New Presentation May 2011

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New Presentation May 2011

  1. 1. OTSI KETA FOCUS FUNDStrategy ReviewProprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!© 2011 Otsi Keta Capital, LLC. All rights reserved.!
  2. 2. Table of Contents  Fund Strategy 2  Performance and Portfolio Review 9  OKFF Team 14  Risk 18  Fund Terms 19Proprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!© 2011 Otsi Keta Capital, LLC. All rights reserved.! 1!
  3. 3. Strategy Focused on generating high, risk-adjusted returns by identifying undervalued companies using a private equity-style, intrinsic value discipline Inputs Smaller Companies   Historic outperformance Enterprise values of less than $1 billion   Limited institutional ownership and coverage   Greater number of buyouts at higher premiums Midwestern Based   Breadth and diversity of industry and companies Companies headquartered in 10 US states   Efficiency of access (IL,MN,NE,MI,IA,OH,PN,WI,MO,IN)   Culture and improving regulatory environment “Hurricane Resistant” Businesses   Superior business models Maintain proportional strength in difficult   Fortress balance sheets business environments   Aligned and engaged management teams   Clear growth or value catalystProprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!© 2011 Otsi Keta Capital, LLC. All rights reserved.! 2!
  4. 4. Strategy Small capitalization value stocks have historically had the most compelling performance of any capitalization classProprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!© 2011 Otsi Keta Capital, LLC. All rights reserved.! 3!
  5. 5. Strategy Otsi Keta believes the Midwest represents the most attractive geography for achieving its objectives 700 <1 Number of companies with enterprise values ! ! Average number of analyst earnings 55 %! Level of institutional ownership of small between 50 million estimates for small companies in the and one billion Midwestern companies Midwestern US 10 7 Number of Length of car ! states Otsi hrs! ride to reach Keta considers 75% of target in the Midwest companies 62 5 Cost of %! Midwestern exports against 14 ! Number of new governors running Midwestern states – largest trade weighted partners highest in 20 yearsProprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!© 2011 Otsi Keta Capital, LLC. All rights reserved.! 4!
  6. 6. Strategy Otsi Keta identifies undervalued “Hurricane Resistant” businesses with clear growth or value catalysts   Unique approach to customer problems Superior Business Model   Maintained proportional strength during downturn   Consistently high ROIC’s   Low debt to equity ratios Fortress Balance Sheet   Significant financial resources to pursue new market opportunities Priority Target   Significant insider ownership Owners not Employees   Engaged and growth-oriented management team   Growth catalysts (new products, Clear Growth or customers, geographies etc.) Value Catalyst   Value catalysts (buyout candidate, share repurchase, dividend increases etc.)Proprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!© 2011 Otsi Keta Capital, LLC. All rights reserved.! 5!
  7. 7. Strategy Otsi Keta’s focus on developing original and proprietary research will generate clear informational and conviction advantages. Nature of Otsi Keta Research (examples – illustrative of approach) Review of Public Original Research and Filings and Analyst Proprietary Analysis Interviews Research •  Understanding the •  Management •  Forecast future business and its stated interviews and site earnings and cash strategy visit flows •  Analysis of historical •  Customer/client •  Calculate firms performance and key interviews intrinsic value drivers •  Competitive •  Assess potential •  Assess alignment assessment catalyst for between management •  Market assessment improvement and risks and shareholders •  Industry interviews to valuation •  Product portfolio •  Assess liquidity and assessment technicals •  Develop entry and exit strategyProprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!© 2011 Otsi Keta Capital, LLC. All rights reserved.! 6!
  8. 8. Strategy Small/micro-cap liquidity makes focusing on and managing business risk essential to generating strong returns.   Otsi Keta only invests in firms that have been profitable over the previous four quarters. We believe with limited coverage you do not need to be early to significantly outperform.   Limited debt and significant management stock ownership are hallmarks of firms Otsi Keta finds attractive.   We look for companies that will grow through traditional block and tackle execution funded by internally generated cash flow.   Growing their customer base and distribution channels   Broadening their product lines   Geographic expansion domestically and abroad   Expansion of operational capacity   Acquiring complimentary businesses for scale improvements   Otsi Keta avoids investing in businesses whose future success and improvement depends on break through technologies or changing customer behavior.Proprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!© 2011 Otsi Keta Capital, LLC. All rights reserved.! 7!
  9. 9. Performance Otsi Keta believes it has significant advantages in generating high risk adjusted returns.   Otsi Keta focuses on an asset class largely ignored by Wall Street and institutional investors due to volatility and liquidity.   Otsi Keta’s location in the heart of the Midwest gives it greater and more efficient access to potential undervalued companies and their management teams.   Otsi Keta’s focus on developing original and proprietary research will generate clear informational advantages.   Otsi Keta’s approach to reducing business risk within portfolio through proprietary research should help it perform well during up markets and outperform during challenging markets.   Otsi Keta’s investment strategy and process plays to the strengths and experience of the firm’s management team.Proprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!© 2011 Otsi Keta Capital, LLC. All rights reserved.! 8!
  10. 10. Performance The fund returned 21.8% in its first twelve months of operations 21.8%!Proprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!© 2011 Otsi Keta Capital, LLC. All rights reserved.! 9!
  11. 11. Performance Performance has been strong across the majority of our holdings. Current OKFF Portfolio Data thru April 30th % Gain/Loss on Position Percentage of Portfolio (Each bubble represents an individual portfolio position, the size of each bubble represents the relative size of the position, the grey colored bubbles currently represent gains while the red bubbles depict positions with current losses)!Proprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!© 2011 Otsi Keta Capital, LLC. All rights reserved.! 10!
  12. 12. Portfolio Our portfolio is currently diversified across eight industry sectors and is constructed using bottoms up analyses – not index weightingsAll data sourced from Morningstar !Proprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!© 2011 Otsi Keta Capital, LLC. All rights reserved.!
  13. 13. Portfolio OKFF’s current portfolio is attractive across a number of key fundamentals. Statistical Comparison Fundamental Measures Current OKFF Portfolio Russell 2000 Price/Prospective Earnings 15.33 17.96 Price/Book Ratio 2.53 1.87 Return on Assets 12.31% 4.02% Return on Equity 15.97% 9.67% Projected – EPS Growth (5 yr %) 15.18% 11.93% Yield % 1.48% 1.06% Average Market Cap ($MM) $434.58 $1,128.9Source: Otsi Keta Analysis, Morningstar 12/31/10Proprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!© 2011 Otsi Keta Capital, LLC. All rights reserved.! 12!
  14. 14. Portfolio The combined operating profit and average earnings per share of companies in the portfolio held up during the worst economic crisis in a generation Fundamental strength of portfolio companies during 2008/2009 “Hurricane” Combined operating Profit Avg. Earnings per Share Depth of Crisis ($MM)Proprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!© 2011 Otsi Keta Capital, LLC. All rights reserved.! 13!
  15. 15. OKFF Team Otsi Keta’s investment strategy and process plays to the strengths and experience of the firm’s management team. Critical Success Factors Otsi Keta Management Team Experience Identify attractive companies and Performed numerous acquisition assessments for fortune 100 companies Industries Co-managed $200 million portfolio of equity, fixed income and alternative assets Develop proprietary research and analysis Developed and modeled impact of growth strategies on client businesses Managed strategic due diligence projects for acquisitions ranging from $5MM to $1B in size for corporations and private equity clients Implementation and execution of 13 years as a market-maker trading small and mid-cap equities investment strategy Positioned institutional liquidity through technical analysis Risk Assessment Managed strategic portfolio reviews to assess competitive and business risk to client business units Created asset allocation models to align with client targeted risk metricsProprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!© 2011 Otsi Keta Capital, LLC. All rights reserved.! 14!
  16. 16. OKFF Team Partner biographies Fred Rollins, Founder Prior to founding the firm, Mr. Rollins made several successful investments in small, privately held companies through Land & River Group, which he founded in 2002. His investments included companies in business to business services, energy, transportation, IT hardware, recreation and real estate. Mr. Rollins was a Principal in San Francisco based strategy consulting firm, Swander, Pace & Company, prior to its sale in 2001 to Kurt Salmon Associates. Mr. Rollins worked with Fortune 500 clients to complete portfolio reviews, strategic acquisitions, and competitive and market assessments. Mr. Rollins received a BA in Economics from the University of Michigan and an MBA in Finance with distinction from Wake Forest University.Proprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!© 2011 Otsi Keta Capital, LLC. All rights reserved.! 15!
  17. 17. OKFF Team Partner biographies Bill Schwarz, Founder Prior to founding Otsi Keta Capital, Mr. Schwarz was a Financial Advisor for Wells Fargo Advisors, a Portfolio Manager for Citizens First Asset Management (the asset management division of Citizens First Bancorp), co-managing a $200 million portfolio, and a Senior Position Trader (focusing on Small Cap securities) for W.R. Hambrecht & Co. in San Francisco. Mr. Schwarz was also a Vice President and Head of OTC Trading for Olde Discount Corporation in Detroit, which focused on coverage of small to mid- cap equities on the Nasdaq and NYSE exchanges, and owned a seat and traded proprietarily, primarily in the oilseed pit, on the Winnipeg Commodity Exchange. Mr. Schwarz received a B.S. in Agriculture from Michigan State University.Proprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!© 2011 Otsi Keta Capital, LLC. All rights reserved.! 16!
  18. 18. OKFF Team Otsi Keta utilizes several strategic partners for back office operations. Fund Structure and Service Providers Fund Management Service Providers Key Functions Prime Broker   Centralized custody of assets Otsi Keta Jeffries & Company   Clear trades Capital, LLC New York, NY   Institutional knowledge   Risk metrics Fund Administrator   Monthly NAV and account valuations   Performance information Four Winds Otsi Keta Minneapolis, MN   Accounting services Focus Fund, LP Auditor   Annual audit Baker Tilly,   K-1’s LLP   Tax returns ... Minneapolis, MN   National firm with 100’s of investment #1 #98 #99 fund clients Accredited InvestorsProprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!© 2011 Otsi Keta Capital, LLC. All rights reserved.! 17!
  19. 19. Risks   An investment in the Fund is speculative and involves a substantial degree of risk. Investment in the Fund should be made only after consulting with independent, qualified sources of accounting, investment, legal, tax and other advice.   Investment and Trading Risks. The transactions in which the Managing Member generally will engage involve significant risks. Growing competition may limit the Managing Member’s ability to take advantage of trading opportunities in rapidly changing markets. No assurance can be given that investors will realize a profit on their investment. Moreover, each Member may lose some or all of its investment. Because of the nature of the trading activities, the results of the Company’s operations may fluctuate from month to month and from period to period. Accordingly, investors should understand that the results of a particular period will not necessarily be indicative of results in future periods.Proprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!© 2011 Otsi Keta Capital, LLC. All rights reserved.! 18!
  20. 20. Summary of Otsi Keta Focus Fund, LP Terms as of 4/30/11 Summary of Terms Section 3(c) (1) – The Private Investment Company Exclusion (limited to Structure: 100 investors) Investment Manager: Otsi Keta Capital, LLC Minimum Investment: $250,000 Investor Eligibility: Accredited Investors Subscriptions: Quarterly Redemptions: Quarterly, 45 days notice Initial Lock-up Period: 1 year Redemption Fees: None Management Fee: 1.5% Incentive Fee: 20% (high water mark) Fiscal Year End: December 31 Prime Broker: Jeffries & Company New York, NY Administrator: Fourwinds, LLC Minneapolis, MN Auditor: Baker Tilly, LLP Minneapolis, MN Counsel: Warner Norcross & Judd, LLP, Grand Rapids, MIProprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!© 2011 Otsi Keta Capital, LLC. All rights reserved.! 19!

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