1. CONTRARIAN
Long/Short US Equity
Dan Wimsatt, CFA
October 2010 Meredith Hooke
Chief Investment Officer Director of Administration
O. 858.427.1437 O. 858.427.1434
C. 858.395.7650 C. 858.395.7650
dw@aadcapital.com mh@aadcapital.com
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2. How do you produce Alpha?
Investing is a blend of art • We are bottoms-up fundamental stock pickers – most stocks trading at 52 week lows are
and science and there is no
there for good reason, we look for the one that is there for the wrong reason.
substitute for experience.
• First step, understand everyone’s assumptions
…mistakes are a part of the
- Talk to the Bull and Bear on the Street
business. The key is to not be
overly afraid of investment
- Talk to the Company – what is the Street missing?
mistakes, yet not let our
• Is there an opportunity to make money and if so what is the risk/reward?
mistakes cause excessive
damage to the overall portfolio
results. This can be more
difficult than it sounds.
2 CONTRARIAN LONG/SHORT US EQUITY FUND

3. Desirable Long/Short Attributes
Wall
Street
Pessimis:c
Bias
Wall
Street
Overenthusias:c
Bias
Significant
Rela:ve
Price
Deprecia:on
DESIRABLE DESIRABLE Significant
Rela:ve
Price
Apprecia:on
Insider
Ownership/Buying
SHORT LONG Insider
Selling
ATTRIBUTES ATTRIBUTES
Changing
Industry
Structure
Inflated
TAM
Expecta:ons
Improving
Margins
Peaking
Margins
Target Return Target Return
Focused
Management
Team
Arrogant
Management
Team
-20% over 3- 6 +50%+ over
Poten:al
for
P/E
Expansion
months 12-18 months Poten:al
for
P/E
Contrac:on
Por$olio
Construc.on
Parameters
Number
of
Posi.ons:
Typically
30-­‐50
stocks
in
total
(long
and
short)
Top
20
posi:ons
typically
represents
two-­‐thirds
of
por>olio
Gross
Exposure:
Typical
range
of
150-­‐200%
Market
Caps:
A
majority
of
our
posi:ons
on
the
long
side
are
typically
small-­‐cap
(<$1B)
and
on
the
short
side
typically
mid-­‐cap
($1-­‐$5B).
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4. Risk Management Guidelines
Risk Management begins
• No long position to exceed 10% (gross exposure)
at the security level. Our
analytical approach is the
• No short position to exceed 5% (gross exposure)
cornerstone of our risk
management system, and
provides a substantial • Gross exposure to any one sector will not exceed 50% of capital
“margin of safety” that
aids in protecting capital • Monitor current liquidity of overall portfolio and individual stocks
during market
dislocations, which can • Utilize liquidity limits at the security level as well
also be a source of
considerable profits.
• Rarely deploy “portfolio hedges” (i.e., ETFs)
4 CONTRARIAN LONG/SHORT US EQUITY FUND

5. Client Communication/Relations
• Goal congruence is important – our interests are aligned with our investors. The General Partner is the
aAd Capital is
largest investor in the Fund at 30%.
committed to the highest
• We believe staying small will deliver outsized returns to our investors over the long term and we are
level of integrity
committed to being no larger than $200mm. We will not accept additional assets in an environment in
and transparency.
which we cannot achieve our objectives.
• Liquidity: No gates, no hard lock-up, monthly liquidity.
• No side letters or side pockets.
• Client communication
– Timely estimate of weekly results (typically within 1-2 business days) via e-mail
– Timely estimate of monthly results (typically within 5 business days of the end of the month) via email,
website
– Total transparency: monthly correspondence includes current portfolio, attribution by industry sector, portfolio
metrics relating to exposures, concentration and liquidity
– Quarterly client letter reviewing pertinent information
– 24/7 access to General Partners
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6. Summary of Terms
• aAd
Partners
LP–
domes:c
3(c)1
Investment Vehicle:
• AUM
as
of
11/1/2010:
$40.3mm
• 1%
management
fee,
payable
quarterly
in
advance
Fees:
• 20%
annual
incen:ve
fee,
subject
to
high
water
mark
Subscriptions: • Monthly
•
Monthly
with
45
days
no:ce;
however,
an
investor
may
withdraw
with
as
lible
as
15
days
no:ce,
with
a
3%
penalty
paid
to
the
remaining
Limited
Partners
not
the
General
Partner.
Withdrawals:
•Sod
Lock-­‐up:
if
redeeming
within
first
12
months
there
is
a
3%
penalty
paid
to
the
remaining
Limited
Partners.
Minimum Investment: • $500,000
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7. WHY aAd Capital?
“Buy when there’s blood • 26+ years of Investment Experience with a Proven Track Record
running in the streets • General Partners are largest investor (approximately 30% of the Fund)
and sell when everyone
• Contrarian - we buy when others are scared and sell when others are greedy
is pounding at the door,
crawling to own your • Uncorrelated with US Equity Markets (<0.50 for S&P 500 and Russell 2000)
equities.” • Uncorrelated with HFRI Equity Hedge Index (<0.50)
Baron Rothschild
• 24/7 access to Portfolio, 24/7 access to Partners
• Monthly Redemptions with 45 days notice/15 days notice (subject to a 3% fee)
• No Hard Lock-Up
• No Gates
• No Side Letters – one for all and all for one
• No Amortized Organizational Costs
• SEC Registered
7 CONTRARIAN LONG/SHORT US EQUITY FUND

8. Directory
Jeff
Blumberg
312.569.1106
Jeff.blumberg@dbr.com
Legal Counsel: Drinker,
Biddle
&
Realth
191
North
Wacker
Drive,
Suite
3700
Chicago,
IL
60606
Taylor
Schwerman,
CPA
858.336.3841
tschwerman@squarmilner.com
Auditors: Squar,
Milner,
Peterson,
Miranda
&
Williamson,
LLP
3655
Nobel
Drive,
Suite
450
San
Diego,
CA
92122
Gena
Shaffer
415.576.2604
Gena.shaffer@morganstanley.com
Prime Broker: Morgan
Stanley
555
California
Street,
22nd
Floor
San
Francisco,
CA
94104
Art
Lascano
760.804.7742
Art.lascano@db.com
Fund Administrator: DB
Alterna.ve
Fund
Services
1900
Wright
Place,
Suite
100
Carlsbad,
CA
92008
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9. Performance Disclaimers
the composition of these indices, aAd believes that the performance of the Funds and these indices are not comparable.
Sector/Industry Performance
The sector and industry results for the Fund reflect the reinvestment of dividends and interest by sector, but do not reflect any deduction of
costs, management fees or special profit allocations paid by or charged to the Fund. The results are calculated by dividing the profit and loss
from the Fund’s investments in securities in each sector at the end of the period shown (after adding back all dividends by sector and
distributing interest income evenly through each sector) by the Fund’s aggregate capital at the beginning of the period (as adjusted for any
contributions and withdrawals during the year).
aAd’s Past Recommendations
It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities discussed in
this letter. On request, aAd will provide to you a list of all of the recommendations made by it within the past year.
9 CONTRARIAN LONG/SHORT US EQUITY FUND