QVCA Data Presentation.

1. West Chester, PA 19380
610-436-1120
glenn@gdsinvestments.com
www.gdsinvestments.com
Best Ideas Conference 2017
January 10-11, 2016

2. About GDS Investments
West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• Long only / no leverage
• Concentrated portfolios (15-20 positions)
• Low turnover, patient approach to portfolio management
• Separately managed accounts with third-party custody
(Schwab and TD Ameritrade)
• 13.93% annualized (2009 - 2016)
• All-cap value with emphasis on companies undergoing significant change
(management, business composition, balance sheet, cyclical pressure)
• Time arbitrage: long-term orientation in a short-term world
• “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
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; be guided by facts.
• Establish a 24-30 month holding period, then determine 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.
• Study the greats, including those outside of the money management
profession (e.g. Bill Belichick, Bill James, Sam Hinkie).

4. QVC (NASDAQ: QVCA)
West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• Price: $20 (as of 1.4.2017)
• Shares Outstanding: 467M
• Market Cap: $9.5B
• 52-week Range: $17.88 - $27.58
• LTM Revenues: $10.35B
• LTM OIBDA: $2B
• Liquidity: $1.75B ($680M in revolver capacity, $348M in cash, and $718M in
HSNi).
• Tracking stock: forces market to value specific assets individually.

5. Business Units
West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
1. QVC US
• $6.2B in Revenues / 60% of total / 51% e-commerce / 1% growth
• 8.1M Customers
• $1,476M in OIBDA / -1% growth
• 25 average orders / customer / year
2. QVC Intl. (Germany, Italy, China, France, U.K., Japan)
• $2.6B in Revenues / 25% of total / 33% e-commerce / 3% growth
• 4.6M Customers
• $434M in OIBDA
• 23 average orders / customer / year
3. Zulily (acquired October 2015)
• $1.5B in Revenues / 15% of total / 100% e-commerce / 16% growth
• 5M Customers
• $110M in OIBDA / 105% growth
• 6 average orders / customer / year
4. 38% ownership in HSN (NASDAQ: HNSI): $720M

6. Capital Allocation: zulily
West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• zulily $2.4B acquisition ($1.9B net of cash): closed October 1, 2015
• QVC leader among 35-64 year old women / zulily leader among 25-45 year old
women.
• Only 6% of active zulily customers have shopped with QVC over the past year.
• Few of zulily’s 10,000 vendors currently work with QVC, and few of QVC’s
brands are sold through zulily.
• “As partner companies, zulily and QVC will be able to share brands and products across
platforms, jointly host events and brand launches, engage celebrities together, and more.
zulily will be able to leverage QVC’s deep experience in creating rich video content across
its platforms, while QVC can take advantage of zulily’s sophisticated personalization
technologies to offer greater relevancy to our customers. And our combined ecommerce and
mobile know how will put us squarely at the forefront of digital innovation.” Mike
George, QVC CEO 8/17/2015.

7. zulily (after 1 year)
West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• Quarterly revenue growth of 10% (3Q-15), 13% (4Q-15), 16% (1Q-16), 23% (2Q-16) and
14% (3Q-16).
• LTM OIBDA: $53M (3Q-15) to $110M (3Q-16) / Margins from 4.1% to 7.2%.
• Revenue synergies.
• Cost synergies from increasing scale, fulfillment, etc.

8. Capital Allocation: Shares Repurchases
West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
“Our history of maintaining what we think is thoughtful, prudent and effective
leverage to drive the highest equity returns and sustain systematic buybacks –
John Malone likes those models and it’s worked pretty well for us over the
years.” Mark Carleton, Liberty Media Corporation CFO at UBS Conference on
12/6/2016.
• ROIC focus

9. Capital Allocation: Share Repurchases
West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
MONTH: # OF SHARES AVG. PRICE
Oct-15 2,665,212 $ 27.44
Nov-15 2,669,832 $ 26.57
Dec-15 4,092,300 $ 26.79
Jan-16 3,558,600 $ 25.64
Feb-16 4,170,100 $ 24.45
Mar-16 1,767,098 $ 25.34
Apr-16 1,797,842 $ 25.84
May-16 2,230,388 $ 26.07
Jun-16 2,888,964 $ 25.65
Jul-16 567,253 $ 25.06
Aug-16 3,221,340 $ 21.59
Sep-16 5,187,326 $ 19.90
TOTAL 34,816,255

10. Q2 Earnings (8/5/2016)
West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• "Late in the quarter, we experienced a deceleration in demand in the US that has continued. As a
result, our near-term perspective is more cautious” Mike George, QVC CEO in August 5, 2016
earnings release.
• “Beginning in early June QVC's US sales began to experience significant headwinds, which have
continued. The sales declines, as compared to prior periods, have averaged in the mid to high
single digit percentages. QVC has developed many initiatives intended to reverse the negative
trends and QVC is optimistic, although there is no guarantee, that these actions will have a
positive effect. However, even if these initiatives begin to reverse these trends, it is believed that
QVC's US net revenue and adjusted OIBDA will likely experience negative growth rates for the
third quarter.” Mike George, QVC CEO
• "We accelerated our revenue growth in the second quarter. Our merchandising and operational
execution are driving strong growth in our business. As we look to the back half of 2016 and
beyond, we remain obsessed about offering fresh new products and experiences every day that
strengthen our brand and market presence. Additionally, we continue to find valuable new ways
to expand our customer reach and leverage the collaboration with QVC to deliver incremental
growth opportunities.“ Darrell Cavens, zulily President and CEO
• QVCA closed down over 18% on August 5th.
• Bad news usually gets discounted faster than good news.

11. Problems: Short-term or Structural?
West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• Viewership, retention and average customer demographics have remained stable.
Investor Day November 10, 2016.
• Significant contributors to recent sales decline:
• Challenges in key product areas (kitchen cook, electronics, jewelry, handbags
and hair care) – 1/3 of sales.
• Increased promotional competition.
• Macro/geo-political factors
• “In addition to these category pressures, we also believe that difficult geopolitical
environment, including a challenging election cycle that ends today, depressed
consumer sentiment, which disproportionally impacts a business like ours that relies
on discretionary purchases, and mixed economic trends, the continuation of a highly
promotional retail climate and the temporary Olympics viewership were also
challenges.” Mike George, QVC CEO November 8, 2016 Q3 earnings call

12. Action Plan Around Key Products
West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• Apparel and Accessories: accelerate growth of “lifestyle” brands
• Hair care: adding 40 new brands across beauty category in 1H 2017.
• Jewelry: hired new category leader, adding new fashion lines, respond to changing
trends more quickly.
• Home: respond to emerging trends more quickly (e.g. copper cookware, air fryers).
• Improve pricing and adding distribution (Beauty IQ)
• Expand digital presence
• “We are encouraged but generally not satisfied with recent trends. Our quarter-to-
date and Q4 sales declines have moderated into the low to mid single-digits. Now, we
also anticipate that the product margin erosion we saw in Q3 will moderate as we
start to reduce clearance activity in Q4 and through early next year.” Mike George,
QVC CEO November 8, 2016 Q3 earnings call

13. Long-term Key Priorities
West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• Return to more balanced growth across product categories
• More brands across global network of suppliers
• Subscription models
• Deliver perfect experiences and wow values
• Accelerate growth of new customers
• Active customers represent small % of addressable market
• 9 non-customers viewing QVC TV for every 1 customer
• 15 non-customers visiting QVC.com for every 1 customer
• Expand distribution reach and innovation
• More video (Facebook Live, YouTube, Twitter, etc.)
• Enhanced product detail pages
• Beauty IQ (10/31 launch, 40M+ households, 24-7 channel with 4 hrs. live
programming 5 days a week
• Drive continuous improvement in cost structure

14. Valuation Considerations
West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• QVC’s long history of stable results: 28 consecutive quarters of revenue growth
through 2Q-16.
• High margins / low capex: OIBDA margin low-to-mid 20%; CAPEX roughly 2.5% of
sales.
• Distribution moat
• Programing/inventory flexibility
• Hard to replicate infrastructure (360M homes, 14 networks)
• Scale with vendors and distributors
• Digital leader (#3 multi-category mobile retailer / > 50% penetration)
• Loyal customer base (14.1M worldwide, 89% retention rate, 24 items per
customer/year).
• Diverse product mix (75% of products are exclusive).
• Net Promotor Score: 67 for QVC US (stable trend during slowdown).

15. Valuation Considerations
West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• QVC Enterprise Value is $14.7B
• Compelling sum-of-parts valuation:
• Zulily estimated value: $2B
• HSNI estimated value: $.7B
• QVC Intl. estimated value: $4B
• $8B EV left for QVC US / $1.44B 2016 OIBDA (5.5x)
• Best in class retailers (e.g. ROST, TJX) trade 2x implied value of QVC US

16. Liquidity (9/30/2016)
West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• Revolver capacity: $680M
• Cash and liquid investments: $348M
• HSNI: $700M
• Total liquidity: $1.7B

17. Debt Profile (9/30/2016)
West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com
• Senior notes: $791M
• Credit facility: $1,970M
• QVC senior notes and subsidiary debt: $3,728M
• Total: $6,489M
• Weighted average cost of debt 4% (pre-tax)
• $400M in notes due 2019
• Credit facility matures in 2021
• Remaining debt expires 2022 - 2043

18. Market Observations from January 2016
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 and materials.
• Bubble in indexing? Value in value?
• Beware of the “bottom-up” stock pickers that can’t find anything to buy in
a universe of 7k publicly traded companies.

19. Questions?
West Chester, PA 19380
610-436-1120 (direct)
www.gdsinvestments.com