Transcript The Title of Presentation Goes Here

Red Sky Capital
Management Ltd.
Red Sky Capital Management Ltd.
Why alternative investments?
• Generate positive returns in a variety of market
conditions.
• Enhance diversification.
• Improve portfolio returns.
• Reduce portfolio risk.
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
Red Sky Capital Management Ltd.
CSFB L/S
S&P 500
Average Return
0.5%
0.4%
Best Month
5.2%
10.9%
Worst Month
(7.8%)
(16.8%)
Win/Loss %
64.2%
61.7%
Standard Deviation Sharpe Ratio
7.9%
0.8
15.9%
0.3
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
Red Sky Capital Management Ltd.
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
Red Sky Capital Management Ltd.
How hedge funds differ from long only funds
Absolute versus relative return
Risk manager
• Loss of dollars versus benchmark
Available investment tools
• Short selling
• Hedging via derivatives
• Cash
• Leverage
Performance versus assets
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
Red Sky Capital Management Ltd.
How hedge funds differ from long only funds
“Wouldn’t it be great if a manager could run
money like it was his own?”
Leon Levy
Odyssey Partners
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
Red Sky Capital Management Ltd.
How hedge funds differ from long only funds
• Founded March 2010 by Tim Lazaris.
• CI Financial, Canada’s largest independent asset
manager, is a significant minority shareholder and a
founding investor in the Partners Fund.
• Partners Fund launched September 2010. Founders
and shareholders contributed significant capital to
the fund. Today that investment represents 40% of
the fund assets.
• Four portfolio managers with over 46 years of
combined capital markets experience.
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
Red Sky Capital Management Ltd.
Red Sky portfolio team
Team
Background
Coverage
Timothy Lazaris, CA, CFA
CEO and CIO
• 2.5 years Portfolio Manager at GMP Investment
Management
• 10 years Research Analyst at GMP Securities
• 5 years Research Analyst at RBC Capital Markets
(Ranked #1 in Canada by Brendan Woods)
• Portfolio Construction
• Capital Allocation
• Risk Management
• Focused on Core Investment
Ideas
Keith Lam, CA, CFA
Managing Partner and CFO
• 2.5 years Associate Portfolio Manager at GMP
Investment Management
• 3 years Research Analyst at GMP Securities
• Financial Services
• Technology
• Telecom and Media
• Real Estate
Dariusz Nieciecki, CFA
Managing Partner
• 2.5 years Associate Portfolio Manager at GMP
Investment Management
• 3 years Global M&A at Lehman Brothers/Scotia
Capital
• 2 years Equity Research at CIBC World Markets
and TD Securities
• Energy
• Industrials
• Healthcare
• Transportation
Brian Huen, CFA
Managing Partner
• 6 years on the Institutional Equity Sales desks of
CIBC and UBS
• 2 years Private Equity at TD Capital
• 3 years Investment Banking / M&A at Credit
Suisse
• Materials
• Event Driven / Merger Arbitrage
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
Red Sky Capital Management Ltd.
Red Sky Partners Fund
Absolute return
•
•
•
•
Capital preservation
Diversification
Risk management
Focus on generating positive returns in all market conditions
Multi-strategy equity fund
• Core
• Opportunistic / trading
• Market neutral / merger arbitrage
Highly effective tax structure
• Ability to compound returns on a tax-free basis
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
Red Sky Capital Management Ltd.
Multi-strategy portfolio approach
Capital
Capital allocation
• Macroeconomic factors
• Market sentiment
• Fundamental valuation
Core
• Fundamental stock selection
• Detailed due diligence
• Continuous review
Long bias
Market
Neutral
Trading
• Sentiment or momentum driven
• Technical analysis
• Systematic stop losses
• Event-driven/ M&A
• Capturing a defined return
• Complex review process
Long or short
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
Uncorrelated
Red Sky Capital Management Ltd.
Red Sky Partners – portfolio allocations
Dec. 31st, 2011
Mar. 31st, 2012
*Market Neutral includes cash.
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
Red Sky Capital Management Ltd.
Red Sky Partners Fund – performance
As of March 31st, 2012
1 Month
YTD
1 Year
Since Inception
Red Sky Partners Fund - Series B
(0.34%)
4.10%
(3.62%)
8.83%
Scotia Hedge Fund Performance Index EW
(2.06%)
(0.26%)
(10.04%)
1.02%
S&P TSX Index
(1.63%)
4.39%
(9.76%)
S&P 500 Index
4.09%
10.25%
11.66%
Monthly Returns
Series B
Jan
Feb
Mar
2012
2.74%
1.66% (0.34%)
2011
1.76%
1.88%
2010
1.87%
Apr
May
June
July
August
Sept
Oct
Nov
Dec
Year
4.10%
2.01% (1.83%) (1.67%) 0.34% (3.76%) (3.98%) 3.40% (1.12%) (0.82%) (2.22%)
0.94% 0.81%
All returns in Canadian Dollars.
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
1.61%
3.40%
6.92%
Red Sky Capital Management Ltd.
Fund statistics
Since Inception
Avg Month
RSPMF*
0.7%
S&P/TSX
0.3%
S&P 500
1.2%
Best Month
4.1%
5.4%
6.0%
Worst Month
(4.2%)
(9.0%)
(3.6%)
Win/Loss %
63.2%
47.4%
73.7%
1.1
0.3
1.4
1.0
0.8
0.8
10.2%
15.6%
19.4%
3
N/A
N/A
1.2:1
N/A
N/A
Sharpe Ratio1,2
Current Month
Correlation2
Std Deviation2
Days to
liquidate3
Leverage ratio
* The Master Fund is a reference fund. The performance figures of this reference fund differ from those of the individual Series of the Red Sky Partners Fund.
Please refer to the Series of units you hold for purposes of calculating the returns generated for unit holders. The difference between the returns of the Master Fund
and those of the individual series is mainly due to the difference in the amount of management and performance fees charged by the Manager, the cost associated
with the forward agreement and other allowable expenses charged to the Domestic units. Please refer to the Offering Memorandum for a full description or contact
unitholder services for an explanation. (1) Sharpe ratio calculated using monthly figures. (2) Calculations based on returns in local currency.
(3) 90% of portfolio can be liquidated using 10% of the 20 day moving average of trading volume.
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
Red Sky Capital Management Ltd.
Market outlook
Long term – Macro
• U.S. recovery
• European recession
• Emerging market/China uncertainty
• Allocation of assets from bonds to equity as rates
rise over the next 12 months
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
Red Sky Capital Management Ltd.
Market outlook
Short term – Themes
1. Europe
– Contagion risks persist
– ECB actions
2. U.S. monetary policy
– Despite job data, hard for Fed to ease further
– Inflation has complicated stimulus
– QE3?
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
Red Sky Capital Management Ltd.
Market outlook
Short term – Themes
3. Public policy
– U.S. elections
– Republicans versus Democrats
4. Economic outlook
– Decelerating productivity, output, growth
– Rising unit costs
5. Earnings
– Record high margins remain under pressure
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
Red Sky Capital Management Ltd.
Market outlook
Portfolio
Constructive
Financials
Technology
Consumer
Telecom
Large Caps
Less constructive
Energy
Natural Gas
Base Metals
Precious Metals
Small Caps
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
Red Sky Capital Management Ltd.
Red Sky Capital
Experienced portfolio management team
Partnership with CI Financial
Strong corporate and institutional relationships
Significant committed capital
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
Red Sky Capital Management Ltd.
Red Sky Partners Fund
Absolute return
Multi-strategy portfolio approach
Focus
• Risk management
• Capital preservation
• Diversification
• Fundamental research
Tax-efficient structure
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
Red Sky Capital Management Ltd.
Red Sky Partners Fund
Fund Information
AUM
$57 Million
Auditors
Deloitte & Touche
Prime Brokers
CIBC World Markets
RBC DS
Series Information
Series B
Fundserv Code
CIG59217
Management Fee
2%
Performance Fee
20%
Administrator
Commonwealth
Trailing Commission
Transfer Agent
CI Financial
Redemption Fee
Lawyer
BLG
Early Redemption Fee
Eligible Provinces
ON, AB, BC, QC
1% Paid Quarterly
1%
Months 1-6: 5%, Months 6-12: 1%
High Water Mark
Yes, Non-Resettable
Eligible Accounts
Cash, RRSP, TSFA, RESP
Subscriptions
Monthly
Redemptions
Monthly
Minimum Investment
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
$150,000
Red Sky Capital Management Ltd.
Brookfield Place, 181 Bay Street, Suite 900
Toronto, Ontario, M5J 2T3
Tel: 416.642.2209
Fax: 416.642.0929
[email protected]
www.redskycm.com
Paul Perrow
Managing Partner
[email protected]
Red Sky Capital Management Ltd.
Appendix – risk focus
• Generate consistent annual investment returns and long-term capital appreciation of the
Capital
preservation
Units.
• Employ active hedging strategies and short positions to maintain a balanced portfolio.
• Interests of portfolio management team strongly aligned with Unitholders.
• Industry , position, and strategy limits ensure a well diversified portfolio at all times.
Diversification
• Core and Trading positions limited to a max of 5% and 3% of AUM respectively.
• Ability to invest in multiple markets and asset classes provides a unique opportunity.
• Utilize technology and a rigorous risk management process to minimize portfolio volatility.
Risk
management
• Strict liquidity metrics are continuously monitored by the portfolio management team.
• Strict limits on investments in small-caps and private placements.
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
Red Sky Capital Management Ltd.
Appendix: Investment Process
• Identify emerging macro
economic themes
• Identify where we are in
the market cycle
• Consider social / political
landscape and the
potential impact on
overall investment thesis
• Determine optimal
overall long / short bias
given existing and
expected market
conditions
• Anticipate any changes in
key macroeconomic
factors that may impact
the funds overall
investment thesis
• Identify those sectors
which we believe
provide investment
opportunities based
on our macro
analysis
• Seek out sectors on a
global basis that is
consistent with our
favoured
macroeconomic
themes
• The fund will not
invest in sectors or
industries that we
cannot understand
or are unable to
develop an expertise
• Rigorous fundamental
analysis to identify
companies best or worst
positioned in the context
of the macro environment
• Bifurcate between shortterm trading
opportunities and longterm investments
• Seek out companies with
near-term catalysts that
may create significant
volatility in the price of
the firms’ securities
• Consider different parts
of the capital structure to
capture most attractive
risk-adjusted returns
• Leverage our strong
relationships with
key market
participants to
identify best
investment
opportunities
• Sentiment towards
an asset, sector or
theme is a critical
consideration
• Utilize technical
analysis to realize
optimal trading
strategies for our
favourite names
• Identify exit/entry
points based on
technical factors
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
• Select optimal
investment in the
capital structure
• Adhere to strict risk
management process
• Limit concentration in
any one industry,
company or strategy
• Exploit asymmetric
risk/return profiles to
maximize effectiveness
of hedging or
investment positions
• Portfolio management
system used to
continuously monitor
overall exposure and
liquidity
Red Sky Capital Management Ltd.
Appendix – Portfolio construction
Core Portfolio
Trading Portfolio
Market Neutral
Investment Style
Fundamental Bottom-Up
Sentiment, Technical
Factors
Event-driven, Merger
Arbitrage
Trade Duration
Mid and Long-Term
Short-Term
Short and Mid-Term
Trade Size
Larger (Max 5% of fund)
Smaller (Max 3% of fund)
Trade dependent – may
deploy leverage
Profit & Loss
Realization
Target driven (or change
in fundamental thesis)
Systematic
Completion of
transaction
Risk Management
Review
Position Size ,Liquidity,
Industry Concentration
Liquidity and Adherence
to Established Stop
Losses
Detailed due diligence
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
Red Sky Capital Management Ltd.
Appendix – Biographies
Timothy Lazaris CA, CFA - President & CEO
•
Prior to founding Red Sky Capital Management Inc. (RSCM), Timothy Lazaris was one of the
founders and a managing partner of GMP Investment Management L.P.. Before that, he was a
Director and one of the early partners of GMP Securities L.P. having joined in March 1998 to
establish the Financial Services practice. Prior to GMP, he was a Vice President at RBC Capital
Markets and a Research Analyst. Over his 14 year career as a research analyst, specializing in
Financial Services, he achieved high rankings in independent surveys including a number one
ranking in Canada as determined by Brendan Woods. Mr. Lazaris is a graduate of the University
of Toronto (St. Michaels College) where he earned his Bachelor of Commerce degree and
continued his professional education by obtaining his Chartered Accountants (CA) designation
while working at Deloittes and his Chartered Financial Analyst (CFA) designation. Mr. Lazaris was
a member of the Bishop Strachan School Board of Trustees where he is the head of the Audit
Committee and a member of the Investment Committee and is currently a member of the Bishop
Strachan School Board of Governors and a member of the Finance Committee.
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
Red Sky Capital Management Ltd.
Appendix – Biographies
Paul Perrow – Managing Partner
•
Paul brings to Red Sky over 20 years of valuable experience in the asset management industry. He
has held senior positions including: Senior Vice President, Director of Sales and Marketing with CI
Investments, Managing Director with Loring Ward Investment Counsel, Co-Head and Managing
Director with Merrill Lynch Investment Managers Canada and Co-Founder and President of Fairway
Capital. Paul was most recently President and CEO of BluMont Capital, an asset management
company focused on hedge funds and alternative mutual funds.
Keith Lam CA, CFA – Managing Partner & CFO
•
Prior to joining the Red Sky Capital Management Inc., Keith Lam was a Vice-President and Associate
Portfolio Manager of GMP Investment Management evaluating investment opportunities across a
wide range of industries utilizing equity, credit and derivative securities. Previously, Mr. Lam was both
a Research Associate and Research Analyst at GMP Securities L.P. covering the Financial Services
sector. Prior to GMP, Mr. Lam was a Senior Accountant at Deloitte & Touche LLP where he worked on
assurance and advisory engagements for two of Canada's largest financial institutions. Mr. Lam is a
graduate of the University of Waterloo where he earned his Bachelor of Mathematics and Master of
Accounting degrees in 2004. Mr. Lam continued his professional education by obtaining his
Chartered Accountant (CA) designation in 2005 while articling at Deloitte & Touche, and also
obtained his Chartered Financial Analyst (CFA) designation in 2008.
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
Red Sky Capital Management Ltd.
Appendix – Biographies
Dariusz Nieciecki, CFA – Managing Partner
•
Prior to joining Red Sky Capital Management Inc. (RSCM), Dariusz Nieciecki was a Vice-President
and Associate Portfolio Manager of GMP Investment Management L.P. (GMPIM) responsible for the
development and execution of investment strategies across a wide range of industry sectors utilizing
equity, credit and derivative securities. Prior to joining GMPIM, Mr. Nieciecki, was an Associate in the
Global Mergers & Acquisitions group at Lehman Brothers and Scotia Capital for approximately 3
years. Mr. Nieciecki advised corporate clients and financial sponsors on various financial advisory
mandates including mergers, acquisitions, divestitures, leveraged buyouts and recapitalizations.
Prior to that, Mr. Nieciecki worked in the Equity Research Department at TD Securities and CIBC
World Markets with a top-ranked analyst. Mr. Nieciecki received his Bachelor of Commerce from
Queen's University in 2000 and his MBA from the Schulich School of Business at York University in
2003. Mr. Nieciecki also obtained his Chartered Financial Analyst (CFA) designation in 2005.
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
Red Sky Capital Management Ltd.
Appendix – Biographies
Brian Huen, CFA – Managing Partner
•
Prior to joining Red Sky Capital Management Inc. (RSCM), Brian Huen was a Executive Director at
CIBC Wholesale Bank in its Institutional Equity Division and spearheaded the Bank's hedge fund
efforts. Prior to CIBC, Brian was a Director at UBS Canada in its Institutional Equities Sales Division
advising global hedge fund clients on event-driven, risk arbitrage and equity long / short trading
strategies. Brian has also held various positions at TD Capital, Credit Suisse and Scotia Capital.
Brian holds both a Masters Degree in Business (MBA) and an Honours Business Administration
(HBA) degree from the Ivey Business School at the University of Western Ontario. He is also a
Certified Management Accountant (CMA) and a Chartered Financial Analyst (CFA) charterholder.
Geoff MacPhail - Associate
•
Prior to joining Red Sky Capital Management Inc. (RSCM), Geoff MacPhail attended Queen's
University, receiving a Bachelor of Commerce in 2010. Geoff recently passed his Level 2 examination
for the Chartered Financial Analyst (CFA) designation and is a Level 3 candidate for 2012.
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.
Thank you
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund
investments. Please read the prospectus before investing. Unless otherwise indicated and except for returns for periods
less than one year, the indicated rates of return are the historical annual compounded total returns including changes in
security value. All performance data assume reinvestment of all distributions or dividends and do not take into account
sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have
reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be
repeated.
®CI
Investments and the CI Investments design are registered trademarks of CI Investments Inc.
This document is not an offering memorandum and is not intended to be used to solicit investments. Please refer
to the Offering Memorandum and Subscription documents for full information and it is recommended you consult
both legal and tax advisors.