Miles Howland Deep Value Managers Fund, L.P.
Overview Presentation
August 2009
Manager: Miles Howland & Co. LLC
Miles Howland Deep Value Managers Fund, L.P.
Deep Value Fund of Funds Value Proposition to Investors
•
Allows investors access to funds whose managers apply private equity
style investing techniques to their investments in public companies
•
Provides a diversified way to invest in the best performing deep value,
activist and distressed hedge fund managers, many of whom are
currently inaccessible to high net worth individuals either because of
prohibitively high minimums or because they are closed to new
investors
•
Provides balanced diversification into up to 15 funds
•
Underlying managers have consistently demonstrated the ability to earn
competitive returns at risk levels below the S&P 500 and other equity
benchmarks
Miles Howland Deep Value Managers Fund, L.P.
Why Deep Value as a Strategy?
•
Only a limited number of hedge funds possess the business, legal and capital
resources to successfully implement change in underperforming large
capitalization corporations
•
The deep value sector has been less prone to capacity constraints and returns
have not been compressed by capital inflows
•
Top deep value managers are patient, long-term investors, willing to wait for
value realization - many managers (and their investors) in other strategies are
far less patient and more short-term in perspective
•
Long-term investment strategies of deep value managers and concentrated
portfolios generally result in lower turnover and higher tax efficiency relative to
other strategies
Miles Howland Deep Value Managers Fund, L.P.
How Proven Deep Value Investors Generate Returns
•
Understanding industry sectors and anticipating changes and trends that create
investment opportunities
•
Recognizing untapped value in companies ahead of other investors
•
Analyzing and capturing the value of distressed securities across the capital
structure
•
Developing and implementing a specific plan to unlock and grow value in an
investment position
•
Being a catalyst for change through dialogue with management and other
shareholders ranging from suggestions to activism
•
Ongoing strategic input at management and board levels
Miles Howland Deep Value Managers Fund, L.P.
The Investment Strategy
•
Allocate capital to hedge funds that have demonstrated consistent results over the
long term by creating value within public company investments
•
Focus on hedge fund managers that have the industry knowledge, strategic board
level involvement and ability to create value that is often associated with the best
private equity investors
•
Select fund managers with a strategy style based on creating positive change
within companies and when necessary being an “Activist” or catalyst for such
change
•
Build a diversified portfolio of deep value hedge funds to balance concentrated
portfolios at the fund level, with prudent diversification at the fund of funds level
•
Allocate capital to managers making investments in the U.S., U.K., Europe and
Miles Howland Deep Value Managers Fund, L.P.
•
Miles Howland & Co. LLC is an investment management firm focused on
alternative assets. Our primary focus is the management of multi-manager
portfolios (fund of funds).
•
The firm is headquartered in New York and works with substantial private
investors and institutional investors as clients.
•
Miles Howland & Co. LLC works with clients including family offices,
investment advisors, private banks, institutional consultants and institutional
investors.
•
The current client base of the firm includes investors based in the United
States, United Kingdom, Europe and the Middle East.
•
The investment philosophy of the firm is based on quality of manager research
and selection, appropriate diversification, transparency and minimal use of
leverage
Miles Howland Deep Value Managers Fund, L.P.
UBP Asset Management LLC (“UBPAM”)
•
Established its first U.S. fund of funds in 1997
•
Depth
of infrastructure: seasoned team of investment and
business
professionals
•
Approved list of approximately 85 managers to be recommended during the
portfolio construction process
•
UBPAM is able to leverage its relationship with its parent company, Union
Bancaire Privée, (“UBP”) which has been a pioneer in alternative investments
since 1972
–
Over 20 global offices spanning three continents
–
UBP has relationships with the world’s top hedge fund managers
•
Global network and teams sharing information, intelligence, and sourcing
opportunities
•
UBPAM was engaged by the Manager to act as Sub-Advisor to the Fund on a
Miles Howland Deep Value Managers Fund, L.P.
Performance Summary Since Inception
(January 2007 – August 2009)
1This presentation is not to be relied upon in substitution for the exercise of independent judgment. Past performance in not indicative of future results. Returns are net of
all manager fees and estimated fund fees.
Please see pages 18 and 19 for additional important disclosures, definitions of benchmarks and descriptions of certain risks of investing in the Fund. UBPAM has not verified the accuracy of any information in this Presentation, and UBPAM makes no guarantee or warranty as to the correctness or completeness of any information contained herein.
11.26%
7.98%
20.20%
Sharpe Ratio (5%)
(1.06)
(0.88)
(0.63)
0.80
0.64
-Number of Months
32
32
32
Number of Positive Months
18
20
17
Worst Month
-10.13%
-6.54%
-16.79%
Best Month
4.71%
3.33%
9.57%
Maximum Drawdown
34.69%
22.14%
50.94%
Annualized Standard Deviation
Comparative Statistics
Miles Howland Deep
Value Fund
HFRI Fund of Funds
Composite Index
S&P 500 DRI
Annualized Return (net of fees)
-7.39%
-2.45%
-9.59%
Correlation to S&P 500
Monthly Statistics
Number of months Miles Howland
Miles Howland Deep Value Managers Fund, L.P.
Monthly Performance Since Inception
The Miles Howland Deep Value Managers Fund provides
qualified investors a diversified way to invest in the best
performing deep value, activist and distressed hedge fund
managers. The Fund provides access to proven managers
with long term industry leading track records, many of
whom are otherwise closed to new investors. The Fund will
achieve diversification across up to 15 funds in the overall
portfolio to balance the relative concentration in each
underlying fund portfolio.
This presentation is not to be relied upon in substitution for the exercise of independent judgment. Returns are net of all manager fees and estimated fund fees. The Fund launched January 1, 2007. The most recent month is still an estimate. Past performance is not indicative of future results.
Please see pages 18 and 19 for additional important disclosures.
Year Jan Feb Mar Apr May Jun Jul Aug S ep Oct Nov Dec YTD
2009 -0.90% -2.37% 0.39% 4.71% 3.30% 0.17% 3.61% 2.14% 11.38% 2008 -2.87% 0.34% -1.37% 1.55% 2.28% -3.34% -4.34% 0.22% -8.23% -10.13% -4.58% -4.05% -30.07% 2007 2.06% 0.82% 1.18% 1.32% 2.74% -0.70% -0.87% -2.40% 0.06% 2.82% -2.49% 0.15% 4.62% -25% -20% -15% -10% -5% 0% 5% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% An nu al ize d Re tu rn
Annualized Standard Deviation
Miles Howland Deep Value Managers Fund, L.P.
Miles Howland Deep Value Portfolio Net Returns By Manager
Please see pages 18 and 19 for additional important disclosures.
Name of Manager Fund
Cevian Capital II3 Jul-06 3.00% N/A N/A N/A N/A 31.72% 16.83% -40.40% 25.98% Icahn Partners L.P. Nov-04 0.15% N/A N/A 3.95% 11.63% 27.19% 6.26% -37.63% 17.57% JANA Partners, L.P. Jan-01 3.10% 10.35% 45.97% 25.98% 11.31% 16.12% 7.86% -23.23% 13.00% Marathon Special Opportunity Fund2 May-99 4.04% 20.17% 33.95% 28.81% 14.09% 13.26% 4.02% -25.49% 16.45% Pershing Square, L.P. Jan-04 1.93% N/A N/A 42.60% 40.09% 22.33% 22.20% -12.08% 17.92% Scoggin Capital Management LP II Jan-99 3.60% -2.86% 28.00% 23.99% 11.33% 12.69% 10.85% -33.49% 22.13% Stark Investments L.P. Oct-94 0.73% 5.18% 16.37% 9.19% 6.68% 14.97% 3.53% -23.36% 1.65% Steel Partners II L.P.1 Oct-93 0.00% 10.16% 17.63% 29.84% -1.15% 16.47% -0.56% -40.14% -5.15% Third Point Offshore Fund Dec-96 0.00% -7.64% 52.93% 29.07% 19.76% 13.86% 17.78% -32.36% 4.59%
Miles Howland Deep Value
Managers Fund1 2.14% N/A N/A N/A N/A N/A 4.62% -30.07% 11.38%
S&P 500 Index 3.61% -22.09% 28.67% 10.86% 4.91% 15.78% 5.49% -36.99% 14.97% HFRI Fund of Funds Composite Index 0.97% 1.02% 11.61% 6.86% 7.49% 10.39% 10.25% -21.30% 7.87%
Aug-09
Miles Howland Deep Value Managers Fund, L.P.
Miles Howland Deep Value Portfolio
Fund
Key Principal
Firm AUM
Deep Value/Activist Strategy
Cevian Capital
Christer Gardell
$
3,000,000,000
Shareholder Value
Icahn Fund
Carl Icahn
$
4,900,000,000
Shareholder Value
JANA Offshore Partners
Barry Rosenstein
$
2,500,000,000
Shareholder Value
Marathon Special Opportunity Fund
Bruce Richards
$
10,000,000,000
Special Situations
Pershing Square International
William Ackman
$
4,300,000,000
Shareholder Value
Scoggin Overseas Fund
Craig Effron
$
1,200,000,000
Distressed
Stark Investments L.P.
Brian Stark & Michael Roth
$
8,600,000,000
Multi-Strategy
Steel Partners
Warren Lichtenstein
$
4,000,000,000
Shareholder Value
Third Point Fund
Daniel S. Loeb
$
2,300,000,000
Shareholder Value
Miles Howland Deep Value Managers Fund, L.P.
Summary of Terms
Domestic (L.P.)
Offshore (Ltd.)
Structure:
Delaware Limited Partnership
Cayman Islands
Minimum Investment:
$1,000,000
$1,000,000
Management Fee:
1.00%
1.00%
Performance Fee:
10%
10%
High Water Mark
Yes
Yes
Administrator:
Citi Hedge Fund Services, Ltd.
Citi Hedge Fund Services, Ltd.
Auditor:
Ernst & Young
Ernst & Young
Legal Counsel:
Bingham McCutchen, LLP
Maples and Calder
Subscriptions:
Monthly
Monthly
Redemptions:
Quarterly 95 day notice
1 Year hard Lock up, 4%
penalty in Year 2
Quarterly 95 day notice
1 Year hard Lock up, 4%
penalty in Year 2
Miles Howland Deep Value Managers Fund, L.P.
The Due Diligence and Manager Selection Process
Detailed Review of Documents
Face-to-face Meetings in Managers’ Offices
Quantitative Review
Background Checks
Risk Profile
Back Office Review
Qualitative Analysis
Miles Howland Deep Value Managers Fund, L.P.
UBPAM (Sub- Advisor) Investment Process Overview
Approved
List
Approx. 85 managers Top-Down AnalysisPortfolio
Management
Team
Operational / Business RiskStructural Risk
Analysis Team
“Checks and Balances”
Investment Risk
Management Team
Investment Risk Bottom-Up AnalysisResearch
Team
Investment Process
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Miles Howland Deep Value Managers Fund, L.P.
•
Manager sourcing for Approved List
•
Primary communication with managers / ongoing monitoring
•
Qualitative review
•
Strategy teams with proven areas of expertise
•
Depth of team allows for concentrated manager coverage
•
All information stored in centralized, proprietary database
Miles Howland Deep Value Managers Fund, L.P.
• Risk analysis conducted both at the manager level
and the portfolio level
• Will seek to manage portfolios to a risk budget
• Factor and exposure analysis is assessed
• Opportunistic use of active hedge overlays will
seek to create additional alpha and/or hedging for
the portfolios
• Independent from Portfolio Management
UBPAM (Sub-Advisor) Risk Management: Factors in Recommending
Underlying Managers
Structural Risk Analysis Team
Investment Risk Analysis Team
• Independent Structural Risk Analysis (“SRA”) team
since 1997
• SRA Team focuses on non-investment related risks
• Areas of focus include:
- Safeguarding of assets
- Pricing / valuation of assets
- Service providers (Administration,
Custodian, etc.)
• SRA utilizes a comprehensive proprietary evaluation
methodology for hedge fund managers
Miles Howland Deep Value Managers Fund, L.P.
Background of Reid R. Miles
•
Founder and CEO of Miles Howland and Co. LLC, a New York based
investment management firm.
•
Over 20 years of experience in executive management and investment
management. He has been active as a professional investor for over ten years.
Over the course of his career, he has invested in over 30 private equity
transactions and managed numerous fund of funds investments.
•
Currently a Director of the following companies:
–
CreditSights (
www.creditsights.com
) an independent financial research firm
–
Majestic Research (
www.majesticresearch.com
) an independent research firm
–
Tachyon Networks (
www.tachyon.com
) a broadband telecommunications firm
•
Prior to launching Miles Howland & Co., he was a Managing Director and
Partner of BV Group Ventures LLC, a diversified investment management firm
focused on private equity, real estate and hedge fund investing.
Miles Howland Deep Value Managers Fund, L.P.
Contact Information
Reid R. Miles
Chief Executive Officer
Miles Howland & Co. LLC
1270 Avenue of the Americas
Suite 1900
New York, NY 10020
[email protected]
Miles Howland Deep Value Managers Fund, L.P.
Footnotes/Disclosures
The Indices shown do not reflect fees and expenses associated with the active management of a hedge fund portfolio. Investors cannot invest directly in indices or averages, and their performance does not represent the performance of any fund or underlying fund mention in this report. Index performance is being provided as a point of reference only. The fund and the underlying funds may invest indifferent securities and engage in different trading strategies from the index. In addition, it should be noted that the sector, industry, stock and country exposures, volatility and risk characteristics of the fund and underlying funds may differ materially from those of the index. Returns for the indices are from the HFR Database.
The HFRI Fund of Funds Composite Index consists of funds that invest in multiple managers through funds or managed accounts. The strategy designs a diversified portfolio of managers with the objective of significantly lowering the risk (volatility) of investing with an individual manager. The Fund of Funds manager has discretion in choosing which strategies to invest in for the portfolio. A manager may allocate funds to numerous managers within a single strategy, or with numerous managers in multiple strategies. The minimum investment in a Fund of Funds may be lower than an investment in an individual hedge fund or managed account. The investor has the advantage of diversification among managers and styles with significantly less capital than investing with separate managers.
The Standard & Poor’s 500 Index ("S&P 500") is a widely recognized, unmanaged index of market activity based upon the aggregate performance of a selected portfolio of publicly traded common stocks including monthly adjustments to reflect the reinvestment of dividends and other distributions. The S&P 500 reflects the total return of securities comprising the index, including changes in market prices as well as accrued investment income, which is presumed to be reinvested. These results are shown to give a perspective of the historical performance of the U.S. equity market.
No information provided in this Miles Howland (“Report”) shall constitute, or be construed as, an offer to sell or a solicitation of an offer to acquire any security, investment product or service, nor shall any such security, product or service be offered or sold in any jurisdiction where such offer or solicitation is prohibited by law or regulation. This Report is not intended to be, and shall not be construed as, investment, financial or other professional or expert advice. Readers of this Report are urged to seek professional advice with respect to any such matters. Performance data supplied herein is based solely on the information provided to the Fund by third parties. Information and opinions presented in this presentation have been obtained or derived from sources believed by Miles Howland & Co. LLC. to be reliable, but they make no representation as to their accuracy or completeness and accept no liability for loss arising from the use of the material presented in this presentation unless such liability arises under specific statutes or regulations. This presentation is not to be relied upon in substitution for the exercise of independent judgment. Miles Howland & Co. LLC. may have issued other presentations that are inconsistent with, and reach different conclusions from, the information presented in this presentation. Those presentations reflect the different assumptions, views and analytical methods of the analysts who prepared them. The results above are net of all fees and estimated expenses. The most recent month is still an estimate.
The information contained herein is not intended for or available to certain investors in certain jurisdictions and are only available to certain accredited investors or qualified purchasers. UBPAM has not prepared this Presentation nor verified the accuracy or completeness of any information in this Presentation, concerning the Fund or Miles Howland & Co. LLC and UBPAM disclaims responsibility for and makes no guarantee or warranty as to the correctness or completeness of any information contained herein.
Miles Howland Deep Value Managers Fund, L.P.
Risk Factors
Please see the Fund’s private placement memorandum for a more detailed discussion of risks, conflicts of interest and tax consequences associated with an investment in the Fund. Prospective investors should carefully consider, among other factors, the matters described below, each of which could have an adverse effect on the value of an investment in the Fund. As a result of these factors, as well as other risks inherent in any investment, there can be no assurance that the Fund will meet its investment objectives or otherwise be able to carry out its investment program successfully. The Fund’s returns may be unpredictable and accordingly, the Fund’s investment program is not suitable as the sole investment vehicle for an investor. An investor should only invest in the Fund as part of an overall investment strategy. Based on, among others, the factors described below, the possibility of partial or total loss of capital will exist and investors should not subscribe unless they can bear the consequences of such loss. Past Performance. The Fund’s prior investment performance is not indicative of future results. On any given investment, total loss of the investment is possible.
Projections/Opinions. Statements contained herein that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of Miles Howland & Co. LLC (“MHC”) or UBP Asset Management LLC (“UBPAM”) as the case may be. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. No assurances can be given that actual results will achieve the Fund’s stated objectives.
Restrictions on Transfer and Withdrawal; Lack of Liquidity. The Fund’s shares have not been registered under the Securities Act or any other applicable securities laws. There will be no public or private market for the Fund’s shares and none is expected to develop. In addition, the Fund shares described herein are not transferable except as permitted under the Fund’s memorandum and articles and private placement memorandum of the Fund.
Dependence on Key Personnel. The success of the Fund depends in substantial part upon the skill and expertise of the management team of the Fund. There can be no assurance that these individuals will continue to be members of or employed by MHC. The loss of service to the Fund of one or more of such individuals could have a material adverse effect.
