SWIFTSURE TECHNOLOGY FUND - Swiftsure Partnersswiftsurepartners.co.uk/wp-content/uploads/2017/11/... · SWIFTSURE TECHNOLOGY FUND Swiftsure Partners Limited is an Appointed Representative

SWIFTSURE TECHNOLOGY FUND

A Global Technology Long/Short Equity Strategy

October 2017

1 Fore Street | London | EC2Y 9DT+44 (0)20 3865 8209


Swiftsure Partners Limited is an Appointed Representative of Thornbridge Investment Management LLP which is authorised and regulated by the Financial Conduct Authority 2

Shouldn’t the trends that affect the world change your investments?


Swiftsure Partners Limited is an Appointed Representative of Thornbridge Investment Management LLP which is authorised and regulated by the Financial Conduct Authority 3

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• Thematic approach to investing in TMT and industrial technology stocks

• Established public companies (mid-cap bias) listed on developed markets

• Fundamental stock selection

• Long-short (neutral to long-bias)

• UCITS (on Pictet’s Protea Fund platform) - Daily liquidity with GBP and USD share classes

• Ongoing charge of ~1.22%, with a 15% performance fee

• Early Bird discount: ~0.92% ongoing charge and 12% performance fee

Launched on August 18th, 2017

Global Technology Equities Fund

Swiftsure Partners Limited is an Appointed Representative of Thornbridge Investment Management LLP which is authorised and regulated by the Financial Conduct Authority


Investment Process

4

Stock Selection

Mapping the Supply

Chain

Theme Selection

Identify stocks in theme value chain impacted (positively or negatively)

• Each theme has a universe of 50 to 100 stocks

Fundamental analysis to select stocks

• 25 years experience picking technology stocks

• Previous careers in operating and advising technology companies

Identify secular global technology trends

• Current themes: 1) Workplace Automation, 2) Data Science, 3) Future Transport, 4) Human Machine Interaction, 5) Security Technology



What we do

What we don’t do:

• Speculate on future technology trends

• Speculate on high risk, emerging technology

• Chase momentum stocks

• Invest in unlisted companies or illiquid micro caps

• Track the index or mirror competition

5

What we do:

• Identify current secular growth trends

• Target established technology companies

• Combine industry and fund management experience

• Dig deep into value chains

• Get out there and meet companies



Portfolio structure

6

Limits%

Normal%

Gross Exposure 200 100-150

Net exposure +0 / +100 +0 / +50

Maximum individual sizeLong 10% Short 5%*

Long 2-5%Short 1-3%

Long Short

Number of Positions 25-35 10-20

Typical Holding Period 9-36 months 3-12 months

*up to 10% for ETFs



The Background of the Investment Team

7

“The Devil is in the details, but so is salvation.” – Hyman G. Rickover, father of the US nuclear navy

Unique combination of sector experience and

expertise

Engineering educated

Fundamental stock pickers

Prior careers in technology

industry



• CIM Investment Management, thematic long/short strategy, from 2006 to 2016

• US Navy, fast attack nuclear submarine officer, SSN 761 (USS Springfield)

• Asyst Technologies, headed manufacturing for semiconductor robotics company

• Industrials and tech focused investment banking -Robertson Stephens, Deutsche Bank

• Consultancy to industrial/technology companies at Bain & Co

• Harvard Business School, MBA with Distinction

• Master degree equivalent in Nuclear Engineering

• BSc in Manufacturing Engineering, Boston University

• CIM Investment Management, with a focus on technology equities

• RAB Capital Plc focusing on tech and engineering equities

• PAR Equity LLP, a VC fund: activism, new deals and portfolio management

• RBS Group, Procurement/supply chain

• MEng in Mechanical Engineering, University of Bristol

• MSc in Economics, Finance and Management, University of Bristol

Investment Team

8

Daniel Nye, CFAPortfolio Manager14 years in portfolio management

Duncan Stewart, CFAAssociate PM9 years in portfolio management



Continuous process of seeking out new themes• Sector media/third party research• Industry conferences• Company meetings

Is the trend sustainable, secular, with quantifiable growth?• Consultation of relevant industry contacts• Proprietary and sell side research• Analysis of industry dynamics

Is there an opportunity to make money?• Broadly identify investible universe• Review sector valuations

Stage 1

Stage 2

Stage 3

Investment Process: 1. Theme Selection

9

Focus our analytical efforts and expose the fund to technology trends that will prevail through the cycle

• Portfolio of 5 themes

• Each theme is typically held for 3 years



Investment Process: 2. Map Value Chain

10

• Industry experts

• Market research

• Broker research

• 50 to 100 stocks globally per theme

Initial Mapping

Screen

Defined Investment Universe

LONGS• Market Cap: >$500m• Developed markets• Growth tail wind

SHORTS• Market cap: >$1000m• Developed markets• Disruptive head wind

• Conferences

• Company meetings

• Media and 3rd party research



Investment Process: 3. Stock Selection

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1. Comparable Analysis

• Valuation versus peers• EV/EBITDA, EV/S, P/E, PE/G

2. Sustainability of Returns

• Defensibility of technology• Competitive position

3. Balance Sheet

• Trajectory of credit quality• Balance sheet strength

7. Continuous Review

• Evolution or drift of thesis• Target price adjustment• Share price action• Business execution• Relative valuation

4. Accounting

• Evidence of creative accounting?• GAAP to non-GAAP adjustments• Quality of cash flows

5. Management

• Onsite/offsite meetings• Track record of navigating cycles• Delivery versus guidance• Ownership, alignment, insider selling/buying

6. Investment Thesis

• Establish target price• Historical multiples

Investment

Not speculation



Universe

12

Americas EMEA Asia

423

43

3894

167

Number of Companies

1,838 companies with a total market capitalisation of over $42 trillion

765

131 42

31

58

136

Number of Companies 398

322

33

96

67

155

Number of Companies 673

$1,781

$882

$705

$163

$686

Total Market CapitalisationBillions of $US

$574$513

$376

$356$736


$6,081

$3,943

$303$1,020

$6,300




Theme Thesis Beneficiaries

Data Science • Cisco: “Global IP traffic to increase at 24%/pa”

• Smartphone and M2M traffic growing at 49%

BI and data mining software, comms, hardware systems

Security Technology • Mounting threats from nation states and fundamentalism

• Cybersecurity spend has increased 35x since ’04

• Expected to grow 12-15%/pa over next 5 years 1

Firewalls, compliance s/w, detection s/w, cloud app security, monitoring, outsourced IT, border screening

Workplace Automation • Deloitte: “25-31% of business service jobs at risk”

• McKinsey: “45% of activities can be automated”

• International Federation of Robotics (IFR): “global robot unit sales to grow at 12% pa

Enterprise optimisation s/w, service exchanges, Co-Bots, analog sensors

Future Transport • New sensors/processors allow for vehicle automation

• McKinsey: “50% of cars to be highly autonomous and 15% fully autonomous by 2023”

Semiconductor processors, sensors, application software, precision machine components, wireless connectivity (5G)

Human Machine

Interaction (HMI)

• Expanding toolkit for how users interface offers new means of communication, disrupting industry and driving growth.

• Clear growth in voice, vision, sensors, and digital engagement.

Consumer electronics, componentsuppliers, digital agencies, new media, AR/VR

Current Themes Major Secular Macro Technology Themes

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Source: 1 SANS Institute



Current Positioning: October 5th

14

Top 10 Long Positions

ON Semiconductor Ord Shs 3.6% Future Transport

Flir Systems Ord Shs 3.5% HMT

TomTom Ord Shs 3.5% Future Transport

Teradyne Ord Shs 3.3% Workplace Automation

Rapid7 Ord Shs 3.3% Security Technology

Gigamon Ord Shs 3.3% Data Science

Hortonworks Ord Shs 3.2% Data Science

OSI Systems Ord Shs 3.2% Security Technology

Secureworks Class A Ord Shs 3.1% Security Technology

Ebix Ord Shs 3.1% Workplace Automation

Top 10 Short Positions

Broadcom Ord Shs 1.9% Data Science

WPP Ord Shs 1.7% HMT

Lumentum Holdings Ord Shs 1.6% Data Science

STMicroelectronics ADR 1.6% Data Science

Cirrus Logic Ord Shs 1.6% HMT

Citrix Systems Ord Shs 1.5% Future Transport

Amada Holdings Ord Shs 1.4% Future Transport

Publicis Groupe Ord Shs 1.3% HMT

Fanuc Ord Shs 1.3% Workplace Automation

iRobot Ord Shs 1.2% Workplace Automation



33%

20%

47% 0%

>$20bn

$13bn-$20bn

$1bn-$13bn

<$1bn

60%27%

13%

North America

Europe

Asia

40%

24%

17%

14%

5%

HMT

Data Science

Workplace Automation

Future Transport

Security Technology

27%

25%9%

18%

21%

Themes

Current Positioning: October 5th

15

Long book

Short book

9% 3%

71%

17%

Market Cap

69%

21%

10%

Geography



Example: Data Science

16

Quantifiable evidence of a sustainable trend

• “IP Traffic is expected to grow at 27%/pa for the next 5 years,” Cisco

• “Every two days we create as much information as we did from the dawn of civilization up until 2003,” Eric Schmidt, Google

• “Stored data to rise 44 fold between 2009 and 2020,” Microsoft

• “Internet connected devices to grow from 500 million in 2007 to 50 billion by 2020,” Cisco

Map out the companies that are impacted or disrupted

Positively Impacted

• Business Intelligence applications

• Cloud/distributed Storage

• Comm equipment and components

Disrupted

• Telcos and CDN

• Legacy database companies

• Subscale semiconductor companies

Stock selection examples

Long

• Hortonworks

Short

• Lumentum

Stock Selection

Mapping the Supply

Chain

Theme Selection



Risk Controls

17

Individual positions – We have an internal policy of reducing loss making positions, with the following guidance:

• 10% drop in price during the month: Add to focus list

• 15% drop in price during the month: Reduce position size by 50%

• 20% drop in price during the month: Exit position

Portfolio level risk control:

• VaR (one month, 99% confidence) >20%: Reduction in net positioning

Fund is also subject to formal restrictions on individual position sizes, but our internal policies follow tighter limits, for which we provide the following

guidance:

• Maximum individual position size on the long book: 6% of NAV

• Maximum individual position size on the short book: 4% of NAV

THE ABOVE IS GUIDANCE ONLY



Fund Terms

18

Management Fee 1%

Performance Fee 15% on performance over 1 month LIBOR (with equalisation and high water mark)

Liquidity Daily

Structure Luxembourg SICAV

Legal Lux c/o Pictet – Allen & Overy, and UK – Rooney | Nimmo

Auditors Deloitte Luxembourg

Administrator Pictet Luxembourg

Prime Broker Morgan Stanley

Depository and custodian Pictet Luxembourg

All in annual administration costApproximately 22 basis points (at $30 million); cost includes administrator/depository/custodian, fund directors, annual audit, legal costs



DisclaimerThis presentation may not be reproduced (in whole or in part), transmitted, modified or used for any public or commercial purpose without the prior written permission of Swiftsure Partners Ltd.

This presentation does not constitute and none of its contents should be construed as an offer or a recommendation to subscribe for, purchase or sell any interest in the Fund, nor as an offer or an invitation,inducement, recommendation or a solicitation of an offer, to subscribe for, purchase or sell, any security held by the Fund.

The opinions expressed in this presentation do not take into account any individual’s circumstances, objectives, or needs and each individual must make his or her own independent decisions regarding any investmentin the Fund. Before entering into any transaction, each individual is urged to consider the suitability of the transaction to his or her particular circumstances and to review independently, with professional advisors asnecessary, the specific risks involved, in particular the financial, regulatory, and tax aspects.

The information, opinions and analysis contained herein represent own assessments of information believed to be reliable and available to them as at the date that this report was prepared but no liability is acceptedfor the use of, nor may any reliance be placed on, any information, opinions or analysis contained in this presentation in making any investment decision. Any decision to invest in the Fund should be made on the basisof the information contained in the Private Placement Memorandum and Share Subscription Agreement and not on the information contained in this presentation.

There can be no certainty that the objectives of the investments or structures which are described herein will be achieved. The impact of charges, which may have a greater proportionate effect on returns ifinvestments are sold in the shorter term, are contained in Insight Growth Fund Placement Memorandum (to become Swiftsure Growth Fund Placement Memorandum). The value of an investment and the income fromit can go down as well as up, it may be affected by exchange rate variations, and you may not get back the amount invested. Quoted yields are not guaranteed, and past performance is no guarantee of current or futurereturns.

There can be no assurance that any securities or other financial instruments discussed herein are currently or will remain in the fund’s portfolio. The investments discussed in this presentation do not represent theentire portfolio and, accordingly, the examples are not intended to indicate the overall portfolio performance that may be expected to be achieved. The information presented should not be considered arecommendation to purchase or sell any particular security or other financial instrument. It should not be assumed that any of the investments discussed herein have been or will be profitable, or thatrecommendations made in the future will be profitable or will equal the performance of those discussed herein. Past results are not necessarily indicative of future results.

This presentation is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it directed to any person or entity to whom it would beunlawful to direct such a document.

Nothing in this disclaimer excludes any obligation we have to you under applicable law.

19

The contents of this document are communicated by, and the property of, Swiftsure Partners Limited. Swiftsure Partners Limited is an appointed representative of Thornbridge Investment Management LLP which isauthorised and regulated by the Financial Conduct Authority (“FCA”).

The information and opinions contained in this document are subject to updating and verification and may be subject to amendment. No representation, warranty, or undertaking, express or limited, is given as to theaccuracy or completeness of the information or opinions contained in this document by Swiftsure Partners Limited or its directors. No liability is accepted by such persons for the accuracy or completeness of anyinformation or opinions. As such, no reliance may be placed for any purpose on the information and opinions contained in this document.

The information contained in this document is strictly confidential.

The value of investments and any income generated may go down as well as up and is not guaranteed. Past performance is not necessarily a guide to future performance.

Documents

SWIFTSURE TECHNOLOGY FUND - Swiftsure Partnersswiftsurepartners.co.uk/wp-content/uploads/2017/11/... · SWIFTSURE TECHNOLOGY FUND Swiftsure Partners Limited is an Appointed Representative