May 18, 2018
Prosperously navigating unexpected events with great skill and agility 2
AGENDA Who We Are Investment Methodology Performance by sectors Risk Management Current Opportunity and Investment pipeline Performance Summary 3
WHO WE ARE PORTFOLIO MANAGEMENT EXPERIENCE TECHNOLOGY EXPERTISE • Unique insight • Portfolio Manager with 30 years of from entrepreneurs leading portfolio management experience international tech development across various asset classes at based on needs creation asset management companies (LGT, • Advisory Committee of tech leaders BLACK SWAN TAL, CIBC Asset Management), and who determine the global adoption a pension (British Petroleum) DEXTERITAS and success of new technologies (“BSD”) • Exceptional research team with a • Representation in all BSD-invested wide breadth of knowledge in tech sectors and sub-sectors, for research, finance, and engineering unrivalled expertise • Intense due diligence process for our stock selection process • Unique risk management overlay to minimize drawdowns and volatility 4
INVESTMENT METHODOLOGY IDEATION • BSD Investment Advisory Committee: seek out global growth themes and trends to overweight and underweight various subsectors PUBLIC COMPANIES • Experienced investment team sourcing trade ideas and discussing vital macro economical forces in play PORTFOLIO CONSTRUCTION • Draw on sector experiences from members of the committee and discuss emerging technology from the private and public space • Deep dive into industry verticals to identify beneficiaries in other primary, secondary, and tertiary markets IDEATION SECTOR ASSESSMENT • Life Cycle: Sectors in introduction and growth stages with high Total Addressable Market (TAM) • Competition: High barrier of entry with differentiated products and services within the sector SECTOR ASSESSMENT COMPANY ANALYSIS • Business Model: Public ccompanies with high recurring revenue, easily able to leverage network effects, strong negotiating power with suppliers and customers, and strong corporate governance • Size: Target small (500M+) to large cap public companies with established track record of executing the business. COMPANY ANALYSIS • Growth: Public companies with high and/or consistent revenue growth • Valuation: Determine if opportunities exist based on our fair value expectation of stocks versus current stock prices PORTFOLIO CONSTRUCTION • Weightings: Determine % of portfolio allocated to holdings based on risk-reward expectations • Diversification: Well-diversified across 35 to 40 holdings to maximize risk-adjusted returns • Hedging: Utilize derivatives and fixed income products to minimize drawdowns and generate alpha 5
TOP 10 STRATEGIC TECH TRENDS FOR 2018-2020 6
INVESTMENT METHODOLOGY IDEATION EXAMPLES IPHONE 8 ECOSYSTEM Radio frequency Display (RF) Baseband GPU (Graphics Processor Processing (Cellular Unit) modem) CPU (Central Processing Unit) Power Assembly management Power Wireless Delivery charging Flash Memory MEMS and other sensors 7
INVESTMENT METHODOLOGY IDEATION EXAMPLES AUTOMATED DRIVING ECOSYSTEM SAE automated driving levels Statistics and End Users Forecasts Hardware Applications 8
INVESTMENT METHODOLOGY IDEATION EXAMPLES DIGITAL TWINS ECOSYSTEM Hardware Software • Sensing & Power • Data management End users • Processing • CAD - Computer-Aided Design 9
INVESTMENT METHODOLOGY DIVERSIFICATION As of April 30, 2018 PORTFOLIO BY MARKET CAP PORTFOLIO BY TECH SUBSECTOR Application Software 28.2% Internet Software 16.2% Consumer Services 14.1% Semiconductors 11.2% Fintech 9.6% Cash 6.3% Over $10B Communication Equipment 4.3% Under $5B 91.0% Technology Real Estate 3.6% 4.5% Internet Gaming 3.3% Automation 2.0% $5B to $10B Industrial 1.2% 4.5% BSD is well-diversified across 10 technology subsectors across 30 to 35 holdings with minimal correlation. BSD seeks out high potential technology sectors with promising unit sales projections and revenue projections and minimizes exposure to low potential sectors 10
RISK MANAGEMENT HEDGING OVERLAY HEDGING STRATEGY The goal of the hedging strategy is threefold: 1. Minimize the portfolio’s drawdown 2. Lessen the portfolio’s volatility 3. Generate alpha HEDGING TACTICAL PROCESS There are 3 tactical steps in the execution of the hedging process: 1. The neutral market position is set at 20% of the stock portfolio, ex-cash 2. The hedging position will deviate from the neutral market position to underweight or overweight, based on macro fundamental, technical, and capital flow factors 3. The combination of various futures instruments ( for example, S&P 500 futures, Nasdaq 100 futures, and Russell 2000 futures) is determined by a proprietary hedging model HEDGING P&L IMPACT The hedging strategy is an “insurance” policy in anticipation of an adverse market event The hedging tactical process limits drawdowns, and potentially generates alpha 11
RISK MANAGEMENT CASE STUDY: 2014 EBOLA OUTBREAK Sept 22, 2014 - PLoS Outbreaks reports that the Ebola BSD Benchmark S&P 500 epidemic in West Africa is growing exponentially with 6.75% cases reaching 6,800 by the end of September. Once the Ebola fear subsided and the market has returned to its pre-Ebola levels, BSD outperformed the 3.38% Nasdaq/Russell benchmark as well as the S&P 500 Index. 0.00% -3.38% At the peak of the drawdown, BSD exhibited -6.75% less drawdown than the Nasdaq/Russell benchmark as well as the S&P 500 Index. -10.13% Our prudent risk management system allows us to navigate market corrections and black swan events with lower drawdowns and higher returns 12
RISK MANAGEMENT CASE STUDY: AUGUST-SEPTEMBER 2015 CORRECTION Total Equities P&L % Total Derivatives P&L % Total P&L % 15.00% 11.25% As market conditions deteriorate, our hedging 7.50% positions reduce our total BSD scales back our hedging positions portfolio drawdown, accordingly as various market signals allowing us to outperform indicated probable upside to our our benchmark. portfolio, conversely, when we see certain signs of market deterioration, 3.75% we increase our hedging positions. 0.00% -3.75% Our dynamic hedging strategy allows us to position our portfolio to minimize losses during market downturns and maximize upside potential in recoveries 13
RISK MANAGEMENT CASE STUDY: AUGUST 2015 AND JANUARY 2016 CORRECTIONS August 2015 correction 15.00% BSD S&P 500 Benchmark January 2016 correction 10.00% 5.00% 0.00% -5.00% -10.00% -15.00% -20.00% 14
RISK MANAGEMENT CASE STUDY: FEBRUARY- MARCH 2018 CORRECTION 4.00% BSD S&P 500 Benchmark Once the fear subsided and the market has returned to its pre-correction levels, BSD outperformed the Nasdaq/Russell benchmark as well as the S&P 500 2.00% Index. 0.00% 1/29/2018 1/30/2018 1/31/2018 2/1/2018 2/2/2018 2/3/2018 2/4/2018 2/5/2018 2/6/2018 2/7/2018 2/8/2018 2/9/2018 2/10/2018 2/11/2018 2/12/2018 2/13/2018 2/14/2018 2/15/2018 2/16/2018 2/17/2018 2/18/2018 2/19/2018 2/20/2018 2/21/2018 2/22/2018 2/23/2018 2/24/2018 2/25/2018 2/26/2018 2/27/2018 2/28/2018 3/1/2018 3/2/2018 3/3/2018 3/4/2018 3/5/2018 3/6/2018 3/7/2018 3/8/2018 3/9/2018 3/10/2018 3/11/2018 3/12/2018 3/13/2018 3/14/2018 3/15/2018 3/16/2018 3/17/2018 3/18/2018 3/19/2018 3/20/2018 3/21/2018 3/22/2018 3/23/2018 3/24/2018 3/25/2018 3/26/2018 3/27/2018 3/28/2018 3/29/2018 -2.00% -4.00% -6.00% -8.00% At the peak of the drawdown, BSD exhibited less drawdown than the Nasdaq/Russell -10.00% benchmark as well as the S&P 500 Index. -12.00% Our prudent risk management system allows us to navigate market corrections and black swan events with lower drawdowns and higher returns 15
CURRENT OPPORTUNITIES AND INVESTMENT PIPLINE • DIGITALIZATION & ELECTRIFICATION The automotive revenue pool will grow and diversify with new services potentially becoming a ~USD 1.5 trillion market in 2030 • 5G DEPLOYMENT The 5G market will grow to $1.23 trillion by 2026, according to a new report by Ericsson announced at the Mobile World Congress • DIGITAL TWINS T he digital twin market is expected to grow at a CAGR of 37.87%, to reach USD 15.66 Billion by 2023 • AUTOMATION & ROBOTIZATION After growing at a compound rate of 17 per cent a year, the robot market will be worth $135bn by 2019, according to IDC • OLED – Organic Light Emitting Diode T he OLED market is expected to be valued at USD 48.81 Billion by 2023, growing at a CAGR of 15.2% between 2017 and 2023 • GAMING Gaming market to grow at a CAGR of +6.2% toward 2020 to reach $128.5 billion • HYPERCONVERGED INFRASTRUCTURE The hyper-converged infrastructure market is expected to reach USD 12.6 billion by 2022, at a CAGR of 43.59% between 2016 and 2022 16
CURRENT OPPORTUNITIES AND INVESTMENT PIPLINE DIGITALIZATION & ELECTRIFICATION Entire industries are changing with and through digitalization, while car drivers are demanding even more from their vehicles. In addition to vehicle dynamics and consumption, the perceived intelligence, comfort, and convenience of the car also play a significant role. We are convinced that electromobility in its many different forms will be an essential component of future mobility. The automotive revenue pool will grow and diversify with new services potentially becoming a ~USD 1.5 trillion market in 2030. 17
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