Eleva Capital –European Equities - Candoris · risk/rewards profile but tends to be around 1.5 %...

FOR INVESTMENT PROFESSIONAL USE ONLY

Eleva Capital – European EquitiesPerformance data as of 31/07/2017, net of fees


Agenda1. Eleva Capital LLP

2. Eleva European Selection

3. Performance & Characteristics

4. Eleva Absolute Return Europe

5. Performance and characteristics

6. Candoris

7. Important Information


Section One:

Eleva Capital LLP

FOR INVESTMENT PROFESSIONAL USE ONLY 4

Eleva CapitalConviction based, style agnostic, active and flexible approach

Eleva: Utilizing the Same European Equity Fund Manager and Philosophy since Dec 2005 to Achieve Top Decile Performance

• 100% independent employee-owned boutique founded in 2014, focused exclusively on European equities

• Eric Bendahan; CEO and Fund Manager; 17 years of experience

• Concentrated, experienced Fund Manager successfully employed the same strategy at Oyster Funds:

• European equities offered with 2 UCITS funds, Eleva European Selection and Eleva Absolute Return Europe

• Long term partnership with Unicef who share in profits of the firm

Eleva & Candoris:

• Both employee owned smaller firms

• Believers in active management and outperformance due to a distinct style and process

• Relationship started in 2016


Eleva CapitalConviction based, style agnostic, active and flexible approach

Eleva: Utilizing the Same European Equity Fund Manager and Philosophy since Dec 2005 to Achieve Top Decile Performance

• Oyster European Opportunities ranked 1st quartile* in terms of performance since the beginning of Eric Bendahan’s tenure (31/12/05)

• Oyster European Selection ranked 1st percentile* since its launch on 29 Nov 2011 with a net outperformance to Stoxx 600 of 24.4% net of fees.

• ELEVA Capital currently manages over €1.5 billion, with top decile performance

Eleva & Candoris:

• Both employee owned smaller firms

• Believers in active management and outperformance due to a distinct style and process

• Relationship started in 2016

* Source: Lipper Investment Management from the 31.12.05 to the 29.08.14, European equity classification.


Organizational StructureEleva Capital LLP

Eric BendahanFounder and CEO

Investment Team

Armand Suchet d’AlbuferaDeputy PMPartner

Benjamin BilliardAnalystPartner

Vincent ResillotAnalyst

Antoine de CatheuAnalyst

Richard PearsonHead of Trading

Business Operations & Compliance

Investor RelationsAxel PlichonHead of Investor RelationsPartner

Pierre-Louis ChandelierFrench speaking

Andrea CardoneItalian speaking

Adam DonaldsonEnglish speaking

Andrea MorrallCOO Partner

James CostelloHead of Operations

Hana ZarubovaOperations Analyst


Investment Team

• Prior to setting up Eleva Capital, Eric was at Banque Syz & Co responsible for EUR 2.5bn in European Equities up to the end of August 2014

• Oyster European Opportunities ranked 1st quartile(1) in terms of performance since the beginning of his tenure (31/12/05)

• Oyster European Selection ranked 1st percentile(1) since its launch on 29 Nov 2011 with a net outperformance to Stoxx 600 of 24.4 % net of fees

• Prior to that, he was managing EUR 2.5bn in European Equities at AXA Investment Managers

• In 2005, he was named best manager in European Equities by Citywire for his results over 3 years

• Eric is a CFA Charterholder and has a Masters in Business and Economics at ESSEC

Eric Bendahan, CFACEO & FounderPortfolio Manager

17 years experienceMacro & StrategyCountry intelligence:Portugal, Italy, Ireland, Greeceand Spain

(1) Source: Lipper Investment Management from the 31.12.05 to the 29.08.14, European Equity classification


Investment Team

• 16 years experience

• Banque Syz & Co, where he was Eric’s

Deputy PM for 7 years

• CIBC and Rothschild & Cie

• Cesem Reims, Masters in finance from EM Lyon

• Consumer discretionary

• Healthcare• Energy

• Country intelligence : Nordics

Armand Suchet d’AlbuferaSenior Analyst / Deputy PM


• Credit Lyonnais, Exane (Sell-side), La

Banque Postale AM, Banque Syz & Co

and Verrazzano Capital

• Degree in Actuarial Sciences from ISUP,

Master in Management from IAE Lille

• CFA Charterholder

• Banks• Insurance

• Utilities

• Country intelligence : United Kingdom

Pierre-Marie GerezSenior Analyst


• PriceWaterhouseCoopers (Audit),

Econocom Group (Audit), Credit Suisse

(sell-side), NewSmith Capital Partners

and GLG Partners

• EM Lyon, MBA from IESE, Barcelona• Telecoms

• Consumer Staples,

• Materials, Real Estate

• Country intelligence : France, Benelux, Turkey and Russia

Vincent ResillotAnalyst

Antoine de CatheuAnalyst


• BNP Paribas Investment Partners

(European Small and Mid-cap equity

Analyst)

• Masters in Banking and Finance from

ESSCA business school

• CFA Charterholder

• Industrials

• Technology• Autos

• Country intelligence : Germany, Austria and Switzerland


Section Two:

Eleva European Selection


Eleva’s Unique Investment Philosophy

• Active and flexible approach

• Conviction based – high tracking error (target circa 6%),Active weight above 80%

• Benchmark agnostic stock picking

• Style market cap agnostic

• No country nor sector bias

• Medium-term horizon, opportunistic

• Benchmark is Europe Stoxx 600 (net Return) - Comparison purpose only

Eleva European selection:

AdeepandprovenexperienceinfundamentalinvestinginEuropeanEquities


Eleva’s Unique Investment PhilosophyTarget investments in different types of opportunities

A frame of four key themes providing a strong base for investment opportunities

Family or Foundation

owned businesses

Companies undergoing significant

management or

shareholder changes

Diverging valuations between

equities and credits

Differentiated business model in mature

industries


Investment philosophyFamily or Foundation owned businesses

• Patrimonial approach ensures true alignment of interest

• Management and key people are here for the long term

• Conservative accounting

• Sounder balance sheets

• Long term focus on capital allocation, brand management, R&D

• M&A tends to be more value-accretive and less driven by herd mentalities

Family owned businesses Family or Foundation

owned businesses


Investment philosophyDifferentiated business model in mature markets

• While a low growth sector offers less excitement at first glance……it offers opportunities for a company with …a differentiated business model…it is often a very large sector…it attracts less competition and new entrants

than booming sectors…market share gains can be obtained over

sleepy incumbents• From a market perspective, good companies trade at a premium to their sector but at a discount to

the market

• “Don’t compete with rivals, make them irrelevant”

• Companies have to create a new market space or a “blue ocean”, focusing on value innovation, doing business differently from peers

Differentiated business model in mature marketsDifferentiated business model in mature

industries


Investment philosophyDiverging valuations between equities and credits

Eleva believes it makes sense to analyse the message from credit markets• Same companies but treated as two different asset classes managed by different teams with

no communication• Access to a broader group of unlisted companies

Balance sheets tend to be under-analysed by equity investors• Asymmetric risk-reward makes credit investors more risk-adverse• Prime focus is the income statement for equity analysts• Quality of earnings and cash flow not scrutinised enough

Use in Eleva’s day to day work• Ongoing review of the CDS market• A more comprehensive understanding of FCF generation

Diverging valuations between equities and credits Diverging valuations between

equities and credits


Investment philosophyCompanies undergoing significant changes

Eleva likes to focus on corporate change• It forces a more radical review by investors/analysts covering the name after a period of underperformance• Sell side is bad at forecasting change, forecasts are usually linear and bad at incorporating disruptions• Perceptions are anchored in the past and there is intrinsic reluctance to accept that things have changed

Changes can take many forms• CEO/senior management /shareholding structure• Changes at a sector level, after a period of crisis, leading to industry consolidation or regulatory change• Balance sheet/corporate actions

Eleva undertakes a detailed analysis• New management team track record• Benchmarking analysis / easy wins• Timing: often kitchen-sinking / capital raise takes place after management change

Companies undergoing significant changesCompanies undergoing significant

management or

shareholder changes


Eleva’s Investment ProcessConviction based, style agnostic, active and flexible approach

• UCITSandPEAconstraints

• c.150bpsoverweight• Rarelyabove5%per

stock• Exactsizingwill

dependonrisk/reward

• Activeweight>80%• Targetc.40/50

positions

Idea generation

Fundamental research

Portfolio constructio

n

• Businessmodelunderstanding

• Operationalanalysis• Financialanalysis• Management

meeting• Clearinvestment

case• Valuationanalysis• Upsidepotential

• Flexibleapproachtosourcingofideas

• Extensiveknowledgeofcompanies

• Investmentseminarsandcompanycontacts

• Screening• Constantdebate

withintheteam


Investment processIdea generation

>

>

>

At least 85%+ of the portfolio will come from the focus companies

Investable universe of 11,500European companies

Eliminate companies with less than EUR2M daily liquidity

Eliminate companies:• more than EUR 5bn market cap• or less than EUR 5bn market cap

with:5-year top line CAGR of > +7% anda strong balance

~ 1,000 liquidcompanies

~ 500 liquidcompanies

~ 250 focuscompanies

Focus on companies that are either:• Family owned • have a differentiated business model • face change • have different credit and equity

Alpha generation on stock selection based on a proven and efficient

investment process


Eleva’s Investment ProcessConviction based, style agnostic, active and flexible approach

Bottom up analysis

Understand market

perceptionValuation

• We have a common sense approach to valuation rather than financial engineering

• Valuation approach differs but we prefer FCF

• Price target is set with a 2-year time horizon

• Understand equity market perception via meetings with sell side analysts

• A particular focus will be given on the credit market perception through CDS and listed bond analysis

• Where do we differ from consensus view?

Operational analysis• Understanding the

business model • ROCE analysis• Barriers to entry• Threats to the business

model• Competition

Management assessment• Track Record• Incentive structure

Meeting with management and operational people in the field


Investment processStock picking supplemented by Macro view

Basic principles: “We are not economists, but a detailed analysis of some key leading indicators can help us enhance a bottom-up strategy.” Eleva Capital

Europe leading indicators• EU OECD leading indicator• German IFO index• PMI new orders – Inventories• European yield curve• Second hand car pricing

Economic and earnings surprises• Citi economic surprise

indicators• Global and European

earnings revisions

Global leading indicators• Global OECD leading

indicators (12M) • Inflation expectations• HLI-C, HLI-M• ISM New Orders –

Inventories• Copper inventories

Style/ momentum watch• HY credit spreads• Yield curve analysis• PM performance breadth• Growth/ value performance• Valuation dispersions• Cash holdings


Investment processPortfolio construction

• Constant monitoring of UCITS regulatory constraints

• Constant liquidity monitoring

• Share classes are hedged, but Eleva does not hedge systematically currency exposure

• 40- 50 names on average• Tracking error ~6%• Active weight 80 %+• Sector and country weight

are monitored but are a function of stock picking choices

• Initial seizing depends on risk/rewards profile but tends to be around 1.5 % overweight (1.5% to 2.5% absolute)

• Typically Eleva does not like to go above 5% for a single stock

• Eleva tends to be fully invested

Stock weightings reflect • the expected return profile

subject to Eleva’s assessment of the risk

• Risk/reward profile in context of existing holdings

Stock picking supplemented by leading indicator analysis

Portfolio Construction targets

the best mix of stock specific

opportunities at any particular time


Risk management sell discipline

Stock selection

Target price set

Positive share price movement Negative share price movement

Lack of upside

Fundamentals still

improving

►

Keep/add Sell

► Investment case

still valid

Systematic review

after 10% drop

Deterioration got

story wrong

►

Keep/add

►

Sell


Eleva CapitalRisk monitoring

ExecutionBuilt-in internal

constraints (regulatory, contractual

and internal)

ComplianceDaily monitoring of

investment guidelines

Risk managementDaily analysis

of risk and liquidity with Statpro

External controlManagement

company (dedicated CR officer)

and auditors

Portfolio constructionStock level, sector

diversification, UCITS, PEA constraintsDiscipline process for

poorly performing stocks

Constant monitoring of credit market input

Strong focus of Eleva Capital on risk monitoring and compliance


Eleva European selectionPortfolio exposure and positioning

Family-owned Differentiated biz model

Credit-Equity mismatch

Significant change

Portfolio exposure to our investment criteria (%)

Portfolio- Value proportion at 58%, focus remains on FCF generation- Cautious on Cyclicals- Mid-cap growth to be preferred over large cap growth- EM exposure is c.28% of the portfolio- SMID exposure at 26%- Reduction in Industrials, Energy and Financials- Increase in Telecoms, Healthcare, Real Estate and Consumer

discretionary

Value vs Growth %

Market Capitalization

> EUR 2 bn 88%

< EUR 1 bn 1%

>EUR 1 bn, <EUR 5 bn 25%

> EUR 5 bn, <EUR 20 bn 30%

> EUR 20 bn 44%

Average market cap (EUR bn) 26.9

35%

40%

45%

50%

55%

60%

65%

70%

Value Growth

54% 57%

42%31%

Family-owned Differentiatedbizmodel

Credit-Equitymismatch

Significantchange

Portfolio exposure to our investment criteria (%)


Eleva European selectionGrowth exposure: quality is expensive

Low historical growth…elevated expectations

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%EPS CAGR 2015-20E vs 2007-15

2007-15 2015-20E (consensus)

Valuations have increased materially

We focus on high growth small and mid caps- Oriflame- Orpea- Maisons du Monde- Alten- Wessanen- Lonza- Teleperformance- Criteo- Cairn Homes

More selective on large caps- SAP- BAT- Kering- Sika- Fresensiun SE- Jeronimo Martins

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

30.0x

35.0x

40.0x Curr P/E 2016 vs. 2007-15

P/E 2007-15 P/E 2016E


Eleva European selectionPortfolio exposure and positioning

0.3%1.4%1.9%

6.8%7.3%8.5%9.0%

13.0%14.4%15.2%

22.2%

UtilitiesEnergy

RealestateTelecommunicationServices

InformationTechnologyIndustrials

ConsumerStaplesHealthCare

ConsumerDiscretionaryMaterialsFinancials

Portfolio weighting - by Sector

1.1%2.2%2.7%2.8%2.9%2.9%3.1%3.4%

5.4%5.7%5.7%6.2%

13.3%19.3%

23.4%

Belgium

Luxembourg

Austria

Norway

Italy

Switzerland

Germany

France

Portfolio weighting - by Country

-8.3%-6.3%

-3.2%-1.7%-1.7%-1.0%-0.9%

0.1%0.3%

1.9%2.1%2.2%2.4%3.2%

5.1%7.6%

Switzerland

Spain

Finland

Belgium

Netherlands

Norway

Austria

Ireland

Exposure relative to benchmark

-5.4%-4.5%-4.3%-3.5%

0.2%0.3%0.6%2.4%3.0%3.7%

7.5%

IndustrialsConsumerStaplesEnergyUtilitiesRealestateFinancialsHealthCareInformationTechnologyTelecommunicationServicesConsumerDiscretionaryMaterials

Exposure relative to benchmark


Section Three:

Performance & Characteristics


Eleva European SelectionPortfolio Performance

Performance since inception

As of 31/07/2017, since inception (26/01/2015) Source:Bloomberg

21.56%

9.33%

80

85

90

95

100

105

110

115

120

125

ElevaEuropeanSelection(I)

SXXRIndex


Eleva European SelectionHistorical Performance

* PreliminaryThe content presented is for informational and supplemental purposes only. The performance presented represents a composite of the prior performance of discretionary accounts managed by DSMCapital Partners LLC (“DSM”) in accordance with its global growth strategy. You should not consider this performance data to be an indication of future performance of DSM’s global grow style. Theperformance figures presented do not reflect the deduction of investment advisory fees actually charged to the accounts in the composite. Rather, the performance results presented reflect thededuction of a model advisory fee. The model advisory fee for global growth is 1% per annum. The net of fee returns calculated for the composite were created by deducting the monthly amount ofthe model annual fee from actual gross returns. DSM has prepared and presented this performance report in compliance with the DSM has prepared and presented the global growth performance incompliance with the Global Investment Performance Standards (GIPS®) of the CFA Institute. The CFA Institute has not been involved with the preparation or review of this report. Past performance is noguarantee of future results and individual accounts and results will vary. Different market or economic conditions could result in markedly different performance, including the possibility of loss. Thereare also special risk considerations associated with international and global investing (especially emerging markets), small and mid-capitalization companies, or other growth and/or concentratedinvestment strategies. Comparative indexes are unmanaged, do not reflect the payment of advisory fees and other expenses associated with an investment and may not reflect the reinvestment ofdividends. Investors cannot invest directly in an index.

GIPS Compliant annualized Gross Composite Performance* - Eleva European SelectionEUR; As of 31/07/2017

YtD 1 Year 2 YearEuropean EquitiesEleva European Selection 10.85% 21.39% 5.29%STOXX Europe 600 EUR 6.67% 13.52% 0.83%



Averageweight(%) Totalreturn(%) Totaleffect(bps)Maincontributors 1.307200555

1 COVESTROAG 1.97 43 1282 THALESSA 2.18 32 753 TECHNIPSA 1.68 42 654 KONINKLIJKEPHILIPSNV 3.01 27 645 ADIDASAG 1.06 74 596 WACKERCHEMIEAG 1.14 7 537 STANDARDCHARTEREDPLC 0.86 34 528 SAIPEMSPA 0.40 23 499 ASSICURAZIONIGENERALI 1.21 25 4810 DELHAIZEGROUP 1.49 17 43

Maindetractors1 FLOWTRADERS 1.30 -38 -752 RWEAG 0.80 -27 -703 PETROLEUMGEO-SERVICES 0.14 -51 -504 SOPHOSGROUPPLC 0.64 -37 -465 B&MEUROPEANVALUERETAI 2.30 -12 -456 PEUGEOTSA 1.11 -28 -397 UCBSA 0.88 -21 -388 INTLCONSOLIDATEDAIRLIN 0.64 -33 -379 PADDYPOWERBETFAIRPLC 1.25 -5 -3610 MILLICOMINTLCELLULAR-S 0.13 -24 -35

Asof30/12/2016,since31/12/2015


1 KERING 2.72 41 742 FINECOBANKSPA 2.12 29 743 ERSTEGROUPBANKAG 2.77 30 524 SIKAAG-BR 2.23 30 505 UNICREDITSPA 2.22 26 506 RYANAIRHOLDINGSPLC 1.34 27 487 GLENCOREPLC 2.43 16 478 ORPEA 2.15 28 449 DANSKEBANKA/S 2.82 23 3810 LONZAGROUPAG-REG 0.84 12 34

Maindetractors1 RPCGROUPPLC 1.51 -28 -802 TECHNIPFMCPLC 1.36 -22 -743 SAIPEMSPA 0.59 -21 -544 SHIREPLC 2.81 -13 -535 SUBSEA7SA 0.85 -14 -366 RENAULTSA 1.42 -10 -357 PEUGEOTSA 1.00 -7 -218 AXASA 0.99 -2 -209 AKERBPASA 1.41 -4 -2010 FRESENIUSSE&COKGAA 1.88 -4 -16

Asof31/07/2017,since30/12/2016

Contributors to performance 2017Average weight (%) Total return (%) Total Effect (bps)

Contributors to performance 2016Average weight (%) Total return (%) Total Effect (bps)

Source: StatPro, Eleva



Contributors to performance 2017



1 ORIFLAMEHOLDINGAG 2.35 33 622 SIKAAG-BR 2.24 23 353 ORPEA 2.24 17 264 FINECOBANKSPA 1.50 11 245 CRITEOSA-SPONADR 1.57 20 236 SMURFITKAPPAGROUPPLC 2.60 14 197 TELEFONICASA 1.89 19 198 DANSKEBANKA/S 2.71 15 199 KERING 2.44 14 1710 ONESAVINGSBANKPLC 1.03 22 17

Maindetractors1 RPCGROUPPLC 2.11 -22 -662 TECHNIPFMCPLC 1.70 -8 -323 AKERBPASA 1.39 -11 -284 RENAULTSA 2.17 -4 -225 OCINV 0.73 -5 -176 WESSANEN 1.20 -5 -157 SHIREPLC 2.94 0 -148 KONINKLIJKEPHILIPSNV 2.51 4 -119 DEUTSCHETELEKOMAG-REG 2.50 0 -1110 AXASA 2.13 1 -10

Asof31/03/2017,since30/12/2016

Average weight (%) Total return (%) Total Effect (bps)



Attribution by market capAttribution by sector


2016EffectMarket

Allocation(local)EffectSelection(Incl.Interaction)(local)

EffectTotalCurrency(EUR)

Energy -0.73 -0.63 0.40Materials 0.38 0.61 0.43Industrials -0.10 -0.41 0.35ConsumerDiscretionary -0.24 0.36 -0.02ConsumerStaples -0.55 1.83 0.00HealthCare -0.16 1.26 -0.61Financials -0.23 -0.61 -0.04InformationTechnology -0.06 -1.10 0.33TelecommunicationServices 0.02 0.40 -0.12Utilities 0.03 -1.14 0.33RealEstate 0.28 -0.47 0.14Unclassified 0.00 0.00 0.00Asof30/12/2016,since31/12/2015

2017EffectMarket



Energy 0.16 -0.96 -0.05Materials 0.06 0.99 -0.20Industrials 0.02 0.51 0.08ConsumerDiscretionary -0.16 1.05 0.20ConsumerStaples 0.00 0.23 0.18HealthCare 0.06 0.07 0.10Financials -0.08 1.92 0.23InformationTechnology 0.20 0.17 -0.15TelecommunicationServices -0.09 0.17 0.09Utilities -0.04 -0.05 0.01RealEstate 0.09 0.20 0.02Unclassified 0.12 0.00 -0.01Asof31/07/2017,since30/12/2016

2016EffectMarket



<EUR5bn -3.06 0.87 0.76>EUR5bn<EUR25bn -0.01 1.06 1.01>EUR25bn -0.78 0.69 -0.61Unclassified 0.01 -0.01 0.00Asof30/12/2016,since31/12/2015

2017EffectMarket



<EUR5bn -0.29 0.57 0.03>EUR5bn<EUR25bn 0.11 1.95 0.13>EUR25bn 0.21 1.89 0.34Unclassified -0.06 0.26 0.01Asof31/07/2017,since30/12/2016


Eric Bendahan Track record Oyster European Opportunities

Source: Banque Syz & Co, Lipper IMPast performance does not guarantee or predict future

performance.Reference to an index is made for comparison purposes only.(*) Since 30.06.2010, track-record of the R EUR2 share class

(LU0507009925). Before this date, track record recalculated, since inception of the fund, from gross NAVs and deducting similar fees (i.e. management fee and relative performance

fee of the R EUR2 share class, plus all other fees of the historic annual TER computed on a monthly basis).(**) Lipper average: Base 100 = 31.12.2005

166.2

142.5

0

75

100

125

150

175

EORDRSXXR

Aug-2014 2013 2012 2011 2010 2009 2008 2007 2006 Since EB’s arrival

Oyster European Opportunities R EUR2* 4.5% 22.7% 25.4% -14.5% 22.2% 34.2% -44.5% 4.0% 27.7% 66.1%

Stoxx Europe 600 EUR (net return) 6.6% 20.8% 18.2% -8.6% 11.6% 32.4% -43.8% 2.4% 20.8% 42.9%

Performance Delta -2.1% 1.9% 7.2% -5.9% 10.6% 1.8% -0.7% 1.6% 6.9% 23.2%

Peer Group average (Lipper European Equity Funds) 3.7% 18.6% 17.6% -11.9% 11.6% 30.1% -43.0% 1.4% 18.0% 26.3%

Performance Delta 0.8% 4.1% 7.8% -2.6% 10.6% 4.1% -1.5% 2.6% 9.7% 39.8%


Source: Bloomberg, Lipper IMPast performance does not guarantee

or predict future performance.Reference to an index is made for comparison purposes only. The index was not mentioned

in the investment policy of the sub-fund.(**) Lipper average: Base 100 = 29.11.2011

185.1

160.7

0

75

100

125

150

175

200

SelectionSXXR

Aug 2014 2013 20122011 (starting

29.11.2011) Since launch

Oyster European Selection 1 EUR 2.2% 28.7% 34.5% 4.6% 85.1%

Stoxx Europe 600 EUR (net return) 6.6% 20.8% 18.2% 5.6% 60.7%

Performance Delta -4.4% 7.9% 16.3% -1.0% 24.4%

Peer Group average (Lipper European Equity Funds) 3.7% 18.6% 17.6% 4.6% 51.4%

Performance Delta -1.5% 10.1% 16.9% 0% 33.7%

Eric Bendahan Track record Oyster European Selection


Section Four:

Eleva Absolute Return Europe


Eleva’s Unique Investment Philosophy

• Leverage of skills and expertise in European Equities with a natural extension of Eleva’s current successful approach on the long side

• An ability to capture alpha, both on the long and on the short side, with a limited market risk

• A differentiated and disciplined investment process on longs and shorts

• Net exposure range of -10 to 50% driven by fundamental idea generation and market volatility

• Target 6 - 8% volatility and 8 - 10% expected return over a full market cycle

Eleva Absolute Return Europe:

AdeepandprovenexperienceinfundamentalinvestinginEuropeanEquities


Eleva’s Unique Investment PhilosophyTarget investments in different types of opportunities

Bottom-up philosophy complemented by a macro view

Companies

undergoing

significant changes

Long term challenge

d industries

Credit/ Equity market

mismatch

Long opportunities Short opportunities

Differentiated

business modal in mature

industries

Family or Foundatio

nowned

businesses

Popular companie

s at a negative inflexion

point

Elevated expectation

s


Investment philosophy – Long & Short bookCredit/Equity market mismatch

• Eleva believes it makes sense to analyse the message from credit markets

- Same companies but treated as two different asset classes managed by different teams with no communication

- Access to a broader group of unlisted companies• Balance sheets tend to be under-analysed

by equity investors- Asymmetric risk-reward makes credit

investors more risk-adverse- Prime focus is the income statement

for equity analysts- Quality of earnings and cash flow not

scrutinised enough

• Eleva looks at companies that are disliked bythe credit market but still liked by the equitymarket

- The equity market does not always payenough attention to balance sheets and canmiss deterioration in the latter

- Sweet spot tends to be when CDS spreadgoes above 200 bps

- Eleva analyses the message from the creditmarket to see if we can have an edge on theshorts

- Message will be more powerful if a companyonly recently saw a deterioration in spreads• Poor FCF and/or unsustainable balancesheets

- Eleva look for companies with an imbalancebetween FCF and earnings

- Or with an unsustainable balance sheet /potential liquidity issue / use of atypicalfinancing instruments

- Or with aggressive accounting – with thepotential use of CFRA

Long book Short book


Investment philosophy – Short bookPopular companies at a negative inflexion point

Popular companies at a negative inflexion point

A popular company is defined as a company that has outperformed for a long period of time (3 years) and/or has more than 2/3 of analysts with a Buy rating1

- This type of company tends to be widely owned by long-only and hedge funds, with minimal short interest

- Eleva tends to look at fads, overextended cyclicals, valuations anomalies, bad companies in good sectors that:- disappoint on earnings- are affected by a negative cyclical/ sector

change, or- look for atypical M&A or financial

engineering

How does Eleva find them?- Proprietary screening undertaken regularly

with a consistent methodology- Eleva looks for companies that have:• Outperformed the STOXX 600 over the past 3 years OR

have >2/3 of Buy analyst ratings• AND have witnessed a recent inflexion in their earnings

through negative earnings revision worse than -2%• AND command a valuation premium to their sector (P/E)

- This methodology narrows down the 1,000 liquid European stocks to a focus list of ~150 stocks

- Examples: BMW, Compass, Standard life

- Some of these companies could have been held by Eleva on the long only side at some point previously

- Example: Hays Plc


Investment philosophy – Short bookElevated expectations

Elevated expectations

• Risk on elevated earnings expectations- Bottom-up analysis- Market perception- Comparison of our earnings expectations

with those of the market

• Risk on expensive valuation- Unwarranted valuation and de-rating risk- Valuation methodologies differ, but we

prefer FCF- Absolute valuation, not relative ones

• Leveraging our fundamental research- Team experience- Sector expertise- Company/management access- External research- Screenings


Investment processPortfolio construction

• Constant monitoring of UCITS regulatory constraints

• PEA ratio monitoring• Constant liquidity

monitoring• No systematic currency

hedge but will look at the net exposure

• Expect significant commonality on the longs with Eleva European Selection

• c.50 names on average on the long, 50 -70 on the short

• Use of index futures to complement single stock shorts where appropriate

• Use of swaps with 2 bulge-bracket prime brokers

• Gross exposure cap at 250 %

• Volatility target between 6% and 8%

• Net exposure at -10 to 50 %. Expect an average at 25% over a full market cycle

• Net exposure will depend more on the quality and number of the shorts and on the volatility of the market than on a market call/view

• Typically position sizes below 5% for longs and 2.5% for shorts

Stock weightings reflect • the expected return profile

subject to Eleva’s assessment of the risk

• Risk/reward profile in context of existing holdings

Stock picking supplemented by leading indicator analysis –useful for long and shorts

Portfolio Construction targets

the best mix of stock specific

opportunities at any particular time


Investment ProcessIdea generation

• Minimum EUR 2M daily liquidity

►

►

~ 1,000 liquid companies

Investable universe of ~ 11,500European companies

Long book Short book



• No market cap threshold

Focus on companies that are either:• Darling stocks at a turning point• or being in a challenged industry• or have elevated expectations• or have different credit and equity

messages

Disciplined and replicable approach on both Long and Short books to generate Alpha

• > EUR 5bn market cap or

• < EUR 5bn market cap with both:- 5-year top line CAGR of >

+7% - and a strong balance sheet

Focus on companies that are either:• Family owned • or have a differentiated business

model • or face change • or have different credit and equity

messages

~ 500 eligible companies


Risk management sell discipline

Stock selection

Target price set

Positive share price movement Negative share price movement

Lack of upside

Fundamentals still

improving

►

Keep/add Sell

► Investment case

still valid

Systematic review

after 10% drop

Deterioration got

story wrong

►

Keep/add

►►Sell►Short candidate


Eleva Absolute Return EuropeKey characteristics

Typical Maximum Current

Number of positions

Long c.50 55 55

Short 50 – 70 75 50

Gross Exposure 120-200% 250% 146.9%

Net Exposure [ -10% ; 50%] [ -10% ; 50%] 30.1%

Volatility 6-8% 10% 6.67%

Position size (Long) 1-5% 5% 1.8% average (3.1% max)

Position size (Shorts) 1-2% 2.5% 1.3% average (2.4% max)

Index exposure (Short book) 0-25% 50% 20.19%


Section Five:

Performance and characteristics


Performance Eleva Absolute Return Europe

Performancesinceinception

Source: Bloomberg

As of 31/07/2017, since inception (30/12/2015)

91

93

94

96

97

99

100

102

103

105

106

108

ElevaAbsoluteReturnEurope(S)

HFRXEHEIndex

6.28%

1.56%



Contributionbysector- 2016 Contributionbymarketcap- 2016

Source: Novus, Eleva

Longs Contribution(bps) AvgExposure(%) Return(%) BattingAvg(%)MegaCap(>50B) 82.50 11.12 7.42 70.59LargeCap(10B-50B) 42.16 31.29 1.35 48.98MidCap(2B-10B) 15.43 26.23 0.59 41.30SmallCap(250MM-2B) -211.57 16.76 -12.62 34.38MicroCap(<250MM) -50.92 1.25 -40.83 0.00Misc. 27.38 1.33 20.62 50.00Total -95.02 86.19 -1.10 45.81(Asof30/12/2016,31/12/2015)

Shorts Contribution(bps) AvgExposure(%) Return(%) BattingAvg(%)MegaCap(>50B) -40.28 -4.48 -8.99 27.27LargeCap(10B-50B) 41.88 -12.39 3.38 50.00MidCap(2B-10B) -50.93 -19.35 -2.63 50.75SmallCap(250MM-2B) 77.99 -5.78 13.49 48.15MicroCap(<250MM)Indices&Misc. -72.34 -12.75 -5.67 12.50Total -43.68 -54.71 -0.80 44.72(Asof30/12/2016,31/12/2015)

Longs Contribution(bps) AvgExposure(%) Return(%) BattingAvg(%)ConsumerDiscretionary -11.82 13.55 -0.87 52.94ConsumerStaples 165.41 8.56 19.32 66.67Energy 17.53 3.60 4.88 50.00Financials -249.25 14.74 -16.91 29.17HealthCare -50.12 10.38 -4.83 50.00Industrials 35.72 11.83 3.02 52.94InformationTechnology -90.98 7.43 -12.25 27.27Materials 258.33 7.46 34.63 85.71RealEstate -28.93 2.18 -13.27 0.00TelecommunicationServices -43.00 4.01 -10.72 42.86Utilities -125.57 3.10 -40.44 0.00Misc. 27.65 1.33 20.73 55.56Total -95.02 86.19 -1.10 46.15(Asof30/12/2016,31/12/2015)

Shorts Contribution(bps) AvgExposure(%) Return(%) BattingAvg(%)ConsumerDiscretionary -36.68 -9.23 -3.97 44.44ConsumerStaples -40.97 -4.32 -9.49 22.22Energy 71.55 -0.61 117.38 75.00Financials 42.25 -6.64 6.37 50.00HealthCare -49.94 -2.67 -18.68 16.67Industrials -23.40 -7.39 -3.17 43.48InformationTechnology 2.20 -2.85 0.77 63.64Materials 6.88 -4.26 1.62 53.85RealEstate 29.81 -0.58 51.70 100.00TelecommunicationServices 19.09 -1.23 15.58 66.67Utilities 7.85 -2.47 3.18 37.50Indices&Misc. -72.34 -12.75 -5.67 12.50Total -43.68 -54.71 -0.80 42.45(Asof30/12/2016,31/12/2015)



Contributionbysector- 2017 Contributionbymarketcap- 2017

Source: Novus, Eleva

Longs Contribution(bps) AvgExposure(%) Return(%) BattingAvg(%)ConsumerDiscretionary 164.40 13.72 11.98 73.33ConsumerStaples 102.46 8.14 12.58 90.91Energy -82.87 3.43 -24.16 0.00Financials 169.89 17.28 9.83 73.33HealthCare 58.33 9.38 6.22 75.00Industrials 303.04 12.39 24.45 70.59InformationTechnology 263.82 9.78 26.98 84.62Materials 64.84 9.26 7.00 66.67RealEstate 108.35 2.37 45.78 100.00TelecommunicationServices 12.57 4.91 2.56 50.00Utilities 1.94 1.43 1.36 50.00Misc. 20.29 0.63 32.34 66.67Total 1187.05 91.10 13.03 71.84Asof31/07/2017,since30/12/2016

Longs Contribution(bps) AvgExposure(%) Return(%) BattingAvg(%)MegaCap(>50B) 158.84 15.30 10.38 83.33LargeCap(10B-50B) 223.32 31.34 7.13 68.57MidCap(2B-10B) 60.20 23.17 2.60 51.61SmallCap(250MM-2B) 731.27 20.98 34.86 81.25MicroCap(<250MM) -5.84 1.29 -4.53 0.00Misc. 19.25 1.10 17.54 50.00Total 1187.05 91.10 13.03 67.83Asof31/07/2017,since30/12/2016

Shorts Contribution(bps) AvgExposure(%) Return(%) BattingAvg(%)ConsumerDiscretionary 77.50 -11.15 6.95 51.85ConsumerStaples -42.35 -7.84 -5.40 30.00Energy 3.32 -1.30 2.56 0.00Financials 25.13 -4.92 5.11 60.00HealthCare -0.19 -0.78 -0.25 40.00Industrials -6.50 -4.88 -1.33 46.15InformationTechnology -37.13 -1.62 -22.96 40.00Materials -37.19 -5.47 -6.79 66.67RealEstate -5.15 -0.60 -8.55 0.00TelecommunicationServices -13.31 -1.79 -7.43 0.00Utilities 19.59 -0.91 21.64 75.00Indices&Misc. -99.67 -23.49 -4.24 33.33Total -115.95 -64.27 -1.80 47.31Asof31/07/2017,since30/12/2016

Shorts Contribution(bps) AvgExposure(%) Return(%) BattingAvg(%)MegaCap(>50B) -32.68 -3.11 -10.52 28.57LargeCap(10B-50B) 9.77 -11.73 0.83 50.00MidCap(2B-10B) -104.62 -20.38 -5.13 37.21SmallCap(250MM-2B) 111.24 -5.56 20.01 58.82MicroCap(<250MM)Indices&Misc. -99.67 -23.49 -4.24 33.33Total -115.95 -64.27 -1.80 43.56Asof31/07/2017,since30/12/2016


Portfolio ExposureEleva Absolute Return Europe

Marketcapbreakdown

Sectorexposure

Exposurebymarketcap Longbook Shortbook Net%<100m 0.0% 0.0% 0.0%100-250m 0.0% 0.0% 0.0%250-500m 5.9% 0.9% 5.0%500m-1bn 9.5% 0.6% 8.9%1b-2bn 16.9% 2.4% 14.5%2-5bn 13.9% 14.7% -0.8%5-10bn 5.8% 16.0% -10.3%10-25bn 19.7% 12.6% 7.0%>25bn 23.9% 23.8% 0.1%Total 95.6% 70.6% 24.5%

Exposurebysector Longbook Shortbook Net%ConsumerDiscretionary 15.8% 12.4% 3.4%ConsumerStaples 7.4% 10.4% -3.0%Energy 1.0% 3.4% -2.4%Financials 17.2% 9.9% 7.3%HealthCare 9.4% 4.2% 5.2%Industrials 13.4% 16.5% -3.1%InformationTechnology 10.2% 2.8% 7.4%Materials 12.3% 5.9% 6.5%RealEstate 3.9% 0.4% 3.5%TelecommunicationServices 4.7% 4.1% 0.6%Utilities 0.2% 0.9% -0.8%Total 95.6% 71.1% 24.5%

10.5%

21.8%

12.1%

41.5% 45.66%

0%5%10%15%20%25%30%35%40%45%50%

Credit-equitymismatch

LTchallengedindustries

PopularCo'satinflexion

point

Elevatedexpectations

Indices

Criteriaexposure(shortbook)

8

14

20

26

32

38

44

50 Netexposure


Section Six:

Candoris


About CandorisAccess to the world’s best investment strategies

Candoris pairs boutique investment managers with investors and distributors throughout the Nordics and the Netherlands. We are:

• A Dutch firm with two seasoned investment professionals

• Transparent about the managers we introduce, and the key criteria we use before partnering with them

• Transparent on price, and fund and separate account investment possibilities

• Honest and direct in our communication now and when you are a client

Can·dor“kandər-ˌ dôr”

noun: candour; candor

1. The quality of being open and honest in expression; frankness.

Synonyms: frankness, openness, honesty, candidness, truthfulness, sincerity, forthrightness, directness, plain-spokenness, bluntness, straightforwardness, outspokenness


Candoris matches clients’ needs with unique strategies and solutions.

For Investors in the Netherlands & the Nordics:• Introduce and market investment strategies and styles that are unique

• Offer solutions to actual challenges for investors and distributors

• Ability to compare the investment strategy with peers, on an absolute and risk adjusted basis

• Ability to provide insight when including the strategy in portfolio context

• Facilitate European investment vehicles (funds) or mandates

• The organizations we introduce are boutiques, frequently employee-owned, and specialized

• Organizing roadshows at least twice a year through these markets

For Asset Managers:• Access to Dutch and Nordic market at limited expense

• Asset managers can continue to manage assets with distraction

• Support in establishing funds

• Organize/fulfil regulatory requirements


Selected Strategies & ManagersAccess to the world’s best investment strategies

Candoris - Strategies & Managers

Global Equities DSM Capital Partners – Palm Beach Gardens, FL

US Equities Coho Partners - Philadelphia, PA

European Equities Eleva Capital - London

Senior Loans Pacific Asset Management - Newport Beach, CA

US High Yield Strategic Income Management (SiM) - Seattle, WA


Strategies & PerformanceAccess to the world’s best investment strategies

GIPS Compliant Gross Composite PerformanceAs of 30/06/2017

Source: eVestmentData quoted is past performance gross of fees. Current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate.

YtD 1 Year 3 Year 5 Year 10 Year Since Inception

Global Equity (in US$)Global Growth (Inception – Oct 10) 27,02% 32,34% 12,10% 16,60% 14,15%MSCI ACWI Net 11,48% 18,78% 4,82% 10,54% 8,71%US Equity (in US$)US Equity (Inception – Oct 00) 7,14% 10,02% 8,84% 13,77% 9,75% 9,41%S&P 500 TR 9,34% 17,90% 9,61% 14,63% 7,18% 5,23%S&P 500 Value 4,85% 15,86% 7,79% 13,83% 5,25% 5,57%European Equities (in €)Eleva European Selection (Inception - Jan 15) 8,44% 22,63% 20,10%STOXX Europe 600 EUR 7,04% 18,17% 9,72%US Senior Loans (in US$)US Senior Loans (Inception – Jan 07) 2,26% 7,76% 4,01% 5,26% 5,64% 5,76%CS LL Index 1,96% 7,49% 3,49% 4,83% 4,16% 4,31%US High Yield (in US$)US High Yield (Inception – Feb 11) 4,16% 11,76% 5,45% 8,64% 8,26%BofA ML US High Yield Master II 4,91% 12,75% 4,48% 6,91% 6,71%


Section Seven:

Important Information


This information is proprietary and cannot be reproduced or distributed. Certain information may be received from sources Candoris B.V.considers reliable; Candoris B.V. does not represent that such information is accurate or complete. Certain statements contained hereinmay constitute “projections,” “forecasts” and other “forward-looking statements” which do not reflect actual results and are based primarilyupon applying retroactively a hypothetical set of assumptions to certain historical financial data. Actual results, performance or events maydiffer materially from those in such statements. Any opinions, projections, forecasts and forward-looking statements presented herein arevalid only as of the date of this document and are subject to change. Nothing contained herein should be construed as (i) an offer to buyany security or (ii) a recommendation as to the advisability of investing in, purchasing or selling any security. Candoris B.V. assumes noobligation to update any forward-looking information.

Past performance is no guarantee of future results.

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