Contenu connexe
Similaire à New Presentation May 2011 (20)
New Presentation May 2011
- 1. OTSI KETA FOCUS FUND
Strategy Review
Proprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!
© 2011 Otsi Keta Capital, LLC. All rights reserved.!
- 2. Table of Contents
Fund Strategy 2
Performance and Portfolio Review 9
OKFF Team 14
Risk 18
Fund Terms 19
Proprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!
© 2011 Otsi Keta Capital, LLC. All rights reserved.! 1!
- 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 catalyst
Proprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!
© 2011 Otsi Keta Capital, LLC. All rights reserved.! 2!
- 4. Strategy
Small capitalization value stocks have historically had the
most compelling performance of any capitalization class
Proprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!
© 2011 Otsi Keta Capital, LLC. All rights reserved.! 3!
- 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 years
Proprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!
© 2011 Otsi Keta Capital, LLC. All rights reserved.! 4!
- 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. 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
strategy
Proprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!
© 2011 Otsi Keta Capital, LLC. All rights reserved.! 6!
- 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. 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. 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. 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. Portfolio
Our portfolio is currently diversified across eight
industry sectors and is constructed using bottoms up
analyses – not index weightings
All 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. 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 $1,128.9
Source: Otsi Keta Analysis, Morningstar 12/31/10
Proprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!
© 2011 Otsi Keta Capital, LLC. All rights reserved.! 12!
- 14. Portfolio
The combined operating profit and average earnings per
share of companies in the portfolio held up during the
worst economic crisis in a generation
Fundamental strength of portfolio companies during
2008/2009 “Hurricane”
Combined operating Profit
Avg. Earnings per Share
Depth of Crisis
($MM)
Proprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!
© 2011 Otsi Keta Capital, LLC. All rights reserved.! 13!
- 15. 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 metrics
Proprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!
© 2011 Otsi Keta Capital, LLC. All rights reserved.! 14!
- 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. 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. 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 Investors
Proprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!
© 2011 Otsi Keta Capital, LLC. All rights reserved.! 17!
- 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. 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, MI
Proprietary and Confidential. For Use By Accredited Investors Only – Do Not Distribute.!
© 2011 Otsi Keta Capital, LLC. All rights reserved.! 19!