September 2018 Prosperously navigating unexpected events with - - PowerPoint PPT Presentation

September 2018

Prosperously navigating unexpected events with great skill and agility

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AGENDA

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Who We Are Investment Methodology Performance Current Opportunity and Investment pipeline – GAMING & ESPORTS Summary

WHO WE ARE

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BLACK SWAN DEXTERITAS (“BSD”)

TECHNOLOGY EXPERTISE

• Unique insight

from entrepreneurs leading international tech development based on needs creation

• Advisory Committee of tech leaders

who determine the global adoption and success of new technologies

• Representation in all BSD-invested

tech sectors and sub-sectors, for unrivalled expertise

• Portfolio Manager with 30 years of

portfolio management experience across various asset classes at asset management companies (LGT, TAL, CIBC Asset Management), and a pension (British Petroleum)

• Exceptional research team with a

wide breadth of knowledge in research, finance, and engineering

• Intense due diligence process for our

stock selection process

• Unique risk management overlay

to minimize drawdowns and volatility

PORTFOLIO MANAGEMENT EXPERIENCE

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INVESTMENT METHODOLOGY

SECTOR ASSESSMENT

• Life Cycle: Sectors in introduction and growth stages with

high Total Addressable Market (TAM)

• Competition: High barrier of entry with differentiated products

and services within the sector COMPANY ANALYSIS

• Business Model: Public ccompanies with high recurring revenue,

easily able to leverage network effects, strong negotiating power with suppliers and customers, and strong corporate governance

• Size: Target small (500M+) to large cap public companies with

established track record of executing the business.

• Growth: Public companies with high and/or consistent revenue

growth

• Valuation: Determine if opportunities exist based on our fair

value expectation of stocks versus current stock prices PORTFOLIO CONSTRUCTION

• Weightings: Determine % of portfolio allocated to holdings

based on risk-reward expectations

• Diversification: Well-diversified across 35 to 40 holdings to

maximize risk-adjusted returns

• Hedging: Utilize derivatives and fixed income products to

minimize drawdowns and generate alpha IDEATION

• BSD Investment Advisory Committee: seek out global

growth themes and trends to overweight and underweight various subsectors

• Experienced investment team sourcing trade ideas and

discussing vital macro economical forces in play

• Draw on sector experiences from members of the committee and

discuss emerging technology from the private and public space

• Deep dive into industry verticals to identify beneficiaries in other

primary, secondary, and tertiary markets

PORTFOLIO CONSTRUCTION

IDEATION SECTOR ASSESSMENT COMPANY ANALYSIS

PUBLIC COMPANIES

PERFORMANCE

PERFORMANCE METRICS* FUND RETURNS

FUND S&P 500 Return Since Inception YTD Return 60 Day Return 20 Day Return Daily Standard Dev. Sharpe Ratio Sortino Ratio Correlation 64.68% 6.17%

• 0.97%

1.62% 0.71% 0.86 1.19

• 72.53%

7.95% 4.65% 2.61% 0.78% 0.89 1.25 0.97

October 1, 2013 to August 31, 2018

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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD S&P 500 YTD

• 2.08% 3.63% -2.07% -4.39% 2.38% 2.80% 2.21% 3.53% -1.64% 4.95% 2.89% -1.51% 10.69%

11.43% 2014 2013

GLOBAL TECH FUND MONTHLY PERFORMANCE SINCE INCEPTION

BSD has outperformed our portfolio benchmark with lower risks through active diversification across various subsectors

1.32% 0.35% 2.82% 4.55% 9.60% 0.53% 5.39% -0.16% 2.98% 0.90% -0.91% 0.43% -6.67% -1.48% 9.68% 0.63% -0.76% 10.16% 0.47% 2015

• 7.41% -2.78% 5.31% -0.02% 2.33% -0.29% 3.66% 0.65% 1.63% 0.38% -3.75% -0.71%
• 1.63% 9.50%

2016 4.97% 2.14% 2.99% 2.08% 3.85% -2.55% 2.68% 2.12% 0.51% 3.41% 0.11% -0.20% 24.49% 19.42% 2017 2.89% 0.63% -0.62% -1.57% 4.11% -1.63% 0.63% 1.72% 2018

6.17% 7.95%

• 10.00%

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 10/1/2013 10/1/2014 10/1/2015 10/1/2016 10/1/2017

BSD gross vs BSD net vs Benchmark since inception

BSD S&P 500

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HOW BSD COMPARES TO OTHER HEDGE FUNDS

HEDGE FUND STRATEGIES* 2014 RETURN 2015 RETURN 2016 RETURN 2017 RETURN

PERFORMANCE

BSD Global Technology Hedge Fund Absolute Return Multi-Region Equal Weighted Strategies Relative Value Arbitrage Macro/CTA Fixed Income - Credit Global Hedge Fund Equity Hedge North America Emerging Markets Composite Market Directional Event Driven 10.69% 0.67% 1.71%

• 0.56%
• 3.06%

5.09%

• 1.86%
• 0.60%

1.37%

• 4.13%
• 8.03%

5.13%

• 4.06%

Our outperformance relative to other funds are indicative of our core competency in generating outsized returns and navigating a challenging market environment

* Hedge fund index data is provided by Hedge Fund Research Index (HFRI) as of January 2018.

10.16% 2.86%

• 1.19%
• 1.54%
• 3.10%
• 1.96%
• 4.38%
• 3.64%
• 2.33%
• 9.35%
• 5.26%
• 8.58%
• 6.94%
• 1.63%

0.31% 1.95% 3.78% 1.03%

• 2.93%

4.97% 2.50% 5.49% 4.14% 6.77% 9.86% 10.50% 24.99% 3.91% 6.58% 6.10% 4.28% 7.43% 4.55% 8.04% 12.78% 6.25% 8.99% 4.68% 7.22%

TOP 10 STRATEGIC TECH TRENDS FOR 2018-2020

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CURRENT OPPORTUNITIES AND INVESTMENT PIPLINE

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• Modern personal computers owe many advancements and innovations to the

game industry: sound cards, graphics cards and 3D graphic accelerators, faster CPUs, and dedicated co-processors like PhysX are a few of the more notable improvements.

• As of 2017, games industry generated $121.7 Billion in revenues worldwide,

and were the third-largest segment in the U.S. entertainment market, behind broadcast and cable TV.

• Gaming market to grow at a CAGR of +11.0% toward 2021 to reach $180.1

Billion

• Global Esports economy will reach $905.6 Million in 2018 as brand investment

grows by 48%

• The global Esports audience will reach 380 Million this year, made up of 165

million Esports Enthusiasts and 215 Million Occasional Viewers

• On its current trajectory, the Esports industry will reach $1.4 Billion by 2020

GAMING

GAMING

Publishers Distributors Hardware Users Esports

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Source: Newzoo

2017 Total

$122B

+14.3% YoY

VIDEO GAMING ECOSYSTEM

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GAMING

Chinese Tencent is the clear leader in the space

Source: Newzoo

Bn Bn $1.91 $1.94 $2.09 $2.21 $2.27 $2.40 $3.60 $5.10 $5.30 $5.60 $6.50 $7.10 $8.00 $10.50 $18.10 Bn Bn Bn Bn Bn Bn Bn Bn Bn Bn Bn Bn Bn

2017 TOP 15 COMPANIES BY GAME REVENUE

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2016-2021 ESPORTS GLOBAL REVENUE GROWTH

GAMING

2016 2017 2018 2019 2020 2021

$1650M $493M $655M $906M $1154M $1471M

Revenue Growth

+33.0%

YoY

Expected Revenue Growth

+38.2%

YoY

Expected Revenue Growth

+27.4%

CAGR 2016-2021

Source: Newzoo

ESPORTS

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2018 ESPORTS GLOBAL REVENUE EXPECTATIONS

GAMING 2018 Total

$906M

+38.2% YoY

18% 6% 38% 32%

In 2018 China and North America expected to generate

$509M

56%

• f the global

esports revenue

Source: Newzoo

ESPORTS

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2018 ESPORTS EXPECTED GLOBAL REVENUE STREAMS

GAMING

Source: Newzoo

Game publisher Fees

$116.30

+11.0 YoY Merchandise & tickets

$95.50

+16.2 YoY Advertising

$173.80

+23.8 YoY

2018 Total

$906M

+38.2% YoY

Media rights

$160.70

+72.1 YoY Sponsorship

$359.40

+53.2 YoY

13% 11% 40% 18% 19%

ESPORTS Video game streaming platforms:

Fb.gg

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TOP ESPORTS ORGANAIZERS

GAMING

573M

Total organizer hours

11% 9% 28% 23%

Riot and ESL combined, are responsible for more than half of these organizer hours.

Source: Newzoo

ESPORTS

Riot Games ESL Dreamhack Valve Starladder

9%

MLG

5%

Beyondthesamit

5%

Other

10%

League of Legends, developed and published by Riot Games, is easily the most popular and lucrative eSports game out there. At the 2017 Season World Championship, the final competition of the 2017 League of Legends competitive season, 24 teams received invitations to play for a prize pool of $4,596,591 (the initial prize pool was $2,250,000, while the rest was fan contributions). Samsung Galaxy, a South Korean team and member of KeSPA, took first place in the competition and walked away with $1,723,721. SK Telecom T1 finished second and won $620,539, while Royal Never Give Up and Team WE finished in third and fourth to take home $321,761 apiece.

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ESPORTS GLOBAL AUDIENCE GROWTH

GAMING

Source: Newzoo

2016 2017 2018 2019 2020 2021

Esports enthusiasts Occasional viewers $160M $121M $192M $143M $215M $165M $246M $189M $281M $216M $307M $250M

Total Audience

+19.3%

YoY

Expected Revenue Growth

+14.4%

CAGR 2016-2021

Total Audience

+13.8%

YoY

In 2018 Asia-Pacific will account for 52% of Esport Enthusiasts ESPORTS

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AUGUST 2018 MOST WATCHED GAMES ON TWITCH BY TOTAL HOURS

GAMING

Source: Newzoo

ESPORTS

Esports hours consists of content from professionally organized esports competitions and does not include individual (pro-player) streams. This content combined with consumer content makes up the total hours watched.

RANK TITLE TOTAL HOURS ESPORTS HOURS 1 Fortnite Epic Games (Private) 129.2M 0.0M 2 League of Legends Riot Games (Private) 80.1M 19.5M 3 Dota 2 Valve Corporation (Private) 69.5M 47.3M 4 World of Warcraft Activision Blizzard 55.4M 0.1M 5 Hearthstone Activision Blizzard 37.5M 5.1M 6 PLAYERUNKNOWN'S BATTLEGROUNDS Bluehole (Private) 34.9M 1.8M 7 Overwatch Activision Blizzard 22.6M 2.9M 8 Counter-Strike: Global Offensive Valve Corporation (Private) 21.4M 7.4M 9 Grand Theft Auto V Take-Two Interactive 11.4M 0.0M 10 Tom Clancy's Rainbow Six: Siege Ubisoft 13.7M 2.3M

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MAY 2018 MOST WATCHED GAMES ON TWITCH BY ESPORTS HOURS

GAMING

Source: Newzoo

ESPORTS

Esports hours consists of content from professionally organized esports competitions and does not include individual (pro-player) streams. This content combined with consumer content makes up the total hours watched.

RANK TITLE TOTAL HOURS ESPORTS HOURS 1 Dota 2 Valve Corporation (Private) 69.5M 47.3M 2 League of Legends Riot Games (Private) 80.1M 19.5M 3 Counter-Strike: Global Offensive Valve Corporation (Private) 21.4M 7.4M 4 Hearthstone Activision Blizzard 37.5M 5.1M 5 Street Fighter V Capcom 5.2M 3.0M 6 Overwatch Activision Blizzard 22.6M 2.9M 7 Heroes of the Storm Activision Blizzard 5.6M 2.6M 8 Tom Clancy's Rainbow Six: Siege Ubisoft 4.4M 1.5M 9 StarCraft II Activision Blizzard 5.4M 2.3M 10 Call of Duty: WWII Activision Blizzard 3.2M 2.0M

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ESPORTS LEAGUES

GAMING

ESPORTS

Organized by the Electronic Sports League and E-Sports Entertainment Association, CS:GO Pro League (also called ESL Pro League) is the premier worldwide league for the game and features multiple month pro league seasons in Europe and North America, with 12 teams participating in each region. A professional esports league which broadcasts its events on North American television channel TBS, with Counter-Strike: Global Offensive as its primary featured esport. The ELEAGUE features sixteen of the best CS:GO teams picked from around the world competing in two 10-week league seasons annually, with a regular season, play-offs and championship finals. The annual World Championship Dota 2 esports tournament run by Valve Corporation since 2011 and officially the largest and highest-paying esports tournament in the world based on audience (400,000 million) and record-breaking prize-pools (US$24 million). Electronic Major League Soccer (eMLS): The official e-League for FIFA 18 run by Major League Soccer, North America’s major professional soccer league. The eMLS is in partnership with EA Sports, the developer and publisher of the FIFA video game series and will feature high-level FIFA 18 competitions. The HWC is the largest esports event held for competitive Halo since 2014. Sponsored by current Halo developer 343 Industries, the 2018 season is produced by the Electronic Gaming League and Major League Gaming. The EU and NA League of Legends Championship Series are the premier national LoL tournaments in their respective regions, acting as the path for European and North American to earn their way to the World Championships. The premier esports league for Overwatch run by Blizzard Entertainment, the creators and publishers of the game. It is arguably the most popular new esports league of 2018, with millions of viewers tuning in across Twitch.tv and MLG.tv. The first and only professional esports league advertised, managed and endorsed by the NBA in partnership with 2K Games. Set to launch in mid-2018 after a series of virtual try-outs, 17 of the NBA’s 30 teams are confirmed to be a part of the inaugural 2018 2K League season.

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ESPORTS LEAGUES

GAMING

ESPORTS High School Esports Competitions to Begin in U.S. This Year

In October, PlayVS will launch its inaugural season, bringing organized esports to more than 18 states and approximately 5 million students across 5,000 high schools. Competitions will focus on three genres: multiplayer

• nline battle arena (MOBA) games, fighting games, and sports games.

PlayVS partnering with the National Federation of State High School Associations (NFHS) and the NFHS

• Network. The NFHS organizes education-based athletic activities around the country, while the NFHS Network is

the national leader in streaming high school sports online.

Nearly 200 colleges in the U.S. and Canada are now actively recruiting and offering scholarships to players.

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ESPORTS LEAGUES

GAMING

ESPORTS ESPN signed a deal with Activision for TV rights to the Overwatch League

The league's "Grand Finals", which will be telecast on ESPN, marks the first time live competitive gaming will air

• n the network in prime time, and will be the first broadcast of an e-sports championship on ABC

Earlier this year, Activision announced a two-year deal to broadcast the first two seasons of the league on Twitch.

Goldman Sachs predicted that esports will have 276 million viewers worldwide by 2022, on a par with the NFL. Total revenue could reach $3 billion by then, up from $655 million last year.

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VIDEO GAMES MAY BE PART OF THE 2024 OLIMPICS

GAMING

ESPORTS The International Olympic Committee is considering adding e-sports to the 2024 Olympic Games

Tony Estanguet, co-president of the Paris bid committee, has confirmed that he will speak with the International Olympic Committee and eSports representatives about the full-fledged inclusion of competitive video gaming when the Games come to France in seven years’ time. E-sports will also be included in the 2022 Asian Games in Hangzhou, China.

Yes, video games may soon be an Olympic.

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FORTNITE BATTLE ROYALE PHENOMENON

GAMING

ESPORTS The most Watched Games on Twitch & YouTube

149.3M hours in July and 129.2M hours in August, but only 0.2M esport hours and 0.0M esport hours respectively

New Fortnite Release Downloads Shatter Record for Internet Traffic

To put this into perspective, this level of traffic would be like downloading the average mobile game 2.8 million times per minute

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FORTNITE BATTLE ROYALE PHENOMENON

GAMING

ESPORTS Fortnite Creators Put Up $100 Million for Tournament Prize Pool

Epic Games, the maker of Fortnite, has announced plans to provide $100 million for a prize pool in the title’s first year of competitive play.

“We’re getting behind competitive play in a big way, but our approach will be different – we plan to be more inclusive, and focused on the joy of playing and watching the game,” Epic Games said in a blog post

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PUBLIC COMPANIES INVOLVED

GAMING

ESPORTS Pure Players Big Companies exposed

Activision Tencent EA Sony Capcom Alibaba Ubisoft Facebook Take Two Interactive Google Nexon Disney NetEase Microsoft Nintendo Amazon HUYA

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SUMMARY

• We bring unique, proven strengths
• Principal with 30 years of portfolio management experience
• Dynamic stock selection methodology
• Disciplined risk management process
• Our expertise in technology is unparalleled
• Team consisting of seasoned entrepreneurs that have co-founded billion dollar companies
• Global networks of advisors and analysts examining tech vendors and tech end-users
• Significant out-performance in risk-adjusted returns
• The BSD Global Tech Hedge Fund returned 60.87% since inception versus S&P 500 index

return of 61.54%

• Exhibited only 58% of the S&P 500 index volatility in 2017
• Hedging strategy acts as an “insurance policy” in anticipation of adverse market events,

by limiting drawdowns and often generating alpha

* Management fees and expenses may be associated with investments. Investment funds are not guaranteed, their values change frequently and past performance may not be

• repeated. The indicated rate of return is the historical compounded total return including changes in share value and reinvestment of all dividends.