Corporate Overview - Ermitage Group

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Company overview │ Investment approach │ Risk management & ODD │ Client solutions │ Summary
Ermitage introduction
1st Quarter 2010
These presentation materials and the information contained herein, and any oral or other
written information disclosed or provided is strictly confidential and may not be reproduced
or redistributed, in whole or in part, nor may its contents be disclosed to any other person
under any circumstances without the express written consent of Ermitage Asset
Management Jersey Limited.
An investment in the Funds is speculative and involve a high degree of risk. The Funds
may, through their investments, employ certain trading techniques that may include short
selling, options, and the use of leverage which may increase the risk of investment loss.
As a result, performance may be volatile and an investor may lose some or all of his or her
investment. Furthermore, the ability to withdraw investments or redeem shares or to
transfer such shares or interests will be limited. It is anticipated that there will not be a
secondary market for interests or shares in the Funds nor is any expected to develop.
Fees and expenses may offset trading profits. Please refer to the Confidential Private
Offering Memorandum when available for all risks associated with investments in the
Funds.

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Ermitage profile
Company overview │ Investment approach │ Risk management & ODD │ Client solutions │ Summary
Founded 1975, $1.8bn AUM
Alternative pioneer – 1st HF investment 1984
Owned by Caledonia Investments Plc
46 staff – Jersey, London, New York
FoHF’s, Single Funds, Wealth Management
Macro-driven portfolios, integrating top-down view
with bottom-up selection
Manage CalPERS customised portfolio
Edge: Intelligent Portfolio Design

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Ermitage – key milestones
Company overview │ Investment approach │ Risk management & ODD │ Client solutions │ Summary
Ermitage Ltd MBO completed:
Ermitage founded 1st FoHF launched
1975 Management/Caledonia Investments Plc
1997
2006
1984 2001 2007
1st HF Investment Acquired by Liberty OPTICS Portfolio
Group System launched

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Specialist teams, aided by innovative systems
Company overview │ Investment approach │ Risk management & ODD │ Client solutions │ Summary

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All FoHF’s are not created equal
Company overview │ Investment approach │ Risk management & ODD │ Client solutions │ Summary
Designed to deliver specific objectives
Built to perform in multiple scenarios
Obsessed with ‘market wizards’
Each manager given portfolio role
Bundle top managers together
Managed for ‘real world risk’
High market /event correlation
Low diversification, downside protection

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Ermitage – investment philosophy
Company overview │ Investment approach │ Risk management & ODD │ Client solutions │ Summary
Markets are complex & dynamic
…don’t fit Efficient Market model
Periodic, fundamental changes Not uncorrelated ‘asset class’
Forecasting near term impact of Dynamic, adaptive strategies
market changes is vital Portfolios need clear objectives
Effected by market environments
Selecting Q1 managers no guarantee
Knowing behaviour pattern key of reliable future returns
Selected managers given specific role
Aim: robust ‘all weather’ portfolio

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Investment process
Company overview │ Investment approach │ Risk management & ODD │ Client solutions │ Summary
Manager Selection Portfolio Construction Active Management
Identify definable edge Built for varied market scenarios Sub-strategy allocations
Classification by style / focus Focus on style diversification Manager vs. forecast returns
Forecasts for different scenarios Every manager given specific role Portfolio re-tested vs. scenarios

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Hedge fund research – LEWIS
Company overview │ Investment approach │ Risk management & ODD │ Client solutions │ Summary
Qualitative evaluation by strategy specialists
LEWIS Qualitative & Quantitative Database
All research stored in proprietary LEWIS system:
– Statistical analysis on 4500+ funds
– Multiple data feeds (Altvest, Tass, Eurohedge)
– Manager ‘rolodex’, documents, meeting notes
– Operational Due Diligence reports
– Alpha / beta return, performance, risk,
correlation analysis
– Benchmark / peer group regression

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Portfolio construction – OPTICS
Company overview │ Investment approach │ Risk management & ODD │ Client solutions │ Summary
Ermitage’s proprietary system
Transforms forecasts into effective
portfolios
Glass box process helps evaluate:
– Capital allocation (by strategy /
manager)
– Managers’ roles in portfolio
– Portfolio behaviour in different
scenarios
– Performance versus objectives

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Portfolio construction – guiding principals
Company overview │ Investment approach │ Risk management & ODD │ Client solutions │ Summary
Be precise about portfolio objectives
Be specific about beliefs
Don’t extrapolate the past into the future – the world does change
Create a clear link between beliefs, objectives, and actions
Don’t overlook (or downplay) the ‘what-if-we’re-wrong’ scenarios
Examine the key positions embedded in each portfolio
Confront reality directly – don't accept what conflicts with common sense
Use models as guides and recognise their limitations

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Managing ‘investment risk’
Company overview │ Investment approach │ Risk management & ODD │ Client solutions │ Summary
Qualitative assessment by specialist team Style diversification (not just by ‘name’)
Manager’s ability to perform to potential Position size limits
5 independent references compulsory Liquidity risk analysis
P&L analysis – are returns repeatable? Factor risk analysis (e.g. beta, market cap)
Multiple scenario forecasting Flag report / IMC Exception Report
Continuous scenario testing

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Managing ‘operational risk’
Company overview │ Investment approach │ Risk management & ODD │ Client solutions │ Summary
Specialist Ermitage team, power of veto
150+ questions, on-site interviews
Service provider references
Backtrack reports - key principals
COO independent reference
Monthly surveillance
Quarterly independent transparency
Annual accounts review

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Fund solutions – track record of innovation
Company overview │ Investment approach │ Risk management & ODD │ Client solutions │ Summary

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Customised portfolios – harnessing HF talent
Company overview │ Investment approach │ Risk management & ODD │ Client solutions │ Summary
Risk/return specified by client
Uses robust, transparent process
and advanced systems
Investment goals driven by Designed for multiple scenarios Strategy specialists – niche areas
liabilities
Opportunities dictated by market
Conservative risk appetite
Environment change leads to
Require transparency and risk/return volatility
understanding of portfolio

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Customised portfolios – key benefits
Company overview │ Investment approach │ Risk management & ODD │ Client solutions │ Summary
Control … specify strategies, liquidity, risk/return targets, etc
Synergy … with client objectives & existing investments
Performance … increased probability of consistent risk adjusted returns
Flexibility … adaptive to changing environments / circumstances
Transparency … manager selection, due diligence, asset allocation
Service … access to seniors, partnership approach

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Ermitage – value adding expertise, processes, tools
Company overview │ Investment approach │ Risk management & ODD │ Client solutions │ Summary
Established hedge fund specialist
Track record of risk-adjusted performance*
Leading edge systems (OPTICS, LEWIS)
Intelligent portfolio design approach
Innovative customised portfolio service
Proactive, partnership culture
*6 InvestHedge 2009 Award nominations; Winner of PAM and FT/Investor Chronicle 2009 Awards

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Ermitage Asset Management Jersey Ltd
47 The Esplanade, St Helier, Jersey
Channel Islands JE1 9LB
Company overview │ Investment approach │ Risk management & ODD │ Client solutions │ Summary Tel: +44 (0) 1534 615500
Fax: +44 (0) 1534 615520
Ermitage UK Ltd
25 Savile Row, London, W1S 2ES
Tel: +44 (0) 207 333 0900
Fax: +44 (0) 207 333 0443
Ermitage Americas Inc
Suite 917, 9th Floor, 330 Madison Avenue
New York, NY 10017
Tel: +1 646 495 5665
info@ermitagegroup.com
www. ermitagegroup.com
DISCLAIMER Ermitage Asset Management Jersey Limited ("EAMJL") is registered with the Jersey Financial Services Commission for the conduct of investment business and fund services business and with the U.S.
Securities and Exchange Commission as an investment adviser. Information contained in this publication, where not externally sourced, has been provided by EAMJL. EAMJL has issued this publication which is for
private circulation only, is published solely for information purposes and does not constitute an offer to sell or an invitation to buy any of the securities or funds mentioned herein or any other financial instruments.
Subscriptions will only be received and units or shares issued on the basis of the current offering document (s) for the fund and prospective investors should carefully consider the risk warnings and disclosures for the
fund set out therein. Investors should also consider any other factors that may be relevant to their circumstances. The investor must take an independent assessment of any legal, credit, tax, regulatory and accounting
issues and determine with his or her professional advisors any suitability or appropriateness implications of any transaction contemplated or referred herein. Units or shares in the fund are not for sale in any
jurisdiction in which such sale would be prohibited. Without limiting the generality of the previous statement, with particular reference to the UK, this document may only be distributed to and acted upon by those
persons in the UK pursuant to the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 as amended. None of the funds described herein are regulated under the Financial Services and Markets Act
2000, and for such funds protections provided by the UK regulatory system do not apply, nor are the benefits available under the Financial Services Compensation Scheme. When issued in the UK, this publication is
issued by Ermitage UK Limited, which is authorised by the Financial Services Authority. The Fund will not register as an investment company under the U.S Investment Company Act of 1940, as amended (the “Company
Act”) and, accordingly, the provisions of the Company Act will not be applicable to the Fund. Whilst reasonable efforts have been made to ensure the accuracy of the information herein, which may be based on
proforma, estimated or unaudited figures, the Ermitage Group accepts no responsibility for its accuracy, nor the reasonableness of the conclusions based upon such information. The contents of this document are
believed to be accurate at the date hereof but are subject to change without prior notification. Past performance is not a guarantee of future performance. The price of units or shares can go down as well as up and
may be affected by changes in rates of exchange. An investor may not receive back the amount invested.