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Deltec Asset Management, LLC Deltec Emerging Market Equities, L.P. Deltec Asset Management, LLC. 530 Fifth Avenue, New York, NY 10036. (212) 546-6200
Deltec Asset Management, LLC
Deltec Emerging Market Equities, L.P.
Deltec Asset Management, LLC. 530 Fifth Avenue, New York, NY 10036. (212) 546-6200
CONTENTS
THE CASE FOR EMERGING MARKETS
THE DELTEC ADVANTAGE
FIRM HISTORY
WHO WE ARE
INVESTMENT PHILOSOPHY
INVESTMENT PROCESS AND RISK MANAGEMENT
PERFORMANCE
PORTFOLIO CHARACTERISTICS
TRANSACTION HIGHLIGHTS
SERVICE MODEL
SUMMARY
2
3
Fiscal
Growth
Valuation
Demographics
Fundamental long term strengths:
THE CASE FOR EMERGING MARKETS
THE DELTEC ADVANTAGE
4
Experience and local
knowledge
Benchmark agnostic
investment approach
focusing on absolute return
Direct access to your
portfolio manager
Boutique size enables access
to a larger universe of securities
FIRM HISTORY
1946: Deltec founded in Brazil by Clarence
Dauphinot and funded by Kidder Peabody &
Co.
5
1940 1950 1960 1970 1980 1990 2000 2010 2019
1959: Deltec Banking Corporation Limited incorporates in the
Bahamas
1960s: Instrumental in creation of the
securities industry in Brazil
1987: Deltecregisters as an
investment advisor with the SEC
1990: Deltec Latin American Partners, L.P. is launched to participate in The
Brady Plan
1994: DeltecEmerging Market
Equities, L.P. is launched
2000: Arthur Byrnes and John Gordon purchase the
investment management business from the
founder’s family forming Deltec Asset Management,
LLC a 100% Employee owned institution
2001: Greg Lesko joins Deltec
1950s: Expanded with merchant banking
activities throughout Latin America
2020: $614 million in AUM, 100%
Employee owned New York-based
investment manager with a stable
investment team.
WHO WE ARE:
Arthur E. Byrnes
Senior Managing
Director, Head
Emerging Market
Portfolio Manager
BA Harvard College,
MBA Stanford University
School of Business
48 years 1971
John R. Gordon
Senior Managing
Director, Head US
Portfolio Manager
BA Harvard College,
JD/MBA from Harvard
Law and Harvard
Business School
45 years 1988
Gregory J. Lesko
Managing Director,
Emerging Market
Portfolio Manager
AB Dartmouth College,
BE Thayer School of
Engineering Dartmouth,
Certified Financial
Analyst
32 years 2001
Shijia MaoAnalyst, Equity
Research
BS Pepperdine University,
MS Columbia Business
School
1 year 2019
James T. WhiteAnalyst, Equity
ResearchAB Dartmouth College 29 years 1990
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Individual Role EducationIndustry
ExperienceFirm Tenure
INVESTMENT PHILOSOPHY
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• We are emerging market investors and believe in
maintaining a concentrated portfolio focused on
domestic demand.
• We believe in the long term superior return
prospects for emerging markets and invest
significant amounts of our own capital alongside
that of clients.
• Top-down macro-economic analysis determines
country and sector allocation decision-making,
which are meaningful contributors to our
performance.
• Fundamental research helps us identify which
companies in each sector demonstrate the
strongest growth prospects with reasonable
valuations.
• These companies have high-quality financial
attributes and are managed by proven executive
teams.
Country
Security Selection
Risk
Management
Industry
A DISCIPLINED & REPEATABLE INVESTMENT PROCESS
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Portfolio ConstructionFundamental
Bottom-Up
Research
Top-Down
Insight
Country evaluation:
• Demographics
• Currency stability
• Political environment
• Economic trends
• Market dynamics
• Tax policy
• GDP Growth
• Currency stability
Macro Analysis Drives
Sector Views:
• Improving per capita
income
• Consumer preferences
Best
Ideas
Idea
Generation
& Themes
35-45
Holdings
Actively
Managed
12-15 Countries
Risk Control Risk Control Risk Control
Benchmark agnostic
reducing sovereign and
country risk.
Focus on cash flow generative
companies with strong balance sheets.
Frequent meetings with senior corporate
management.
No leverage
Cash
25% decline review
Liquidity
• All cap focus
• Company
fundamentals
• Growth rate to peers
• Catalysts
• Expectations
• Valuation metrics
• Free cash flow
• PEG ratio
• Dividend yield
• Management team
• Earnings
• Concentrated
holdings
Country Industry Security
China
• Large expanding middle class
• Government policy to shift to
consumption lead growth
E-Commerce
• Underpenetrated formal retail industry,
particularly in countryside
• High broadband penetration and rapid 5G
adoption
• High acceptance of digital payments
Alibaba
• First mover in ecommerce with significant
GMV growth
• Proven track record of profitable growth
• World class technology
• Leader on digital payments
• Leader in cloud service
• Focus on 3rd and 4th Tier cities
• Inexpensive valuation
Brazil
• Largest population and land mass in Latin
America
• Pro-reform government
• Emerging from multi-year economic
trough
Airlines
• Significantly underpenetrated air travel
market
• Government support for industry with fuel
tax cuts and major nationwide airport
upgrade program
• Rationalized industry with 3 main players
Azul
• World class management team from
JetBlue
• Unique point-to-point network
• Near term margin expansion opportunities
with up-gauging aircraft, ancillary fees
and cargo
• Potential boost from economic upturn.
• Undemanding valuation
Indonesia
• Large, growing and young population
• Low GDP/capita provides significant
upside for middle class development
• Stable government with a structural
reform agenda, including labor and tax
reform and significant deregulation
Financial Services
• Most profitable banking industry in Asia
• Improved liquidity conditions after several
rate cuts by the central bank
• Low penetration in fee paying services
including credit cards
Bank Raykat
• Largest micro-lending franchise across
entire archipelago
• Focus on high margin micro and SME
lending
• Low funding cost
• Digitization Strategy to improve
efficiency
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INVESTMENT PROCESS HIGHLIGHTS
PERFORMANCE
Annualized Net Returns (1)
10
Deltec Emerging Market Equities, L.P. (DEME L.P.) – March 31, 2020
Comparative Annual Performance
(1) QTD and YTD performance is not annualized.
(2) In 2003 Greg Lesko took over portfolio management responsibilities for the Deltec Emerging Market Equities, L.P.
(3) During some of the periods presented, DEME L.P. owned emerging market bonds and swaps the investment results of which are included in the Fund’s reported performance results.
(4) From February 4, 1994, DEME L.P.’s inception date.
(5) Computed by linking a two month ROR for January and February, net of a 1.5% annual advisory fee with a one month ROR, net of a 1.5% annual advisory fee for each of the months of March through and
including December.
(6) Years 1994 to 2000 MSCI EM Gross.
QTD YTD 1 Year 3 Year 5 Year 10 Year S inc e 2 0 0 3 ( 2 ) S inc e
Inc e p t io n
DEME L.P. (Net) -27.9% -27.9% -22.2% -7.3% -4.5% -1.7% 9.1% 8.2%
MSCI EM (Net) -23.6% -23.6% -17.7% -1.6% -0.4% 0.7% 8.6% 4.1%
2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
DEME L.P. (Net) (3) -27.9% 18.4% -19.5% 30.9% 4.2% -13.5% -1.4% -5.1% 22.6% -23.4% 25.3% 84.1% -48.5% 31.3%
MSCI EM (Net) -23.6% 18.4% -14.6% 37.3% 11.2% -14.9% -2.2% -2.6% 18.2% -18.4% 18.9% 78.5% -53.3% 39.4%
2006 2005 2004 2003 (5) 2002 2001 2000⁽⁶⁾ 1999⁽⁶⁾ 1998(6) 1997(6) 1996(6) 1995(6) 1994 (4)(6)
DEME L.P. (Net) (3) 28.5% 34.4% 35.2% 73.9% -0.6% 19.3% -14.1% 63.7% -47.3% 20.7% 30.0% -2.0% 30.0%
MSCI EM (Net) 32.1% 34.0% 25.6% 55.8% -6.2% -2.6% -30.8% 66.5% -25.3% -11.6% 6.0% -5.2% -7.3%
DEME L.P. STATISTICS
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March 31, 2020
Top Holdings
Characteristics
Country Exposure
China 39.6%
Brazil 6.0%
India 6.0%Indonesia 5.3%
Argentina 3.8%
Thailand 3.7%
South Korea 3.6%
Taiwan 3.4%
Singapore 3.3%
Egypt 3.1%
Other 14.2%
Cash 8.0% (1)SECURITY COUNTRY %
Al ibaba Group Holdings China 5.06%
Tencent Holdings Ltd China 4.51%
Samsung Electronics South Korea 3.62%
Ping An Insurance China 3.52%
New Orienta l Education China 3.43%
Li Ning Ltd. China 3.43%
Taiwan Semiconductor Taiwan 3.41%
Sea Ltd. Singapore 3.30%
(As of 03/31/2020)
Price to Earnings (Forward) 13.3x
Price to Book 1.8x
Dividend Yield 3.0%
Number of Countries 18
Number of Securi ties 44(1) Cash is net of receivables and accruals.
INVESTMENT PHILOSOPHY
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Country Exposure 2009-2020
HISTORICAL COUNTRY EXPOSURE
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
Q4
'09
Q1
'10
Q2
'10
Q3
'10
Q4
'10
Q1
'11
Q2
'11
Q3
'11
Q4
'11
Q1
'12
Q2
'12
Q3
'12
Q4
'12
Q1
'13
Q2
'13
Q3
'13
Q4
'13
Q1
'14
Q2
'14
Q3
'14
Q4
'14
Q1
'15
Q2
'15
Q3
'15
Q4
'15
Q1
'16
Q2
'16
Q3
'16
Q4
'16
Q1
'17
Q2
'17
Q3
'17
Q4
'17
Q1
'18
Q2
'18
Q3
'18
Q4
'18
Q1
'19
Q2
'19
Q3
'19
Q4
'19
Q1
'20
China India Indonesia Malaysia Philippines South Korea Singapore Taiwan Thailand Israel Russia
South Africa Turkey Argentina Brazil Chile Colombia Mexico Peru Frontier Cash
SERVICE MODEL
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Denise Vitti
Chief Compliance Officer
(212) 546-6295
Greg Lesko
Portfolio Manager
(212) 546-6261
Brian O’Connell
Independent Marketing Consultant
(781) 864-1480
Summary and Terms
Deltec Emerging Market Equities, L.P. Institutional Quality Operations
Structure Master/Feeder
Minimum $500,000
Redemption Monthly/No lock-up
Management fee 1.5% per annum
Performance fee None
Custodian Pershing Bank of New York
Counsel Seward & Kissel LLP
Administrator UMB Fund Services
Auditor EisnerAmper
* Five portfolio managers firm-wide supported by a business operations team of 12 employees.
SUMMARY
Experience and local knowledge
Benchmark agnostic
investment approach
focusing on absolute return
Direct access to your portfolio
manager
Boutique size enables access
to a larger universe of securities
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The Deltec Advantage
DELTEC ASSET MANAGEMENT, LLC
Founded in Brazil in 1946 as a merchant bank
SEC registered investment advisor since 1987
100% Employee owned, New York-based investment manager
Approximately $614 million in assets under management
Stable investment team
Five portfolio managers supported by a business/operations team of twelve employees
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SUCCESS PRINCIPALS
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The Pursuit of Alpha
Success Drivers Deltec
Investment team structured for accountability ✔
Disciplined decision-making process ✔
Repeatable and transparent ✔
Superior analytical skills ✔
Proactive sell discipline ✔
Agility of a “boutique” manager ✔
Co-investments with clients ✔
Focus ✔
Experience ✔
Strong performance over full market cycles ✔
Risk controls ✔
DISCLOSURES
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All information is as of and through March 31, 2020 unless otherwise indicated.
Glossary of Investment Terms (see page one):
Annualized Returns - The geometric mean of the product’s returns with respect to one year. Also referred to as the Compounded Annual Growth Rate (CAGR). Ann Rtn =((1+R1)*… (1+Rxi) ^ (1/N)) – 1 R = the return for each period. N = the number of years.
Performance Explanation:At various times since its inception, DEME L.P. has changed its fee structure. Prior to March 1, 2003, DEME L.P.’s annual advisory fee was 2.0% with no incentive fee. EffectiveMarch 1, 2003, DEME L.P. was reorganized into a master-feeder structure with new investors charged an annual advisory fee of 1.0% plus 20% of net profits, as defined. EffectiveApril 1, 2012, new investors were offered only Series B Interests of DEME L.P. and existing investors were provided the option of switching to Series B Interests once their high watermarks were met. The fee structure for Series B Interests is comprised of a 1.5% annual advisory fee, payable quarterly, in arrears, and no incentive fee.
The performance data included in this fact sheet has been restated on a pro forma basis from inception through the most recent period presented to reflect the fee structure offered toSeries B Interests. For the 1994-2002 years presented, when DEME L.P. was a unitized partnership, the annual returns represent the change in the beginning and end of year auditedNAV’s per unit, grossed up by the 2.0% annual advisory fee, further adjusted to reflect a pro forma 1.5% annual advisory fee. For 2003, the annual ROR was computed by linking atwo month return for January and February, net of a 1.5% annual advisory fee, with a one month ROR, net of a 1.5% annual advisory fee, for each of the months of March through andincluding December. For the years 2003 to December 31, 2015, the annual ROR’s presented were computed by netting an annual 1.5% pro rata monthly advisory fee against monthlyreturns gross of any advisory fee. A representative investor was used as a proxy for computing DEME L.P.’s monthly returns gross of advisory fees for this period. Starting January 1,2016, the annual ROR’s presented are computed by linking actual monthly returns of a representative investor which are net of a 1.5% annual advisory fee.
Performance is calculated on a total return basis, reflects the reinvestment of all portfolio income and is net of all pro forma fees (as set forth above) and actual expenses, paid or
accrued. Past performance may not be indicative of future results and may differ for different time periods. The Morgan Stanley Capital International EM (Emerging Markets) - Net -
USD Index (“MSCI EM (Net)”), an emerging markets equity index, is used for comparative purposes only. The MSCI EM – Gross – USD Index was used for the years 1994 through
and including 200, when the MSCI EM – Net Index was unavailable. DEME L.P. does not purport to track any index.
Disclosures:This document is provided on a confidential basis and shall not constitute an offer to sell or the solicitation of any offer to buy which may only be made at the time a qualified offereereceives a confidential private offering memorandum (“CPOM”), which contains important information (including investment objective, policies, risk factors, fees, tax implicationsand relevant qualifications, and only in those jurisdictions where permitted by law). In the case of any inconsistency between the descriptions or terms in this document and theCPOM, the CPOM shall control. These securities shall not be offered or sold in any jurisdiction in which such offer, solicitation or sale would be unlawful until the requirements ofthe laws of such jurisdiction have been satisfied. This document is not intended for public use or distribution and the recipient agrees to keep confidential this document and theinformation contained herein. While all the information prepared in this document is believed to be accurate, Deltec Asset Management LLC (the "Investment Manager" or the"Firm") makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors, appearing in the document.
An investment in the fund or funds managed by the investment manager is speculative and involves a high degree of risk. The funds are not registered as investment companies underthe U.S. Investment Company Act of 1940, as amended, and investors will not be afforded the protection thereof. Any projections, market outlooks or estimates in this document areforward-looking statements and are based upon certain assumptions. Other events which were not taken into account may occur and may significantly affect the returns orperformance of the fund. Any projections, outlooks or assumptions should not be construed to be indicative of the actual events which will occur.
