August 2013
SANDBOURNE ASSET MANAGEMENT LTD
Authorised and regulated by the Financial Conduct Authority
Fund Overview
 Long / Short UK Equity Fund established November 2003
 Aim is to provide absolute capital appreciation
 Best performing European long/short fund 2008-2010
averaging 31.2% per annum (source: BarclayHedge)
 Compound returns over 10% for nearly 10 years
 Investment process tested and refined over 9 years
– Stock selection principally based on fundamentals with a
focus on catalysts to crystallise value in positions
– Futures overlay used to actively control net exposure: now
given more prominence after consistent positive contribution
 Significant management commitment with over $40m own money
invested
 Strategy reflecting the managers’ philosophy on how to manage
equity investment, not specifically “alternative investment”
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Fund Overview (continued)
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Fund only invests in liquid and listed securities
Investors able to redeem shares monthly with no gates
GBP, USD and EUR shares classes available
Simple easy-to-understand strategy
100% transparency – all positions open to investor scrutiny
Managers available and eager to discuss fund with investors
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Monthly Returns
A Shares - GBP
Year
Jan
Feb
Mar
Apr
2013
12.01%
2012
24.04% 18.42% -10.72% -6.13% -22.33%
2011
-0.64% -1.09% -3.84%
2010
-3.08% -0.47% 10.63% -1.28% -6.12% -9.10% 15.44% -1.78% 16.99% -1.26% -1.09% 12.26%
2.70% -4.18% -0.89%
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
9.06% -9.18% 12.74%
1.78% -3.10%
21.98%
8.16%
9.07%
1.24%
2.33%
3.75% -6.68% -5.49% -2.67% -17.97% -13.76% 15.06% -1.56%
2009 -10.57% -11.89%
8.71% 25.66%
3.41% -4.14% 13.36% 16.02%
2008
9.58%
1.67%
2.42% -2.45%
2.39%
8.86%
2007
-0.18%
-1.38%
4.20%
-1.12%
-1.08%
4.51%
4.74%
0.98%
-5.29%
-2.45%
2006
3.31%
2.34%
1.46%
1.35%
-2.76%
-0.20%
-2.73%
0.06%
-2.22%
2005
0.76%
-3.10%
2.63%
2.97%
0.02%
-0.72%
5.04%
0.64%
2004
0.98%
1.41%
-0.12%
0.58%
-1.48%
0.91%
-7.79%
-4.15%
5.98% -5.45%
8.58%
25.13%
1.03% -31.87%
30.75%
0.01%
3.52%
45.58%
0.61% -3.42% 12.09% -6.55% -6.26%
0.20%
18.62%
2.72%
2.23%
7.58%
3.30%
-1.36%
0.40%
2.73%
-1.26%
-0.09%
0.91%
-0.39%
7.41%
-0.61%
1.39%
1.08%
1.21%
-6.81%
2.13%
2.13%
2003
Data is produced by Sandbourne Asset Management based on monthly NAV figures from Citco Fund Services (Ireland)
Monthly returns for US Dollar and Euro share classes available on request.
SANDBOURNE ASSET MANAGEMENT LTD
YTD
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Performance History
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Performance Data
A Shares - GBP
Return
Volatility1
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013 (YTD)
Since launch
-6.81%
7.41%
2.73%
7.58%
18.62%
45.58%
30.75%
-31.87%
25.13%
21.98%
10.62%
9.25%
7.09%
7.26%
10.34%
20.01%
36.91%
29.10%
27.55%
41.57%
27.08%
25.37%
-1.22
0.38
-0.28
0.17
0.66
1.21
1.04
-1.18
0.59
1.48
0.30
Sharpe
Ratio
1
Annualised volatility of monthly returns
Correlation (based on B Shares – USD)
Fund/Peers
Fund/Market
Peers/Market
Since Launch
0.41
0.56
0.83
Last 12 Months
0.73
0.66
0.84
Peers: HFRX Equity Hedge Index
Market: MSCI World Total Return Index
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Investment Philosophy
Top-Down: Market Characteristics
 Equity markets go through extended up- and down-swings which
many investors either ignore, misunderstand or fight against
 We seek to capture returns on both sides by understanding turning
points and respecting genuine trends
 We try to avoid temporary reversals and boost gains with top-down
stock plays
Bottom-Up: How to incorporate stock picking
 Many stock picks take time to play out
 Long-term stock picks are best separated from market view
 Look for stock-specific risks and internal prospects to diversify topdown exposure
 Don’t restrict net exposure to being the sum of stock-picks
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Portfolio Construction – Top Down
Horizon 1 to 3 months
Highly liquid instruments/stocks
Long and short positions
Futures
 Actively used to control net exposure
 Typically up to +/-100% of net assets
Analysis
 Current issues
– e.g. credit crisis
 Economic cycle
 Technical &
sentiment data
 Valuation
Top Down stock picks
 50-80% of net assets
 Typical position size at initiation 3-4% (depending on liquidity)
 20 to 30 positions
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Exposure History
Positive but insubstantial
market-timing contribution
SANDBOURNE ASSET MANAGEMENT LTD
Change of strategy: More aggressive
variation of net exposure, stronger returns
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Top Down: Example
Short: Wolseley
600
• Cyclical fall in demand, negative sentiment
• Earnings expectations halved and P/E contracted further
500
400
Shorted
Aug08: 444p
300
200
Covered
Mar09: 159p
100
0
Jul-08
Aug-08
Sep-08
Oct-08
SANDBOURNE ASSET MANAGEMENT LTD
Nov-08
Dec-08
1
Jan-09
Feb-09
Mar-09
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Portfolio Construction – Bottom Up
Core Trades
 Companies with internally generated prospects
 Performance of shares not dependent on market
 Holding period 6 months or more
 Mainly long positions
 Will accept lower levels of liquidity for high conviction ideas
 50-80% of net assets
 Typical position size at initiation 3%
Research process:
 20 to 30 positions
 Internal
 Company Meetings
 Brokers
– Broker reports
– Sell-side analysts
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Portfolio Construction – Bottom Up
Short-term Trades
 Companies with imminent results or newsflow
 Low correlation to market expected
 Holding period less than 1 month
 Both long and short positions
 Need high levels of liquidity
 Less than 30% of net assets
 Typical position size at initiation 3-4% (depending on liquidity)
 0 to 10 positions
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Summary
 Process refined and improved over 9 years
 Uncorrelated over cycle; above average returns with current
strategy
 Strategy reflecting the managers’ philosophy on how to manage
equity investment, not specifically “alternative investment”
 Large management commitment (over $45m)
 Process scalable to at least $500m
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Appendix
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Directors, Managers, Advisors and Fees
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Launch Date:
Investment Manager:
Prime Broker:
Lawyer UK:
Cayman Islands Lawyer:
Accountant:
Administrator:
Directors:
 Fees:
 Capacity Limit:
 Domicile:
 Listing:
SANDBOURNE ASSET MANAGEMENT LTD
01/12/2003
Sandbourne Asset Management Limited
Goldman Sachs International
Stephenson Harwood
Maples and Calder Europe
BDO
Citco Fund Services (Ireland) Limited
William Scott (Chairman), David Bruce,
Nick England
- 2% per annum Management Fee
- 20% Performance Fee paid annually in
arrears, with high watermark.
$500-750 million
Cayman Islands
Irish Stock Exchange (A & B classes)
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Key Staff
 David Bruce – Chief Executive, Fund Manager is the founder of Sandbourne
Asset Management, having left Abbey Life Investment Services Ltd where he was
the Managing Director. He spent 11 years in total with Abbey Life in a number of
positions including heading up the Japanese desk until 1991 and the UK equity
desk thereafter.
 Paul Dixon-Box, CFA – Fund Manager graduated from Cambridge University
with a degree in Mathematics in 2001 and joined the US desk of Sandbourne
Asset Management in August of that year helping to run a US investment trust and
subsequently a US long/short equity hedge fund. Paul transferred to the UK desk
in April 2003 in preparation for the launch of Sandbourne Fund.
 Alison Dean – Director - Operations worked for David Bruce as Operations
Manager at Abbey Life before joining Sandbourne Asset Management. She plays a
key role in the operation by ensuring that the fund managers have the maximum
possible amount of time to spend on actually running the portfolios.
 Barbara Minns– Investor Relations joined Sandbourne Asset Management in
December 2010 following an 8 year career at J.P. Morgan Investment Bank.
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Dealing
 Subscriptions:
– Minimum subscription for new investors is £100,000 for A Shares,
US$100,000 for B Shares or €100,000 for C Shares
– Applications for shares must be received by the Administrator
before 12.00 pm on the Valuation Day immediately preceding the
relevant monthly Dealing Day.
 Redemptions:
– Shares may be redeemed on each monthly Dealing Day at the
Redemption Price then ruling
– 21 calendar days notice of redemption
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Risk Management
 Daily monitor
– Sector exposure
– Composition of portfolio in terms of large cap, mid cap and
small caps
– Liquidity of positions
 Balance Sheet – maximum leverage of 150%
 Operations staff monitor portfolio to ensure that the fund does not
exceed its restrictions
 Automatic stop losses are NOT used. Adverse moves are
assessed on a daily basis to evaluate changes to risk/reward.
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Example Turning Point: 2007 high
104
60%
102
50%
Monitoring the indices
versus sentiment and
technicals:
100
40%
S&P Indices Rebased
98
96
Index makes higher high in
October, well after first signs
of the credit crisis
30%
But investors are too bullish,
complacent
94
20%
92
10%
S&P 500 TR
And market internals do not
confirm new high
S&P Equalweighted TR
90
AAII Bullish % (rhs)
88
Jul 07
Aug 07
SANDBOURNE ASSET MANAGEMENT LTD
Sep 07
Oct 07
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0%
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Example Futures Trades (FTSE 100)
81% net short at 31 Dec 2007
Increased to
100% short
on 16 May
Went to 44%
short on 31 Jan
Covered
half of short
on 18 Jan
Covered remaining
short on 22 Jan
Went to 25% short
between 19 Sep
and 23 Sep 2008
Returned to 43%
short on 4 Apr
Covered to 8%
short on 17 March
Covered to
8% long on
17 Sep
Chart: Bloomberg
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Performance Commentary
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2004: Poor stock-selection from purchasing poor-quality, lagging names (having launched
many months into the new bull market). Resolution: Focus on quality stocks and improve
selection process, including better analyst contact. Take more decisive action on failing
positions.
2005: Both stock-selection and market-timing positive but not strong enough. Resolution:
Continue to improve stock-selection, and manage/vary net exposure more aggressively.
2006: Strong market-timing including use of futures but largely offset by stock-selection,
including too many shorts caught up in M&A bubble. Resolution: Reduce the number of
positions held against market view (shorts in this case). Shrinking portfolio in this manner will
likely increase volatility but we believe strong returns will more than compensate.
2007: With increased use of futures, market-timing produced a decent return (final short
positioning was costly during the 2H07 but paid off in 1Q08). Stock-selection also satisfactory.
2008: Very strong market-timing returns, but a negative contribution from stock-selection.
2009: Early bullish call produced volatility, but very strong market-timing and stock selection
gains.
2010: Driven by market-timing; stock-selection significantly positive.
2011: Stock-selection poor, particularly cyclicals hurt by rise in risk-aversion. Believe
positioning is correct; added to positions and will hold into 2012 for a recovery.
2012: Strong market-timing gains; small contribution from stock-selection
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Contact Information
 For further information, please contact:
Barbara Minns
Sandbourne Asset Management Ltd
4 Acorn Business Park
Ling Road
Poole
BH12 4NZ
United Kingdom
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Telephone:
Fax:
e-mail:
Website:
+44 1202 305904
+44 1202 305905
barbara.minns@sandbourne.com
www.sandbourne.com
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This document does not constitute or form any part of an offer to sell or an invitation to purchase or subscribe for shares
or other securities, nor may it or any part of it, nor the fact of its distribution, form the basis of, or be relied upon in
connection with, any contract relating thereto.
The information contained herein is for background purposes only, has not been verified and is subject to amendment,
revision and updating. No representation or warranty, express or implied, is made as to the fairness, accuracy, or
completeness of the information contained herein and no reliance should be placed upon it. Sandbourne Asset
Management Limited do not accept any liability for any loss howsoever arising, directly or indirectly, from the issue of this
document or its contents.
The information in this document is only available in the United Kingdom to investment professionals (as defined in
Article 14 of the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions
Order 2001)) (“the Order”) and accordingly to persons who have professional experience of participating in unregulated
schemes or high net worth companies, unincorporated associations, etc, being persons of a kind described in Article 22
of that Order. Persons who do not fall within these categories should take no further action in respect of this document
and should not rely on it in any way. This document has not been approved for the purposes of section 21 of the
Financial Services and Markets Act 2000. Accordingly this document may only be issued or passed on in the United
Kingdom to those persons referred to above and to whom this document may also be lawfully communicated pursuant to
the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001.
The attention of prospective investors is drawn to page 1 of the Continuing Offering Memorandum.
21 August 2013
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