Post on 28-May-2020
transcript
September 30, 2019
Prosperously navigating
unexpected events
with great skill and agility
2
AGENDA
Who We Are
Investment Methodology
Performance by sectors
Risk Management
Current Opportunity and Investment pipeline
Performance
Summary
3
DISCLAIMER: The information and opinions expressed herein are current as of this document date and Black Swan Dexteritas Inc. assumes no obligation to provide updates or
advise on further developments. Any reference should not be considered as investment advice or a recommendation to buy or sell nor should it be considered as any indication of the
portfolio of any Black Swan Dexteritas investment fund or how it will be invested. Commissions, trailing commissions, management fees and expenses may all be associated with fund
investments. Please read the prospectus before investing.
Investment funds are not guaranteed, their values change frequently and past performance may not be repeated.
WHO WE ARE
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BLACK SWAN
DEXTERITAS
(“BSD”)
TECHNOLOGY EXPERTISE
• Unique insight
from entrepreneurs leading
international tech development
based on needs creation
• Advisory Committee of tech leaders
who determine the global adoption
and success of new technologies
• Representation in all BSD-invested
tech sectors and sub-sectors, for
unrivalled expertise
• Portfolio Manager with 30 years of
portfolio management experience
across various asset classes at
asset management companies (LGT,
TAL, CIBC Asset Management), and
a pension (British Petroleum)
• Exceptional research team with a
wide breadth of knowledge in
research, finance, and engineering
• Intense due diligence process for our
stock selection process
• Unique risk management overlay
to minimize drawdowns and volatility
PORTFOLIO MANAGEMENT
EXPERIENCE
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INVESTMENT METHODOLOGY
SECTOR ASSESSMENT
• Life Cycle: Sectors in introduction and growth stages with
high Total Addressable Market (TAM)
• Competition: High barrier of entry with differentiated products
and services within the sector
COMPANY ANALYSIS
• Business Model: Public ccompanies with high recurring revenue,
easily able to leverage network effects, strong negotiating power
with suppliers and customers, and strong corporate governance
• Size: Target small (500M+) to large cap public companies with
established track record of executing the business.
• Growth: Public companies with high and/or consistent revenue
growth
• Valuation: Determine if opportunities exist based on our fair
value expectation of stocks versus current stock prices
PORTFOLIO CONSTRUCTION
• Weightings: Determine % of portfolio allocated to holdings
based on risk-reward expectations
• Diversification: Well-diversified across 35 to 40 holdings to
maximize risk-adjusted returns
• Hedging: Utilize derivatives and fixed income products to
minimize drawdowns and generate alpha
IDEATION
• BSD Investment Advisory Committee: seek out global
growth themes and trends to overweight and underweight
various subsectors
• Experienced investment team sourcing trade ideas and
discussing vital macro economical forces in play
• Draw on sector experiences from members of the committee and
discuss emerging technology from the private and public space
• Deep dive into industry verticals to identify beneficiaries in other
primary, secondary, and tertiary markets
PORTFOLIO CONSTRUCTION
IDEATION
SECTOR
ASSESSMENT
COMPANYANALYSIS
PUBLIC COMPANIES
TOP 10 STRATEGIC TECH TRENDS FOR 2019-2020
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IPHONE 8 ECOSYSTEM
INVESTMENT METHODOLOGY IDEATION EXAMPLES
Assembly
CPU (Central Processing Unit)
GPU (Graphics
Processing Unit)
Baseband Processor (Cellular modem)
Radio frequency (RF)
Power management
Power Delivery
Wireless charging
Display
Flash Memory
MEMS and other sensors
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INVESTMENT METHODOLOGY IDEATION EXAMPLES
SAE automated driving levels
End Users
ApplicationsHardware
Statistics and Forecasts
AUTOMATED DRIVING ECOSYSTEM
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INVESTMENT METHODOLOGY IDEATION EXAMPLES
DIGITAL TWINS ECOSYSTEM
Hardware
• Sensing & Power
• Processing
Software
• Data management
• CAD - Computer-Aided Design
End users
INVESTMENT METHODOLOGY DIVERSIFICATION
BSD seeks out high potential technology sectors with promising unit sales projections and revenue
projections and minimizes exposure to low potential sectors
PORTFOLIO BY MARKET CAP PORTFOLIO BY TECH SUBSECTOR
$5B to $10B
5.0%
Over $10B
91.0%
As of September 30, 2019
BSD is well-diversified across 10 technology subsectors
across 30 to 35 holdings with minimal correlation.
Under $5B
4.0%
10
1.99%
3.63%
3.69%
3.95%
4.05%
7.13%
8.90%
13.42%
13.79%
Consumer Electronics
Technology Real Estate
Automation
Cyber Security
Consumer Services
Fintech
Communication Equipment
Semiconductors
Internet Software
HEDGING OVERLAY
HEDGING STRATEGY
The goal of the hedging strategy is threefold:
1. Minimize the portfolio’s drawdown
2. Lessen the portfolio’s volatility
3. Generate alpha
HEDGING TACTICAL PROCESS
There are 3 tactical steps in the execution of the hedging process:
1. The neutral market position is set at 20% of the stock portfolio, ex-cash
2. The hedging position will deviate from the neutral market position to underweight or
overweight, based on macro fundamental, technical, and capital flow factors
3. The combination of various futures instruments ( for example, S&P 500 futures,
Nasdaq 100 futures, and Russell 2000 futures) is determined by a proprietary
hedging model
HEDGING P&L IMPACT
The hedging strategy is an “insurance” policy in anticipation of an adverse market event
The hedging tactical process limits drawdowns, and potentially generates alpha
RISK MANAGEMENT
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BSD S&P 500 Benchmark
CASE STUDY: FEBRUARY- MARCH 2018 CORRECTION
RISK MANAGEMENT
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At the peak of the drawdown, BSD exhibited
less drawdown than the Nasdaq/Russell
benchmark as well as the S&P 500 Index.
Once the fear subsided and the market has returned to
its pre-correction levels, BSD outperformed the
Nasdaq/Russell benchmark as well as the S&P 500
Index.
CASE STUDY
Our dynamic hedging strategy allows us to position our portfolio to minimize losses during market downturns
and maximize upside potential in recoveries
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BSD Global Tech S&P 500 Russell 2000 NASDAQ
Conversely, when we see certain signs of market
deterioration, we increase our hedging positions.
RISK MANAGEMENT
Our prudent risk management system allows us to navigate market corrections
and black swan events with lower drawdowns and higher returns
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CASE STUDY: MAY2019 CORRECTION
BSD scales back our hedging positions accordingly as various market signals indicated probable upside to our portfolio
CASE STUDY
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BSD ^GSPC ^RUT ^IXIC
CASE STUDY: MAY2019 CORRECTION
Our dynamic hedging strategy allows us to position our portfolio to minimize losses during market downturns
and maximize upside potential in recoveries
As market conditions deteriorate, our hedging
positions reduce our total portfolio drawdown,
allowing us to outperform our benchmark.
RISK MANAGEMENT
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CASE STUDY
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BSD Global Tech S&P 500 Russell 2000 NASDAQ
At the peak of the drawdown, BSD exhibited less drawdown
than the Nasdaq and Russell, as well as the S&P 500 Index.
Once the market has returned to its pre-correction
levels, BSD outperformed the Nasdaq and Russell,
as well as the S&P 500 Index.
RISK MANAGEMENT
Our prudent risk management system allows us to navigate market corrections
and black swan events with lower drawdowns and higher returns
15
CASE STUDY: MAY2019 CORRECTION
CASE STUDY
CURRENT OPPORTUNITIES AND INVESTMENT PIPLINE
• DIGITALIZATION & ELECTRIFICATION
The automotive revenue pool will grow and diversify with new services potentially becoming a ~USD 1.5
trillion market in 2030
• 5G DEPLOYMENT
The 5G market will grow to $1.23 trillion by 2026, according to a new report by Ericsson announced at the
Mobile World Congress
• DIGITAL TWINS
The digital twin market is expected to grow at a CAGR of 37.87%, to reach USD 15.66 Billion by 2023
• BIG DATA
Worldwide Big Data market revenues for software and services are projected to increase from $42B in
2018 to $103B in 2027, attaining a CAGR of 10.48%.
• AUTOMATION & ROBOTIZATION
After growing at a compound rate of 17 per cent a year, the robot market will be worth $135bn by 2019,
according to IDC
• OLED – Organic Light Emitting Diode
The OLED market is expected to be valued at USD 48.81 Billion by 2023, growing at a CAGR of
15.2% between 2017 and 2023
• GAMING
Gaming market to grow at a CAGR of +11% toward 2021 to reach $180.1 billion
Source: Statista, Gartner, Ericson, Newzoo
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CURRENT OPPORTUNITIES AND INVESTMENT PIPLINE
DIGITALIZATION & ELECTRIFICATION
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Entire industries are changing with and through digitalization, while car drivers are demanding even
more from their vehicles. In addition to vehicle dynamics and consumption, the perceived intelligence,
comfort, and convenience of the car also play a significant role.
We are convinced that electromobility in its many different forms will be an essential component of
future mobility.
The automotive revenue pool will grow and diversify with new services potentially becoming a ~USD
1.5 trillion market in 2030.
CURRENT OPPORTUNITIES AND INVESTMENT PIPLINE
5G
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5G networks are the next generation of mobile internet connectivity, offering faster speeds and more
reliable connections on smartphones and other devices than ever before.
The 5G market will grow to $1.23 trillion by 2026, according to a new report by Ericsson announced at
the Mobile World Congress
Verizon CEO: 5G is a lot closer than people think.
CURRENT OPPORTUNITIES AND INVESTMENT PIPLINE
DIGITAL TWINS
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A digital twin is a virtual representation of a physical object or system across its lifecycle, using real-
time data to enable understanding, learning and reasoning.
Digital twins integrate artificial intelligence, machine learning and software analytics with data to create
living digital simulation models that update and change as their physical counterparts change.
The digital twin market is expected to grow at a CAGR of 37.87%, to reach USD 15.66 Billion by 2023.
CURRENT OPPORTUNITIES AND INVESTMENT PIPLINE
BIG DATA
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Data Analytics is the process of examining data sets in order to draw conclusions about the
information they contain, increasingly with the aid of specialized systems and software.
Worldwide Big Data market revenues for software and services are projected to increase from $42B in
2018 to $103B in 2027, attaining a CAGR of 10.48%.
Big Data applications and analytics is projected to grow from $5.3B in 2018 to $19.4B in 2026,
attaining a CAGR of 15.49%.
CURRENT OPPORTUNITIES AND INVESTMENT PIPLINE
AUTOMATION & ROBOTIZATION
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The term robotic automation or robotization refer to the automation of industrial and business
processes using robots, of various guises.
Manufacturing is undergoing its greatest transformation since the Industrial Revolution. A wave of
intelligent technologies is shaping a more connected, flexible and efficient factory floor—and redefining
the ecosystem of equipment providers in the process.
After growing at a compound rate of 17 per cent a year, the robot market will be worth $135bn by
2019, according to IDC
CURRENT OPPORTUNITIES AND INVESTMENT PIPLINE
OLED – Organic Light Emitting Diode
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Organic light emitting diodes don’t need a backlight, so can be manufactured into thinner, more flexible
displays than LCDs.
The demand from foldable devices, as well as the demand from Apple and Samsung for the displays
on their next generation phones, will make OLED one of the fastest growing markets in the global tech
hardware sector.
The OLED market is expected to be valued at USD 48.81 Billion by 2023, growing at a CAGR of
15.2% between 2017 and 2023
CURRENT OPPORTUNITIES AND INVESTMENT PIPLINE
GAMING
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Modern personal computers owe many advancements and innovations to the game industry: sound
cards, graphics cards and 3D graphic accelerators, faster CPUs, and dedicated co-processors like
PhysX are a few of the more notable improvements.
As of 2017, games industry generated $108.4bn in revenues worldwide, and were the third-largest
segment in the U.S. entertainment market, behind broadcast and cable TV.
Gaming market to grow at a CAGR of +6.2% toward 2020 to reach $128.5 billion
PERFORMANCE
PERFORMANCE METRICS* FUND RETURNS
FUND S&P 500
Return Since Inception
YTD Return
60 Day Return
20 Day Return
Daily Standard Dev.
Sharpe Ratio
Sortino Ratio
Correlation
56.85%
12.36%
0.47%
-0.13%
0.80%
0.58
0.81
-
77.02%
18.74%
-0.46%
1.72%
0.83%
0.73
0.99
0.95
* Management fees and expenses may be associated with investments. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated. The indicated rate of return is the historical compounded total return including changes in share value and reinvestment of all dividends.
October 1, 2013 to August 31, 2019
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD S&P 500 YTD
GLOBAL TECH FUND MONTHLY PERFORMANCE SINCE INCEPTION
BSD has outperformed our portfolio benchmark with lower risks through active diversification across various subsectors
2013 1.32% 0.35% 2.82% 4.55% 9.60%
2014 -2.08% 3.63% -2.07% -4.39% 2.38% 2.80% 2.21% 3.53% -1.64% 4.95% 2.89% -1.51% 10.69% 11.43%
2015 0.53% 5.39% -0.16% 2.98% 0.90% -0.91% 0.43% -6.67% -1.48% 9.68% 0.63% -0.76% 10.16% 0.47%
2016 7.41% -2.78% 5.31% -0.02% 2.33% -0.29% 3.66% 0.65% 1.63% 0.38% -3.75% -0.71% -1.63% 9.50%
2017 4.97% 2.14% 2.99% 2.08% 3.85% -2.55% 2.68% 2.12% 0.51% 3.41% 0.11% -0.20% 24.49% 19.42%
2018 2.89% 0.63% -0.62% -1.57% 4.11% -1.63% 0.63% 1.72% -2.18% -7.87% 2.70% -7.41% -10.01% -6.55%
2019 7.09% 1.55% -0.91% 1.86% 0.44% 0.70% 1.83% -0.27% -0.13% 12.36% 18.74%
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BSD S&P 500
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HOW BSD COMPARES TO OTHER HEDGE FUNDS
HEDGE FUND STRATEGIES* 2014 RETURN 2015 RETURN 2016 RETURN 2017 RETURN 2018 RETURN
PERFORMANCE
BSD Global Technology Hedge Fund
Absolute Return
Multi-Region
Equal Weighted Strategies
Relative Value Arbitrage
Macro/CTA
Fixed Income - Credit
Global Hedge Fund
Equity Hedge
North America
Emerging Markets Composite
Market Directional
Event Driven
10.69%
0.67%
1.71%
-0.56%
-3.06%
5.09%
-1.86%
-0.60%
1.37%
-4.13%
-8.03%
5.13%
-4.06%
Our outperformance relative to other funds are indicative of our core competency in
generating outsized returns and navigating a challenging market environment
* Hedge fund index data is provided by Hedge Fund Research Index (HFRI) as of January 2018.
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1.03%
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4.97%
2.50%
5.49%
4.14%
6.77%
9.86%
10.50%
24.99%
3.91%
6.58%
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4.28%
7.43%
4.55%
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12.78%
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-7.62%
-7.55%
-12.54%
-11.68%
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SUMMARY
• We bring unique, proven strengths
• Principal with 30 years of portfolio management experience
• Dynamic stock selection methodology
• Disciplined risk management process
• Our expertise in technology is unparalleled
• Team consisting of seasoned entrepreneurs that have co-founded billion dollar companies
• Global networks of advisors and analysts examining tech vendors and tech end-users
• Significant out-performance in risk-adjusted returns
• The BSD Global Tech Hedge Fund returned 56.85% since inception versus S&P 500 index
return of 77.02%
• Exhibited only 83% of the benchmark volatility
• Hedging strategy acts as an “insurance policy” in anticipation of adverse market events,
by limiting drawdowns and often generating alpha
* Management fees and expenses may be associated with investments. Investment funds are not guaranteed, their values change frequently and past performance may not be
repeated. The indicated rate of return is the historical compounded total return including changes in share value and reinvestment of all dividends.