Bandon Isolated Alpha Fixed Income (Presentation) 03 18 11

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This presentation overviews the Bandon Isolated Alpha Fixed Income Fund.

This presentation overviews the Bandon Isolated Alpha Fixed Income Fund.

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  • 1. Bandon Isolated Alpha Fixed Income Fund February, 2011 For Financial Professional Use Only Seeks Attractive Risk-Adjusted Non-Correlated Returns Using Global Fixed Income Exposures 0523-NLD-3/15/2011
  • 2. Bandon OverviewBandon Capital Management – Alternatives Democratization Specialist Privately owned firm based in Portland Oregon Registered Investment Advisor with the Securities and Exchange Commission History of translating institutional manager research into SMA structures Founder, has implemented hedge fund manager research for investors since 2004 Strategies delivered through strategic relationships with specialized institutional managers The information in this presentation is for informational purposes only and is not intended as an offer to buy or sell, or amount to a solicitation to buy or sell, any securities referred to herein. Important fee, performance and disclaimer information is contained towards the end of this presentation and should be read in conjunction with the information 2 presented above. 0523-NLD-3/15/2011
  • 3. Why Democratized Alternatives?Investors have questioned traditional alternative investments structures because: Traditional Alternative Structure vs. Bandon Alternative Mutual Funds Limited Liquidity Daily Liquidity High Minimum Investment As low as $10,000 Fraud Risk Regulated Transparency K-1’s 1099 2% + 20% of profits + expenses 1.95% expense cap The information in this presentation is for informational purposes only and is not intended as an offer to buy or sell, or amount to a solicitation to buy or sell, any securities referred to herein. Important fee, performance and disclaimer information is contained towards the end of this presentation and should be read in conjunction with the information 3 presented above. 0523-NLD-3/15/2011
  • 4. Why Fixed Income Alternatives? Low developed government bond yields Yields have declines for nearly 30 years providing a tail wind for bonds which is likely come to and end. Many high quality fixed income indices are heavily exposed to government bonds With the US gross public debt ballooning to over $12 Trillion government backed debt now represents more than 75%* of the Barclays Aggregate Bond Index Composition of the Barclays US Aggregate Bond Index 10-Yr Yields (1/2/1962 - 9/30/2010) 18% 1% Government 16% 3% 14% 12% Corporate Credit - IG 19% 10% 8% Asset-Backed Securities / Commercial Mortgages 6% 4% 77% Emerging Markets Debt 2% 0% Duration: 5.05 yrs 1/2/1962 1/2/1968 1/2/1974 1/2/1980 1/2/1986 1/2/1992 1/2/1998 1/2/2004 1/2/2010 * Includes domestic and sovereign debt, quasi government, such as agency government guaranteed and agency non-government guaranteed, municipal bonds and agency RMBS. Source: Barclays Capital as of December 31, 2010. 4 This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice. Please see additional disclosures. 0523-NLD-3/15/2011
  • 5. Low Yields Create Multiple ChallengesOver the last 30 years fixed income has had larger coupons offering attractivereturn what has been often times enough to offset price change duringperiods of rising interest rates: 35% 21% Price Return Coupon Return 10-Year Treasury Yield 30% 18% 25% 15% 20% 12% Yield 10-Year Treasury Return Component2 15% 9% 10% 6% 5% 3% 0% 0% -5% -3% -10% -6% -15% -9% 2007 1995 2000 2009 2001 1989 1996 1981 2006 1982 1985 2008 1992 1991 1987 2005 1983 1986 1988 2010 1980 1994 1999 2002 2003 2004 1990 1993 1997 1998 1984 YTD 2011 1980s 1990s 2000s Avg. Calendar Yr Return: 12.8% 7.9% 6.3% Past performance is not indicative of future results, which may vary. Please note that you cannot invest directly in an index. Source: Barclays Capital, Bloomberg; as of January 31, 2011 1.The above-posted illustration demonstrates a steady decline in coupon returns for the Barclays Capital US Aggregate Bond Index and a structural drop in Treasury yields over the past 30 years. With the share of Treasuries in the Barclays Capital US Aggregate Bond Index never falling below 20% over the past three decades and accounting for 34.0% of the index as of December 31, 2010, we believe the index’s historical total return structure is partly correlated to the declining Treasury yields. Source: Barclays Capital. 2.The return components (i.e total return) accounts for two categories of fixed income return: income (i.e. coupon return) and price 5 return. Income includes interest paid by the fixed-income investments, whereas price return represents the change in the market price of the fixed income security, which, depending on market conditions, can be negative. 0523-NLD-3/15/2011
  • 6. An Alternative for Periods of Rising Interest Rates The Fund’s interest rate strategies have no directional bias and seek to profit from both periods of rising and falling interest rates (credit neutral) The Fund’s credit strategies will seek to isolate credit exposure by hedging out interest rate risks (duration neutral) 2009 Treasury Interest Rates Treasury Performance 5.0% 0.0% 4.5% -5.0% 4.0% -10.0% 3.5% -15.0% 3.0% -20.0% 2.5% 2.0% -25.0% Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 10-Yr 30-Yr IEF (7-10yr) TLT (20+ Yr) The information in this presentation is for informational purposes only and is not intended as an offer to buy or sell, or amount to a solicitation to buy or sell, any securities referred to herein. Important fee, performance and disclaimer information is contained towards the end of this presentation and should be read in conjunction with the information 6 presented above. 0523-NLD-3/15/2011
  • 7. Opportunities and Risks within Fixed Income Investing Prepayment, 8% Prepayment: Sensitivity to prepayment call feature Credit, 23% Credit: Sensitivity to underlying company fundamentals Interest Rate, 69% Duration: Sensitivity to changes in interest rates We believe interest rates are the dominant risk exposure and should receive significantattention, especially in the current low yield environment We believe the current credit environment provides unique opportunities outside ofinterest rate risk factors Chart: Multifactor Beta Research from Investing Separately in Alpha and Beta, CFA Institute Research Foundation, Clark, de Silva, Thorley 2009 7 0523-NLD-3/15/2011
  • 8. Fund OverviewGoals & Objectives Deliver exposure to multiple sources of isolated alpha that are complimentary with each other within the two primary return drivers for fixed income: interest rates and credit Provide attractive risk adjusted returns that are not correlated to stocks, bonds or other alternativesPortfolio Characteristics Return Driver Target Allocation Methodology Strategy Type Sovereign Active Interest Rate 45-55% Systematized / Duration / Credit Fundamental Neutral Global Unconstrained Credit 45-55% Bottom up / Active Credit / Research Driven Duration Neutral The information in this presentation is for informational purposes only and is not intended as an offer to buy or sell, or amount to a solicitation to buy or sell, any securities referred to herein. Important fee, performance and disclaimer information is contained towards the end of this presentation and should be read in conjunction with the information 8 presented above. 0523-NLD-3/15/2011
  • 9. Institutionally Oriented Sub-AdvisersDix Hills Partners, LLC – Interest Rate Specialist Founded in 2003 with 14 full time employees, 4 founding partners 12 years experience managing active duration investment strategies Over $1 Billion* in assets under management from institutional clients Strategic business partnership with Federated Investors, Inc.Logan Circle Partners, LLC – Credit Specialist Founded in 2007 – Delaware Investments institutional investment team transaction Fixed Income manager dedicated solely to the institutional marketplace Over $11 Billion* in assets under management including 4 MF Sub-Advisory mandates 62 employees, 9 portfolio managers, 14 research analysts, and 14 traders Purchased by Fortress Investment Group, LLC in April of 2010 (FIG) *As of December 31st, 2010. 9 0523-NLD-3/15/2011
  • 10. Potential Interest Rate ExposureOverall portfolio duration is actively managed without a bias to being either long orshort with a predetermined band for potential exposure for the fund: Sovereign Futures US 10yr Treasury German 10yr Bund -5 to +5 years of duration UK 10yr Gilt Japanese 10yr JGB The information in this presentation is for informational purposes only and is not intended as an offer to buy or sell, or amount to a solicitation to buy or sell, any securities referred to herein. Important fee, performance and disclaimer information is contained towards the end of this presentation and should be read in conjunction with the information 10 presented above. 0523-NLD-3/15/2011
  • 11. Interest Rate Decision Process Interest rate decisions are driven by a fundamentally rooted multi-factor approach Hard Data Multi-Factor Model Trading Signals Macro Monthly Economic Independent Economic Exposure Data Inputs -CPI Interest Rate Valuation to Interest Rates Release -Non farm Technical Forecast by Market Payrolls -Yield curve -Stock -Momentum market ic Cy at m Re cle ste des pea Sy Tra ts Risk Management Implementation Stop Loss Trading Tools Sovereign & Debt Futures Profit Taking Research data of over 47 years and over 7 years of actual performance history The information in this presentation is for informational purposes only and is not intended as an offer to buy or sell, or amount to a solicitation to buy or sell, any securities referred to herein. Important fee, performance and disclaimer information is contained towards the end of this presentation and should be read in conjunction with the information 11 presented above. 0523-NLD-3/15/2011
  • 12. Potential Credit ExposureIsolated active global credit decision making within predetermined exposure bandsexpressed by strategy type unconstrained by a benchmark: Category Strategy Characteristics Examples Higher current yield MGM 2011 Subs Longs Express via cash or CDS ILFC 2012s Directional Low interest rate sensitivity Brazil 2014s 0% - 50% Special situations Shorts expressed via CDS CDX.IG14 Shorts Single name or index FDC 5yr CDS Directional Thematic basket trades Basket Consumer/Retail - 50% - 0% Typically used to hedge longs Cap Structure / Identifiable catalysts TXU Bank Loans Directional / Industry consolidations CNH 2013s Event Driven Long & Short positions Hasbro 5yr CDS (Short) Relative Value Special situations 0% - 50% Special situations Goldman/Morgan Stanley Pairs Trades Identifiable catalysts Prudential/MetLife Relative Value Industry consolidations GR Capital/Capital One 0% - 50% Intermediate holding period Mispriced security Anadarko 7yr Bonds Opportunistic Liquidity imbalance Prudential 30yr bonds Short Term Mispricing Typically hedged w / futures WellPoint Inc. 10yr bonds 0% - 50% Very short holding period *The examples are based on the holdings of the investment universe of Logan Circle. The Securities were not based on performance and should not be construed as recommendations or endorsements. These examples may 12 or may not have been included in a composite at any given point in time. Ranges are subject to change. 0523-NLD-3/15/2011
  • 13. How Does a Fixed Income Alternative fit in a Portfolio? Alpha / Beta Separation Non-Correlated Alternative Fixed Income Fixed Income Beta or BANIX BANIX Alternative Alternative Investments Investments The information in this presentation is for informational purposes only and is not intended as an offer to buy or sell, or amount to a solicitation to buy or sell, any securities referred to herein. Important fee, performance and disclaimer information is contained towards the end of this presentation and should be read in conjunction with the information 13 presented above. 0523-NLD-3/15/2011
  • 14. Alpha / Beta SeparationBy going away from traditional actively managed product where Beta and Alpha areblurred together you gain control of your asset allocation. Giving you the choice ofeither minimizing costs or reducing beta. Actively Managed Isolated Alpha Isolated Alpha Bond Portfolio (Cost Reduction) (Beta Reduction) 0.58% total cost 0.30% Avg cost 0.58% Avg cost 10% Cost of Alpha 10% Cost of Alpha 1.95% Cost of Alpha Alpha 4.70% BANIX 25% 1.95% BANIX 90% BND 90% BND 0.12% BND Beta Exp Ratio 0.12% 75% Beta 0.12% Exp Ratio Exp Ratio Beta BND: Vanguard Total Bond Market ETF. The portfolios are hypothetical examples created by Bandon and are provided for illustration purposes only. No assumptions should be made that the allocations above will be profitable or provide alpha. Allocations and their 14 percentages should change based on an individual investors needs. 0523-NLD-3/15/2011
  • 15. Why Bandon Isolated Alpha Fixed Income? Targets alternative return characteristics in a Mutual Fund format Secular decline in U.S. interest rates may be over Price changes can overwhelm passive coupon return with yields near historic lows Potential for absolute returns regardless of interest rate environment Seeks non-correlation to traditional and alternative markets Seeks clean isolated alpha within both of the principal fixed income risk factors The information in this presentation is for informational purposes only and is not intended as an offer to buy or sell, or amount to a solicitation to buy or sell, any securities referred to herein. Important fee, performance and disclaimer information is contained towards the end of this presentation and should be read in conjunction with the information 15 presented above. 0523-NLD-3/15/2011
  • 16. Operational and Administrative Considerations Available Custodians Pershing, Fidelity/NFS, Fund Custodian & Trust Company of America. ---- Pending: TD Ameritrade Investor Class Ticker BANIX Minimum Investment $10,000.00 Management Fees 1.75% 12-b1 0.00% Waivable front end load 5.75% Expense Cap 1.95% Tax Reporting 1099 A, C & R share classes available upon capital commitments For more information please contact Mike Miller at 503-477-8100 or mike@bandonalts.com www.bandonalts.com 16 0523-NLD-3/15/2011
  • 17. Portfolio Manager BiosWilliam F. Woodruff - Mr. Woodruff is Bandon’s Founder, Managing Principal and Chief Investment Officer. He is responsible for all investmentmanagement activity at Bandon. Prior to founding Bandon in 2007, Mr. Woodruff spent four years with Beacon Investment Group and its subsidiaries,ultimately serving as a portfolio manager for the firm’s various hedge funds and alternative investment products. In that role, Mr. Woodruff evaluated andinvested in a wide variety of alternative strategies. His primary focus was developing ways to democratize alternative strategies. These efforts lead to thecreation of the trading approach for the DIRS Program that is now a flagship Bandon product. Mr. Woodruff began his career working for Portland, Oregonbased Philips & Co. Securities in 2002. He holds a B.B.A. in Finance from the University of Portland.Andrew J. Kronschnabel, CFA - Mr. Kronschnabel is a senior portfolio manager at Logan Circle Partners. As a member of the portfolio management teamhe is responsible for the firms absolute return strategies with a specialization in high grade. Prior to joining Logan Circle Partners, he was a member of theportfolio management team at Delaware Investments where he was responsible for Core-based and high grade products from 2000 to 2007. Mr.Kronschnabel received a Bachelor of Science degree in international economics and politics from Colorado College.Joseph A. Baggett, CFA - Mr. Baggett is a founder and Senior Portfolio Manager for Dix Hills Partners, LLC and its affiliate management company, Dix HillsAssociates, LLC. Until his departure in January 2003, Mr. Baggett served as Executive Director, Quantitative Investments Group, UBS Global AssetManagement in New York. At UBS, Joe was senior portfolio manager/research analyst for the quantitatively driven investment strategy group that managedover $6 billion in assets. Joe served as Model Developer and Portfolio Manager for Quantitative Fixed Income Strategies and Quantitative Allocation, LLC(“Q.A.”). Additionally, Joe was also a member of the Portfolio Management Team for UBS Tactical Allocation Fund, a $3 billion, fully flexible mutual fund thatallocated between stocks (S&P 500), bonds (intermediate-term Treasury notes) and cash on the basis of a quantitatively-driven market valuation model. Hehas extensive experience in other traditional quantitative disciplines as well, including portfolio optimization, indexation, stock selection models, performanceattribution/analysis, risk management and securities and derivatives trading. At UBS, he was also actively involved in marketing these products to institutionaland individual prospects. Prior to UBS Asset Management, Joe worked as an Economist at PaineWebber, Inc., part of a three-person unit that produced thefirms U.S. economic growth, inflation and interest rate outlooks. Prior to PaineWebber, Joe worked at the Federal Reserve Bank of New York as an AssistantEconomist, Domestic Financial Markets Division. Mr. Baggett holds a B.A. in Economics from Columbia University (Summa Cum Laude, Phi Beta Kappa). Healso attended the University of Chicago Graduate School of Business, completing the first year of a two year M.B.A. program with a 4.0 G.P.A. The information in this presentation is for informational purposes only and is not intended as an offer to buy or sell, or amount to a solicitation to buy or sell, any securities referred to herein. Important fee, performance and disclaimer information is contained towards the end of this presentation and should be read in conjunction with the information 17 presented above. 0523-NLD-3/15/2011
  • 18. Important DisclosuresThe material contained in this document is for general information purposes only and is based oninformation that is considered to be reliable, but Bandon makes this information available on an “as is”basis and make no warranties, express or implied regarding the accuracy of the information containedherein, for any particular purpose. Bandon and its independent providers are not liable for anyinformation errors, incompleteness, or delays, or for any actions taken in reliance on informationcontained herein. Nothing contained in this material is intended to constitute legal, tax, securities,financial or investment advice, nor an opinion regarding the appropriateness of any investment. Theinformation herein should not be acted upon without obtaining specific legal, tax or investment advicefrom a licensed professional.Bandon Capital Management, LLC, Dix Hills Partners, LLC and Logan Circle Partners, LLC are notaffiliated with Northern Lights Distributors, LLCInvestors should carefully consider the investment objectives, risks, charges and expenses ofthe Bandon Isolated Alpha Fixed Income Fund. This and other important information about theFund is contained in the prospectus, which can be obtained at www.bandonfunds.com or bycalling 503-477-8100. The prospectus should be read carefully before investing. The BandonIsolated Alpha Fixed Income Fund is distributed by Northern Lights Distributors, LLC memberFINRA. The information in this presentation is for informational purposes only and is not intended as an offer to buy or sell, or amount to a solicitation to buy or sell, any securities referred to herein. Important fee, performance and disclaimer information is contained towards the end of this presentation and should be read in conjunction with the information 18 presented above. 0523-NLD-3/15/2011
  • 19. Important DisclosuresMutual Funds involve risk including the possible loss of principal. Closed-end funds are subject toinvestment advisory and other expenses, which will be indirectly paid by the Fund. There is a risk thatissuers and counterparties will not make payments on securities and other investments held by theFund, resulting in losses to the Fund. The Funds use of derivative instruments involves risks differentfrom, or possibly greater than, the risks associated with investing directly in securities and othertraditional investments. Emerging market countries may have relatively unstable governments, weakereconomies, and less-developed legal systems with fewer security holder rights. The value of the Fundsinvestments in fixed income securities and derivatives will fluctuate with changes in interest rates.Currency trading risks include market risk, credit risk and country risk. Investments in foreign securitiescould subject the Fund to greater risks including, currency fluctuation, economic conditions, anddifferent governmental and accounting standards. The Fund may invest in high yield securities, alsoknown as "junk bonds." High yield securities provide greater income and opportunity for gain, but entailgreater risk of loss of principal. Using derivatives to increase the Funds combined long and shortexposure creates leverage, which can magnify the Funds potential for gain or loss. The default rate onunderlying mortgage loans or asset loans may be higher than anticipated, potentially reducingpayments to the Fund. As a non-diversified fund, the Fund may invest more than 5% of its total assetsin the securities of one or more issuers. The Fund will incur a loss as a result of a short position if theprice of the short position instrument increases in value between the date of the short position sale andthe date on which the Fund purchases an offsetting position. The information in this presentation is for informational purposes only and is not intended as an offer to buy or sell, or amount to a solicitation to buy or sell, any securities referred to herein. Important fee, performance and disclaimer information is contained towards the end of this presentation and should be read in conjunction with the information 19 presented above. 0523-NLD-3/15/2011
  • 20. DefinitionsS&P refers to the Standard and Poors 500 Index which is a capitalization-weighted index of 500 stocks. The index is designed tomeasure performance of the broad domestic equity market. This index is used for comparative purposes only.Barclays Agg, BarCap refers to the Barclays Aggregate US Bond Index. The index is designed to measure performance of thebroad based investment-grade, fixed rate, taxable bond market. This index is used for comparative purposes only.IEF is an Exchange Traded Fund that seeks results that correspond generally to the price and yield performance, before fees andexpenses, of the Barclays Capital U.S. 7-10 Year Treasury Bond Index.TLT is an Exchange Traded Fund that seeks results that correspond generally to the price and yield performance, before feesand expenses, of the Barclays Capital U.S. 20+ Year Treasury Bond Index.Alpha is a risk-adjusted measure of the active return on an investment. It is a measure of the manager’s contribution toperformance. A positive annual Alpha indicates the portfolio outperformed the market on a risk-adjusted basis, and a negativeAlpha indicates the portfolio underperformed in relation to the market.Beta describes how the expected return of a stock or portfolio is correlated to the return of the financial market as a whole. ABeta greater than 1.00 indicates the portfolio is more volatile than the market, and a Beta less than 1.00 indicates the portfolio isless volatile than the market.Duration is a measure of a bonds price sensitivity to yield. It can also be described as the percentage change in price for aparallel shift in yield. The information in this presentation is for informational purposes only and is not intended as an offer to buy or sell, or amount to a solicitation to buy or sell, any securities referred to herein. Important fee, performance and disclaimer information is contained towards the end of this presentation and should be read in conjunction with the information 20 presented above. 0523-NLD-3/15/2011
  • 21. Broker Dealer AvailabilityAbshier, Webb, Donnelly & Baker First Financial Equity McNally Financial Services Corp. Stockcross Financial Services Inc. MesirowAllstate Financial Services First Heartland Capital Sunbelt Securities Mid Atlantic Corp.American Portfolios First Republic Securities Synergy Investment Group LLC Minnesota Valley InvestmentsAmeritas First Southwest Company The Investment Center Inc. Newbridge Securities Corp.Avisen Securities Inc. Foothil Securities Trade PMR Inc. NFP (National Financial Partners)Biondo Asset Management Founders Financial Securities LLC Trade Station Northeast Securities IncCalton & Associates Freedom Investors Corp. Trust Company of America NRP FinancialCambridge Legacy Securities Fulcrum Securities United Equity Securities LLC Options XpressCapital Analysts Girard Securities VSR Financial Services Inc. Pacific West SecuritiesCapital Guardian LLC Gunn Allen Financial Wedbush Securities Inc Petersen Investments Inc.Capital Investment Brokerage HBW Securities Western International Securties Inc. Regional InvestmentCapital Investment Group Herbert J Sims@ Company Inc. Westport Resouces Investment Services Robert W. Baird and Co. Inc.Citi Securities Corporation Hewitt Financial Services Wiley Bros. - Aintree Capital LLC Sammons SecuritiesCommonwealth Investment Centers of America Inc William Blair and Company SCF Securities Inc.Crowell and Weedon and Company Investors capital Corp Wilmington Trust Company ScottradeDA Davidson and Company J.J.B. Hilliard W.L. Lyons Inc. Winslow, Evans & Crocker Inc. Shareholders Sevices Group IncDelta Equity Services Corporation J.K.R. & Company Workman Securities Corp Sigma Financil CorpDewaay Finacial Network JK Financial Services Inc World Equity Group Southwest SecuritiesEDI Financial Inc. Lincoln Fiancial Advisors Corp Wunderlich Securities Spencer Clarke LLCEnsemble Fiancial Services Lincoln Financial Securties Corp Stephens Inc.FBT Investments Loring Ward Securities Inc. Sterne, Agee & Leech Inc.Fintegra LLC. Lowell & Company The information in this presentation is for informational purposes only and is not intended as an offer to buy or sell, or amount to a solicitation to buy or sell, any securities referred to herein. Important fee, performance and disclaimer information is contained towards the end of this presentation and should be read in conjunction with the information 21 presented above. 0523-NLD-3/15/2011
  • 22. Appendix 1: Logan Circle - Investment Team High Grade EM / Non-Dollar Structured Product High Yield PORTFOLIO & RISK Andy Kronschnabel, CFA Scott Moses, CFA Al Leone, CFA MANAGEMENT Tim Rabe, CFA Stephen Mullin, CFA Kevin Hendrickson, CFA Jude Driscoll, CIO Risk Measurement and Analytics Paul Polichino High Grade High Yield Structured Product TRADING / Matt Buchanan Tom McClintic EM / Non-Dollar Joseph Watkins TECHNICAL ANALYSIS Dana Cottrell Spencer Tullo Todd Howard, CFA John Palphreyman, CFA Lou Petriello Kyle Gallagher Jason Iannuzzi Credit Research Team FUNDAMENTAL Michael Borowske Michael Frey Matt Higgins, CFA RESEACH Brian Funk, CFA, Lee Rubenstein Director Ian Bowman Ximena Galvez Chris Moon, CFA Greg Zappin, CFA Zach Bauer, CFA Evan Driedger, CFA Brent Garrels Michael Recchiuti The information in this presentation is for informational purposes only and is not intended as an offer to buy or sell, or amount to a solicitation to buy or sell, any securities referred to herein. Important fee, performance and disclaimer information is contained towards the end of this presentation and should be read in conjunction with the information 22 presented above. 0523-NLD-3/15/2011
  • 23. Appendix 2: Logan Circle – Investment Process Idea Generation• Research • Portfolio Management 1 • Trading Risk Management/ Research Portfolio Review Proprietary Research 5 2 • Examination of critical industry trends.• Forward Looking Risk Identification • Identification of potential relative value opportunities.• Position Sizing • 5 Senior Analysts/Group Leaders closely monitoring• Portfolio Level Assessments 20-25 companies. • Gross / Net Exposure • Industry Specialists Monitoring 50-75 Companies • Strategy Allocation %’s Portfolio Trading Management Sell Discipline 4 3 Portfolio Construction • Research identifies negative change in fundamentals • Directional (Long & Short) • Securities reach price targets or stop losses • Event Driven / Cap Structure • Better opportunities arise (relative value) • Pairs Trades • Opportunistic The information in this presentation is for informational purposes only and is not intended as an offer to buy or sell, or amount to a solicitation to buy or sell, any securities referred to herein. Important fee, performance and disclaimer information is contained towards the end of this presentation and should be read in conjunction with the information 23 presented above.