GDS Investments provides information about its Best Ideas Conference in January 2016. It discusses its investment approach, focusing on concentrated, long-term positions. Performance has been 13.3% annually since 2008. The document also includes an analysis of Harley-Davidson, discussing the company's history, businesses, competitive strengths, recent challenges, and long-term strategies to grow internationally and in the US.

1. PO Box 5071
West Chester, PA 19380
610-436-1120
glenn@gdsinvestments.com
www.gdsinvestments.com
Best Ideas Conference 2016
January 12-13, 2016

2. About GDS Investments
PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• Long only / no leverage
• Concentrated portfolios
(15-20 positions)
• Separately managed accounts with third-party custody
(Schwab and TD Ameritrade)
• Ability to customize individual client services
(tax considerations, investment horizon, risk tolerance)
• 13.3%/year since inception (12/2008) through 12/31/2015
• All-cap value with emphasis on companies undergoing significant change
(management, business composition, balance sheet, cyclical pressure)
• “Success carries within itself the seeds of failure, and failure the seeds of
success.” The Most Important Thing by Howard Marks

3. Framework for Success
PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• Delayed gratification. The stock market isn’t designed to reward your
particular strategy year-in, year-out.
• Don’t let volatility guide your decision-making; let the facts.
• Establish a 24-30 month holding period before determining success or failure.
• Become a better stock “owner.”
• Avoid Internet “addiction” (e.g. watching daily price changes).
• Get out of your own way and don’t create false expectations around short-
term results.
• Understand and embrace 2015: momentum was rewarded, value was
penalized.
• 50 best stocks from 2014 went up 1.4% in 2015 (as of 12.28.15)
• 50 worst stocks from 2014 went down 25.9% (as of 12.28.15)
• Source: Bespoke Investment Group

4. Harley-Davidson, Inc. (NYSE: HOG)
PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• Price: $45.39 (as of 1.1.2016)
• Shares Outstanding: 206M
• Market Cap: $9.2B
• 52-week Range: $45.14 - $67.55
• Revenues: $6.2B YE 2014
• Cash & Marketable Securities at 9/27/15 - $1.42B
• Operating Cash Flow YTD - $1.02B
• Capital Spending YTD - $139.1M

5. Company History
PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• 1903: Arthur and Walter Davidson found Harley-Davidson.
• 1918: Becomes the world’s largest motorcycle company by producing 28,000 units.
• 1950’s: Fends off European competition in the post-WWII decade by introducing larger,
more power motorcycles to the market; sees market share increase to 60% by the middle
of the decade.
• 1960’s-1970’s: U.S. market goes through dramatic change as Japanese manufacturers
(Honda, Yamaha, Suzuki and Kawasaki) enter the market with a focus on smaller, less-
expensive alternatives.
• 1965: Harley-Davidson sells shares to the public after 60 years of private ownership.
Shortly thereafter (1969), company is acquired by AMF, an industrial conglomerate
looking to diversify into leisure products.
• 1965-1981: AMF presides over several decades of mismanagement as product reliability
and brand reputation declined considerably over this period. Market share declines to
23% by 1980.

6. Company History (continued)
PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• 1981: CEO Vaughn Beals leads a leveraged management buyout of Harley-Davidson.
• Harley-Davidson Owners Group (HOG) established in 1983. Worldwide membership
now over 1 million. HOG organizes rides, training courses, social events, etc.
• 1986: Harley Davidson, Inc. once-again becomes publicly-held.

7. Harley-Davidson, Inc.
PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
1. Motorcycles & Related Products ($5.5B in revenues / 80% of total HOG, Inc. operating
income). Pages 3 – 9, 28 of 10-K
• Motorcycles (79% of segment revenues)
• Parts & Accessories (16% of segment revenues)
• Other (Licensing, General Merchandise, Harley-Davidson Museum, etc.)
• International (32% of overall segment sales)
• Other Assets:
• 3.6 million square feet of owned properties (Corporate Office, Manufacturing,
etc.). Page 19 (Item 2) of 10-K
• Harley Owners Group (HOG): organizes rides, events, etc. for motorcycle
enthusiasts. It has over 1 million members worldwide.
• Harley-Davidson Riding Academy: trained over 400k riders since inception.
• Distribution: sells products to over 1,600 independently-owned dealerships
worldwide (790 in U.S.), of which the majority sell Harley-Davidson
motorcycles exclusively.
2. Financial Services (HDFS) Page 10, 30 and 66-68 (note 5) of 10-K
• Wholesale: financing for dealerships and distributors (inventory, parts, accessories,
floor plan); 100% dealer participation.
• Retail: consumer financing for motorcycle purchases; 57% consumer participation.
• Other (Insurance, Licensing)

8. Competitive Strengths
PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• Iconic / Lifestyle brand
• Stable and dominant market share
• Brand reinforced pre- and post-ownership:
• Harley-Davidson Owners Group (HOG)
• Riding Academy
• Fully integrated offering (financing, parts & accessories, merchandise)
• Consistently high ROE/ROIC metrics
• Pricing power
• Distribution
• 100+ year operating history with core product consistency

9. PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com

10. PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com

11. PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com

12. Long-Term Operating Metrics
PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
U.S. and Canada 2014 2009 2004 1999 1994
HOG Market Share 53.3% 49.8% 49.2% 49.0% 46.4%
Europe Region
HOG Market Share 12.0% 10.3% 7.3% 6.5% 7.1%
Motorcycle Shipments (Units)
Domestic 173,994 144,464 260,607 135,614 66,498
International 96,732 78,559 56,682 41,573 29,313
270,726 223,023 317,289 177,187 95,811
Revenue (In Thousands)
Motorcycle & Related Products 5,567,681 4,287,130 5,015,190 2,452,939 1,158,887
Operating Income (In Thousands)
Motorcycle & Related Products 1,003,147 314,055 1,189,519 415,859 153,562
HD Financial Services 277,836 (117,969) 188,600 27,685 -
1,280,983 196,086 1,378,119 443,544 153,562
Shareholder's Equity (In Thousands)
Treasury Stock (6,303,510) (4,672,720) (1,150,372) (187,992) (1,581)
Total Book Value 2,909,286 2,108,118 3,218,471 1,161,080 433,232

13. U.S.MarketShare
PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com

14. U.S. Market Share
PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com

15. Recent Problems
PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• U.S. Harley-Davidson: retail sales down 1.3% YTD.
• Competition (April 27, 2015 NYSE Analyst Meeting, Slide 9)
• Limited availability of certain Cruiser, Touring and Street models
• International Harley-Davidson: retail sales down 1.5% YTD.
• Asia-Pacific and Mexico strong / Brazil and Europe weak
• Expect to grow international at a faster rate than U.S. over time
• Stiff competition from European and Japanese competitors. Strong dollar hurting
domestically produced goods relative to imports, and exports become more expensive
in local (foreign) currencies. WSJ Dollar Index up 25% over the last 18 months.
• Polaris (Indian and Victory motorcycles) and other manufactures engaged in heaving
discounting at expense of gross margins.

16. Gross Margin Analysis (Motorcycle Segment)
PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
YTD
2014 Gross Margin $ 1,710.90
% of revenue 37.70%
- Volume $ (46.80)
- Pricing $ 61.60
- Mix $ (8.80)
- Currency $ (105.40)
- Raw Materials $ 12.60
- Manufacturing $ 7.40
2015 Gross Margin $ 1,631.50
% of revenue 37.90%

17. Recent Actions (Operational)
PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• Spend an incremental $70M on customer-facing marketing (increase of 65%
y/y) and new product development (increase of 35% y/y) in 2016. Money to
come from SG&A expense savings.
• Increase product and brand awareness.
• Grow new ridership in the U.S.
• Riding Academy: 220k riders trained worldwide since 2010. Goal is to double number of
riders trained annually to 100k by 2020.
• Increase and enhance brand access.
• Grow international dealer network, expand e-commerce and new retail formats for urban
formats. HOG intends to open 150 to 200 new dealerships internationally over the next five
years (20% to 25% increase).
• Accelerate the cadence and impact of new products.
• Refrain from “Race to the Bottom” and continue to think long-term.

18. Recent Actions (Financial)
PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• June 2015 Recapitalization Plan:
• Incurred $750M of long-term debt in Q3
• $450M / 10-year notes @ 3.5%
• $300M / 30-year notes @ 4.625%
• Debt proceeds to be used to repurchase shares during 2H 2015: “This decision was
driven by what we believe to be a favorable credit environment and our current share
price, which we believe is inordinately influenced by near-term headwinds, including
currency exchange rates.” Q2 2015 Conference Call, July 2015
• Share repurchase history:
• 2010: $0 (stock price high / low)
• 2011: $218M
• 2012: $300M
• 2013: $456M
• 2014: $604M
• 2015(E): $1.5B
• Dividends Per Share - $.31/quarter. 29% CAGR over the last five years.

19. Long-Term Strategy
PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• Lead in every market.
• Grow U.S. retail sales and international retail sales at a faster rate.
• Grow international dealer network by 150 to 200 new dealerships by 2020.
• Grow the sport of motorcycling in the U.S.
• Grow number of U.S. core customers and grow U.S. outreach customers at a faster rate.
• Grow revenue and grow earnings faster than revenue through 2020.
• Outperform the S&P 500.
Oct. 20, 2015 Conference Call Slide Presentation

20. Valuation Considerations
PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• More art than science.
• HOG expected to earn $4-$4.50/share in 2016. Could earn > $6/share within
3 years.
• Current PE too low considering the following:
• ROE history
• ROE improvement through combination of higher earnings,
dividends and share repurchases.
• Quality of brand
• Dividends/share up 12-fold since 2000
• Earnings/share up 3.5-fold since 2000
• Very little non-financial debt
• Free cash flow positive throughout economic cycle.
• Ability to raise prices
• Single industry + long operating history
• Other “lifestyle” brands trading at much higher multiples.

21. Investment Return Drivers
PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• Execute on near-term investments, create greater value in the future.
• International expansion
• New products with better cadence
• Grow future per-share earnings through combination of expanding
numerator and shrinking the denominator.
• Multiple expansion. Cycle of declining earnings estimates and multiple
contraction coming to an end.
• “Limited visibility” with “plenty of uncertainty” and “dead money in the
near term” generally rewards investors with a longer-term horizon.
• Dividends.

22. Market Observations
PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• Possible bubble in longer-dated Treasuries.
• New opportunities in high yield market related to distressed industries.
• Broadly speaking, equity markets are fairly valued.
• Lots to do in energy, industrials, materials and “broken” growth
companies (e.g. WFM).
• Bubble in indexing? Value in value?

23. Books
PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
1. The Outsiders, by William N. Thorndike, Jr.
2. Investing and the Irrational Mind, by Robert Koppel
3. The Most Important Thing, by Howard Marks
4. The Education of a Value Investor, by Guy Spier
5. The Ultimate Question, by Fred Reichheld
6. The Manual of Ideas, by John Mihaljevic
7. Capital Account: A Money Manager’s Reports on a Turbulent
Decade 1993-2002, by Marathon Asset Management
8. You Can Be a Stock Market Genius, by Joel Greenblatt
9. The Dhandho Investor, by Mohnish Pabrai
10.All Warren Buffett books by Cunningham, Lowenstein, etc.

24. Books (continued)
PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
11. Charlie Munger: The Complete Investor, by Tren Griffin
12. The Investor’s Anthology, by Charles Ellis
13. One Up On Wall Street, by Peter Lynch
14. The Tao Jones Averages, by Bennett Goodspeed
15. Value Investing: From Graham to Buffett and Beyond, by
Greenwald, Kahn, Sonkin and van Biema.
16. Zen and the Art of Poker, by Larry Phillips
17. “The Little Book” series
18. All books by Michael Lewis

25. Questions?
PO Box 5071 West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com