumstances may a copy be shown. copied. transmitted. or otherwise given to any person other than the authorized recipient without the prior written consent of the Investment Manager. Except as otherwise specifically set forth herein, the information in this letter is as 01 the date hereof. Nolvathstanding anything to the contrary heren. each recipient to this document (and each employee. representative. or recipient) may disclose to any and all persons. without limitation of any kind. the lax treatment and tax structure of the ands any of their transactions. and all materials of any kind (including opinions or other tax analyses) relating to such tax treatment and tax structure. it being understood that 'lax treatment' and 'tax structure do not include the name or klenblying information of a Fund or a Vansaction. The distribution of the information contained herein may be restricted n certain jurisdictions. accordingly. it is the responsibility of any prospective investor to satisfy itself as to compliance with relevant laws and regulations. The redolent and its professional advisors. by accepting delivery of this distraint. agree to keep confidential all matters herein and to return this document promptly upon the request of the Investment Manager. The sitcarnatkri contained herein is preliminary and is provided for discussion often only. This informations only a summary of key information. it is not complete and does not contain certain material information about the Funds. including important conflict of interests disclosures and rek factors associated with an investment the Funds and is subject to change without notice. TM document has been suppled for discussion purposes only. and therefore no representation or warranty is made. whether expressed or st ied. by the ands or the Investment Manager or any 01 their partners. employees, members. or agents as to the accuracy or completeness of the information provided herein. This document may be amended at any time. There is no express or implied obligation to update you of any chances to the information set forth herein. The inkanation contained herein should not be relied upon as the basis of any investment decision or for any other purpose. TM document is not intended to be. nor should it be construed or used as an offer to set or a solicitation of any offer to buy. interests or shares in the Funds. No offer or solicitation may be made prior to the deavery of a definitive offering rnentranden (the 'Memorandum') wNch wit contain additional information about the Finds. including disclosures relating to risk factors and conflicts 01 interest. The information contained Minn does not consider the particular investment objectives or financial circumstances of any specific person who may receive it and is qualified in its entirety by the ktemoranclion. In the event of any disorepancies between the information contained herein and the Memorandum, the Memorandum we control. The Information herein is not intended to provide. and should not be relied upon for, accounting, and legal or tax advice or investment recommendations. Each recipient 01 this docLinent should make an independent investigation as to all matters concerning an investment in the Funds or othenvise described herein, including consulting with its own tax, legal, accounting or other advisors about the matters concerning an investment in the Funds or otherwise discussed herein. In making an investment decision. investors must rely upon their own exammatlon 01 the Funds and the terms of the offering. including the merits and risks involved. An investment in the Funds may not be sistaNe for al investors. An investment in the Funds will be matelot only for certain financially sophisticated investors who meet certain eligibility requirements. have no need for immediate bguidlly in their investment, and can bear the risk of an investment in the Funds for an extended period of tine. Investing in financial markets involves a substantel degree of risk. There can be no assurance that the investment objectives described herein will be achieved. Investment losses may occur. and investors could lose some or all thew investment. No guarantee or representation is made that the ands' investment program. including. without Mutation. Its investment objeaktes. diversification strategies. or risk monitoring goals. will be suocesslul, and investment results may vary substantially over time. Nothing herein is intended to imply that the ands' investment methodology may be considered "conservative". 'safe'. 'risk free' or 'risk averse. Economic, market and other conditions could also cause the Funds to alter their investment objectives, guidelines and restrictions. Certain information contained in this document (including. in particular. the discussion of investment themes contained herein) constitutes 'fcaverud.looking statements'. which can be Identified using forward-looking terminology such as 'may'. YAP. 'should'. 'expect'. 'anticipate". 'target. ^project. 'estimate. Intend'. 'continue' or 'believe' or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties and assumptions made by the liwestrnent Manager. actual events or results or the actual performance of the Funds may Offer materially from those reflected or contemplated in such forward-looking statements. The esbrnates. investment strategies. iweistment themes. and views expressed in tNs document are based upon past or current market conditions and/or data and information provided by unaffiliated third pasties (which has not been independently verified) and is subject to change without notice. In addition. many 01 the views expressed herein are sikpctive andbr reflect the Investment Manager's estimates or forecasts on future performance and market events. Such statements should not be understood lo be predictions or guarantees of any particular outcome. or of the Investment Manager's commitment to invest in any particular industry, sector. region. or cottony. In parboular. you Sh0uld be snare that any new technologies or products discussed herein are unproven. may never develop as the Investment Manager anticipates, could be superseded by other technologes, and are subject to significant investment risks. Past performance is not indcative nor a guarantee of lulus reams. Each issuer discussed as a long/shon contributor or detractor from performance was one of the top 10 licogishort contributors or detractors from performance for the quarter and was selected based on being a representative driver of performance for the quarter. Honeycomb Offshore Fund Ltd. (the 'Offshore Fund') has not been approved for distribution in or from Switzerland by the Swiss Financial Market Supervisory Authority. Asa result. the Offshore Fund's shares may only be offered or dstributed to qUeldled investors within the meaning of Swiss law. The Representative of the Offshore Fund in Switzerland is Bastions Partners Office SA with registered office at Route de Chene 61A. 1208 Geneva. Switzerland. The Paying Agent in SNitZellSrld is Banque Heritage SA. with registered office at Route de Gh0ne 61, 1208 Geneva. Switzerland. The place of performance and jurisdictice for shares of the Offshore Fund dstributed in or from Switzerland are at the registered office of the Representative. 4 Confidential - Not for Distribution EFTA00803458