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Selected Session Highlights from Best Ideas 2014



SAHM ADRANGI, PORTFOLIO MANAGER, KERRISDALE CAPITAL MANAGEMENT
JONES LANG LASALLE (NYSE: JLL): Industry leader in real estate advisory services. Asset-lite,
service-based business model (roughly 40% of revenue is recurring). Prestigious brand name with
global footprint can attract and retain talent. Leading competitive position in an oligopoly industry (#1
market share in Europe and Asia). One of only two brokerages (C.B. Richard Ellis) with global scale
and full product suite. Financial crisis has allowed JLL to consolidate weaker, regional brokerages.
Ability to reinvest cash flows at attractive ROIs. Roll-up of boutiques provides for continued
compounding (generally preferably to buybacks; pays 7 8x EBITDA for its deals, translating into
immediate value creation ). Global commercial real estate transaction volume remains 35% below
pre-recession levels. JLLs 14.5x 2014 P/E multiple appears too cheap given its competitive position
and projected earnings growth of 15%+ based on European real estate recovery, a strengthening
U.S. economy, and emerging market growth. Even after deducting revenue contributed from
acquisitions, JLL has grown at a 12% CAGR over the past seven years. Margin expansion opportunity
as JLLs EBITDA margin is ~300bps below CBRE and newly installed, GE-trained CFO may drive
cost efficiencies. Advisory-focused investment banks (Lazard, Evercore, Greenhill) are a decent
comparable and they trade at 22x 2014E P/E versus JLL at 15-16x. At a 22x 2014 P/E multiple,
which, is warranted given JLLs growth prospects, competitive position in a oligopoly market, and
exposure to the emerging markets, JLL would be worth $155 per share, or a 50% increase from the
recent share price. Adrangi's discounted cash flow model yields a $150 per share fair value.
http://www.valueconferences.com/2014/01/ideas14-sahm-adrangi/

ROBERT DEATON, MANAGING PARTNER, FAT PITCH CAPITAL
H&R BLOCK (NYSE: HRB): World's largest tax preparer with 12,000 offices and 80,000 tax
professionals (25+ million tax returns filed in 2013). Durable competitive advantage: industry leading
client retention and 98% brand awareness (similar to Coca-Cola, McDonalds and Walmart). Fortress
balance sheet with no net debt and a "foolish flow ratio" of 26% ((current assets - cash)/current
liabilities). High returns on invested capital (trailing ROA and ROE: 12% and 52%) with low capital
intensity (capex as % of revenue: 4%). Shareholder oriented management team after William Cobb
became CEO in May 2011: FY 2013 dividends: $217 million; share repurchases: $315 million. 7%
free cash flow yield on a net cash balance sheet provides a margin for safety. Huge capital
reallocation opportunity: assuming HRB levers up to 2.1x EBITDA to repurchase shares, by FY 2017
this would imply an intrinsic value of $60+ (using a 5% FCF yield), or more than a doubling in the
share price from today. Other potential catalysts and opportunities: 1) Sell bank; 2) Affordable Care
Act expands market by ~24 million; 3) Online returns growing faster than leading competitors; 4)
Tax plus: Continued growth of Emerald Debit Card
http://www.valueconferences.com/2014/01/ideas14-robert-deaton/




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JEFF AUXIER, CHIEF EXECUTIVE OFFICER, AUXIER ASSET MANAGEMENT
LABCORP (NYSE: LH): ~15% share price decline since mid-November provides an opportunity to
buy a compounder in the attractive clinical lab industry and benefit from a shareholder-friendly
management team. Recent concerns about declining volumes and pressures on reimbursement rates
are likely temporary as doctor visits have been delayed due to a slow recovery out of the recession
and uncertainty over health care legislation. But, in time, this will change as patients cannot delay
critical health testing forever (similar to Zimmer's experience over the past few years in knee and hip
replacements). Bigger picture: long runway for demand growth as 10,000 people a day are turning 65
and that age group has historically been the biggest user of lab tests. Also, recent negative Supreme
Court ruling related to competitor Myriad Genetics may provide opportunities for increased volumes
for certain products. LabCorp has historically invested well in technology and relationships with
doctors and through its increasing scale has become the low-cost provider in an effective duopoly
with Quest. Potential for value-enhancing acquisitions as temporary pressures on volumes and
reimbursement rates disproportionately hurt smaller-scale providers. Generating $600+ million of
FCF, which implies a high single digit free cash flow yield. CEO David King has been a disciplined
capital allocator (50% of cash flow has historically gone into buybacks, rest into acquisitions). Since
2002 shares are down from 147 million to 86 million.
http://www.valueconferences.com/2014/01/ideas14-jeff-auxier/

CHRIS CRAWFORD, CHIEF INVESTMENT OFFICER, CRAWFORD FUND MANAGEMENT
MYRIAD GENETICS (NASDAQ: MYGN): Stock out of favor (~30% decline since November-end
2013) and heavily shorted due to heightened uncertainty resulting from a Supreme Court ruling
(probable end of BRAC breast cancer test monopoly), leading to new competition and reimbursement
cut threats. But, synthetic genes created by Myriad remain protected and the company has other
sources of moat: beyond the tests, MYGN has built proprietary database of gene variants with
superior error performance to the public database; reputation built over years with prescribing
physicians dealing with critical diseases on a daily basisneed accuracy, comparability, fast
turnaround timesvery hard to do thisrequires much more than a lab; largest portfolio of IP
resulting from focused accumulation of R&D investment conducted in licensed labs; Myriad is a step
ahead of competition with recent launches and pipeline; maturation of basic BRAC segment is
expectedlower prices and competition may accelerate adoptiontrade margin for growth (Myriad is
exposed to high growth segments in early innings of adoption globally). In addition, reimbursement
cut headlines sound draconian, but in reality are likely to be slower and more moderate than
expected. As a result, market fears are overblown and high skepticism (45% shorted) creates
squeeze conditions if company continues to execute. Strong FCF generator. High and rising ROIC
(adding to intrinsic value rapidly). No debt and 516 million of cash ($6.22/share) for buybacks and
reinvestment. Crawford estimates intrinsic value at $34 per share in a pessimistic scenario and $52
optimistically.
http://www.valueconferences.com/2014/01/ideas14-chris-crawford/




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DAVID ROLFE, CHIEF INVESTMENT OFFICER, WEDGEWOOD PARTNERS
EMC (NYSE: EMC): EMC stub valued at just 4-5x earnings, adjusting for VMware stake at market
value (~$30 billion) and net cash (~$8.5 billion), which account for about 75% of EMCs recent market
capitalization. EMC's forward P/E, on a non-adjusted basis, is still only 11.5x. This is too low given
EMC's entrenched ecosystem (services represent ~45% of revenue), sticky customers and
unparalleled distribution (direct sales force). Companys strategy of both R&D and scalable
acquisitions drives competitive product/service offerings. At the recent valuation, the bear case
(current decelerated growth is secular, not cyclical; flash storage and software-defined storage will
cannibalize traditional hard disk drives; public cloud is only a threat and not an opportunity; VMwares
entrenched vSphere gets displaced by Open-Source and Microsofts Hyper-V; and recent premium-
priced acquisitions of Data Domain and Isilon are evidence of lack of internal product development)
has to be so overwhelmingly right as to render EMC a broken growth company. - which Rolfe does
not see materializing. Therefore, the new $6 billion stock buyback should be quite accretive at current
valuation. Rolfe see downside of about 10% to $22 and fair value of $32-35, or 30%+ upside.
http://www.valueconferences.com/2014/01/ideas14-david-rolfe/

JAKE ROSSER, MANAGING PARTNER, COHO CAPITAL MANAGEMENT
UCP (NYSE: UCP): One of the cheapest ways to participate in the recovery of the U.S. housing
market. Asymmetric return potential with low downside risk and significant upside. Simple NAV story,
a dollar trading for $0.50 based upon undeveloped land. UCP is a hybrid land developer and home
builder focused on high-growth western markets with three quarters of operations based in California
and a growing presence in Washington. Increased push into home building promises to unlock
significant value (80%+ of lots acquired between 2008-2011 at distressed prices). Broken IPO has led
to an "orphaned" stock. Markings of a Wilbur Ross distressed industry roll-up. Over $190 million
deployed to take advantage of dislocation in housing market (parent PICO capitalized UCP in 2008 to
take advantage of fire-sale prices during the worst of the housing crisis). Ample land supply provides
visibility into future development potential (guidance for revenue growth of 100% in 2014). P/B of 1.2x
compared to industry average of 2.2x (return of 83% with industry multiple). Direct comp of TPH has a
P/B value of 1.9x indicating a potential return of 58%. Trades below liquidation value as it has $171
million in real estate assets (carried at historical cost; GAAP accounting requires land be carried at
lower of historical cost or fair value), along with $58 million in net cash. According to Case-Schiller, in
UCPs core markets of San Francisco and Seattle, housing prices have risen 53% and 25%
respectively from trough levels (roughly when UCP purchased its lots). Buyout candidate
(homebuilders are land constrained and UCP provides exposure to high growth west coast markets),
but 58% ownership by PICO Holdings could make an acquisition or activist campaign more difficult.
However, valuation is its own catalyst - trades below liquidation value - and ramp in homebuilding
operations should spur book value growth.
http://www.valueconferences.com/2014/01/ideas14-jake-rosser/




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PAUL LOUNTZIS, PRESIDENT, LOUNTZIS ASSET MANAGEMENT
PEPSICO (NYSE: PEP): Potential separation of snacks and beverages businesses to create value
(50%+ upside from recent share price). While investors still think of Pepsico as a beverages business,
the majority of value is in the snacks business, which has better growth prospects than beverages.
While management's willingness to effect a spinoff and an eventual timeframe are difficult to predict,
Lountzis believes Yum! Brands, which was spun-off by Pepsico in 1997, represents a precedent for
spin-off success at the company. Another issue favoring a spin-off is that Frito's volume weakness in
recent years is likely linked to the weakness in the Americas beverages business. Lountzis agrees
with shareholder Trian that the status quo is not a viable long-term option. However, Lountzis prefers
the option of a simple separation of snacks and beverages to the more complex alternative (also
proposed by Trian) of merging Pepsico and Mondelez, followed by a snacks/beverages separation.
Separately, Lountzis also likes the following two preferred stock ideas for income-oriented investors:
USB SERIES F (FRAP), WFC SERIES R (FRAP)
http://www.valueconferences.com/2014/01/ideas14-paul-lountzis/

CHRIS SWASBROOK, PORTFOLIO MANAGER, ELEVATION CAPITAL MANAGEMENT
POST HOLDINGS (NYSE: POST): Third-largest cereals business in the U.S. (market share: 10%)
after Kellogg (34%) and General Mills (33%) undergoing a significant, yet still underappreciated
transformation under hall of fame capital allocator and CEO Bill Stiritz of Ralston Purina fame. A dollar
invested with Bill Stiritz when he became CEO of Ralston Purina was worth $57 nineteen years later.
He is now at it again with POST Holdings, transforming the business from a low growth single
category participant to a consumer products holding company, operating in center-of-the-store, active
nutrition and private label categories (from 2013 Annual). As a result, historical financials dont tell
the full story. Future strategy likely to entail continued roll-up following Stiritz's Ralcorp public LBO
model: leverage up to achieve higher returns on equity, prune less profitable businesses, expand into
related businesses that have higher returns and growth, buy back shares opportunistically. Potential
exit strategies: 1) acquisition target for one of its main competitors in the cereals market; 2)
acquisition target for other major players in the packaged food industry; 3) sale to private equity.
Precedent transactions indicate an EV/EBITDA multiple paid by acquirors of 13x. Assuming a similar
multiple applied to Swasbrook's FY2014 estimated EBITDA range (including announced acquisitions),
POST is worth $63-71 per share, implying 27-44% upside.
http://www.valueconferences.com/2014/01/ideas14-chris-swasbrook/

ERIC DELAMARTER, MANAGING MEMBER, HALF MOON CAPITAL
MURPHY USA (NYSE: MUSA): Regional owner and operator of small-format retail gas stations.
Spun-off from $12B market cap Murphy Oil, an exploration and production company and S&P 500
constituent, in August 2013. Rationale: focus business and unlock value. 1,200 locations in the
Southeast and Midwest, 85% adjacent to Walmart. Mr. Market erroneously focused on low margins
and consolidated financials (which include volatile, non-core segments that have been sold or are
being sold). The reality is a cash-generative core business with an attractive return profile (ROIC: 2x


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peers) due to structural advantages (owns midstream assets; shipper status on pipelines; relationship
with Walmart; small format). This gives the company competitive fuel gross margins while also being
a low-cost provider and making the business less sensitive to oil price swings. Recent insider buying.
Likely year-end portfolio clean-up selling pressure (spin-off). Trading at discount to peers and
absolute sum-of-the-parts value: 7.1x LTM EBITDA-capex (normalized), 7.0x base case CY2014E
EBITDA-capex. Growth opportunity: plans to open 60 stores per year with 200 openings over the next
three years and 400-500 more through 2020 within Walmart network. Equity offers 50%+ near-term
upside. Downside protection: Retail segment real estate worth more than current enterprise value.
Strong balance sheet. Catalysts: 1) sale of non-core ethanol plants; 2) increased appreciation of the
quality of the business and its near-term growth prospects; 3) margin expansion from higher mix of
larger floor plan stores; 4) announcement of dividend or restructuring (conversion to REIT or MLP).
http://www.valueconferences.com/2014/01/ideas14-eric-delamarter/

CHRIS KARLIN, CHIEF INVESTMENT OFFICER, AQUITANIA CAPITAL MANAGEMENT
CHIMERA INVESTMENT (NYSE: CIM): Mortgage REIT formed in 2007 and managed by FIDAC, a
subsidiary of Annaly Capital Management. Owns non-agency residential mortgage backed securities.
Why this company might be mispriced: 1) financial statements are not current due to accounting
restatement; 2) potential NYSE delisting resulting from non-current financials; 3) limited
communications with investors; 4) GAAP accounting treatment deviates from cash economics; 5)
priced below $5 per share; and 6) trades with agency mortgage REIT peer group although facing
different set of risks and opportunities. Karlin views Chimera as effectively a closed-end bond fund
selling at a deep discount to NAV. Closed-end because of delinquent filer status (which should
disappear in 2014) that prevents the company from issuing equity, a traditional way of raising capital
for REITs. Selling at discount due to a valuation of 1.1 book, which is understated due to the fact that
portfolio was primarily created in 2009-11 at steep discounts and using draconian loss assumptions
($2 billion in accreted discounts were recorded at purchase!). As a result, Chimera offers a highly-
levered upside to an improving housing market without significant downside exposure and ability to
collect 10%+ dividend yield. Downside is protected due to the deep discount to economic value of the
net assets; modest leverage at 0.5x debt to equity for recourse debt and the fact that management is
restrained from engaging in value-destructive behavior. Catalysts: 1) resolution of delinquent filing
status; 2) cash flow on maturing securitization deals should increasingly flow to CIM-held paper; 3)
large interest-only portfolio has negative duration; 4) possible takeout by Annaly (see CreXus). Book
value plus dividends grew an estimated 6% in 2013, 21% in 2012, 3% in 2011 and 11% in 2010.
http://www.valueconferences.com/2014/01/ideas14-christopher-karlin/

CHRISTIAN OLESEN, INVESTMENT MANAGER, OLESEN VALUE FUND
CRESTON (UK: CRE): Small-cap U.K.-based marketing services holding company trading at 8x
trailing earnings. Attractive business with very low capital requirements and mostly variable costs
(labor) leads to stable and high free cash flow. Creston trades at the lowest earnings multiple (despite
recently depressed margins) and has the lowest leverage among its peers. Corporate expenses are
about 25% of adjusted EBITA because Creston is small for a publicly traded holding company.
Acquisition by competitor and 6% shareholder Havas (or another buyer) is a possibility, but may be a


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long ways off. In the meantime, investors collect a 4% dividend yield on a debt-free balance sheet.
Earnings growth and multiple expansion are likely due to improving business sentiment in the U.K.,
possible higher utilization of balance sheet, and moving past prior issues (ICM, Sanofi). If, as Olesen
believes, Creston is 30% undervalued (at a low teens fair value earnings multiple), and value
increases 10% per year, a 20% IRR is possible if the stock is fairly valued in three years.
http://www.valueconferences.com/2014/01/ideas14-christian-olesen/

RANDALL ABRAMSON, PORTFOLIO MANAGER, TRAPEZE ASSET MANAGEMENT
MANITOK ENERGY (Canada: MEI): Western Canada oil and gas company trading at $2.15 per
share compared to Abramson's estimated value of $4.50 and growing. Short term noise has created
an opportunity as the recent flow-through financing created an overhang on the stock and the
company revised downward 2013 guidance (due to disappointing third quarter results) related to
timing issues and production mix. In addition, the Entice acquisition created uncertainty about the
future direction and the COO left the company. However, management are astute buyers of the stock
and there has been insider buying recently. Currently trading at an enterprise value of $35,000 per
boe/d, 4.5x Q3 annualized cash flow and 2.3x 2014 cash flow guidance. It is also trading at a discount
to its 2012 reported reserve-based NAV per share of $2.84. Value added through 2013 and the
addition of Entice should raise the current NAV to about $3.50. Abramson's private market value
estimate is $5.75 per share in a takeout scenario based on an EV per boe/d of $85,000.
http://www.valueconferences.com/2014/01/ideas14-randall-abramson/

JOSH YOUNG, PORTFOLIO MANAGER, YOUNG CAPITAL MANAGEMENT
AUSTEX OIL (Australia: AOK): Small-cap oil and gas exploration and production company trading for
~1/4 of its $250 million proved reserve value. Most capital efficient, growing public companies trade at
a premium to their proved reserve value. Austex trades primarily in Australia despite U.S. assets
(focused on vertical development of a proven, highly economic Mississippi Lime field in Kay County,
Oklahoma). Australian Stock market has underperformed and Austex has been overlooked despite
substantial reserve and production growth in the midst of Australian market turmoil. Austex stock has
substantially lagged its high-growth, oil producing peers despite better drilling economics and rapid
growth. Recent, material outside confirmations of valuation, including a sophisticated private equity
investor - Michael Stone, former CEO of JH Whitney, who took Herbalife private in 2002 and public in
2004 - buying a 30% stake and getting incremental reserve engineering report confirming value.
Aligned Board with three out of seven seats held as designees for Stone's investment vehicle. This is
a recent development, and is a significant step up in corporate governance. With the stock trading at
a steep discount to proved reserve value and 2x exit 2014 EBITDA, this is not yet priced in the stock.
http://www.valueconferences.com/2014/01/ideas14-joshua-young/

Also, do not miss the exclusive session on the use of investment checklists in idea generation and
evaluation with thought leaders Mohnish Pabrai, Guy Spier and Michael Shearn. Access the replay
at http://www.valueconferences.com/2014/01/ideas14-pabrai-spier-shearn/
BEST IDEAS 2014: January 7-8, 2014*
Ideas sorted by company (as compiled by the ValueConferences team)
Price at Close
Instructor Company Ticker 6-Jan-14 Link to Session Recording
Josh Young Austex Oil Australia: AOK AUD 0.15 http://www.valueconferences.com/2014/01/ideas14-joshua-young/
Jean-Pascal Rolandez Bourbon France: GBB 20.08 http://www.valueconferences.com/2014/01/ideas14-jean-pascal-rolandez/
Chris Karlin Chimera Investment NYSE: CIM $3.04 http://www.valueconferences.com/2014/01/ideas14-christopher-karlin/
Christian Olesen Creston UK: CRE 0.95 http://www.valueconferences.com/2014/01/ideas14-christian-olesen/
David Rolfe EMC NYSE: EMC $24.86 http://www.valueconferences.com/2014/01/ideas14-david-rolfe/
Robert Deaton H&R Block NYSE: HRB $28.48 http://www.valueconferences.com/2014/01/ideas14-robert-deaton/
Sahm Adrangi Jones Lang LaSalle NYSE: JLL $102.79 http://www.valueconferences.com/2014/01/ideas14-sahm-adrangi/
Jeff Auxier LabCorp NYSE: LH $90.35 http://www.valueconferences.com/2014/01/ideas14-jeff-auxier/
Randall Abramson Manitok Energy Canada: MEI CAD 2.12 http://www.valueconferences.com/2014/01/ideas14-randall-abramson/
Eric DeLamarter Murphy USA NYSE: MUSA $41.78 http://www.valueconferences.com/2014/01/ideas14-eric-delamarter/
Chris Crawford Myriad Genetics Nasdaq: MYGN $21.03 http://www.valueconferences.com/2014/01/ideas14-chris-crawford/
Paul Lountzis Pepsico NYSE: PEP $82.28 http://www.valueconferences.com/2014/01/ideas14-paul-lountzis/
Chris Swasbrook Post Holdings NYSE: POST $49.50 http://www.valueconferences.com/2014/01/ideas14-chris-swasbrook/
Jake Rosser UCP NYSE: UCP $14.50 http://www.valueconferences.com/2014/01/ideas14-jake-rosser/
The Manual of Ideas - Top Ideas from Best Ideas 2014 Issue: Best Ideas 2014 Issue (click on link below, then look in right sidebar)
The Manual of Ideas Harvest Natural NYSE: HNR $4.54 http://www.valueconferences.com/events/ideas14/
The Manual of Ideas Strayer Education Nasdaq: STRA $35.18 http://www.valueconferences.com/events/ideas14/
The Manual of Ideas Weight Watchers NYSE: WTW $31.89 http://www.valueconferences.com/events/ideas14/
* Disclaimer:
The content presented here is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be
construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. There are no warranties, expressed or implied, as to the
accuracy, completeness, or results obtained from any information set forth here. BeyondProxys officers, directors, employees, principals and/or contributing authors may have positions in and may,
from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein. This summary is meant in no way to limit or otherwise circumscribe the full scope and
effect of the complete Terms of Use available at: http://www.beyondproxy.com/terms/
CONFIDENTIAL INVESTOR PRESENTATION
Manual of Ideas: Best Ideas 2014
January 2014





Kerrisdale Capital Management, LLC
1212 Avenue of the Americas, 3rd Floor
New York, NY 10036
Tel: 212.792.7999
Fax: 212.531.6153
Email: info@kerrisdalecap.com

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Jones Lang LaSalle (NYSE:JLL)
Industry leader in real estate advisory services
Transaction-based: Leasing, capital markets, and property development
Recurring: Property management, advisory (valuation/consulting), and investment management
Operations in 1,000 locations spanning 70 countries
Leading competitive position in Asia and Europe
Source: August 2013 Investor Presentation

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Asset-lite, service-based business model
Roughly 40% of revenue is recurring
Prestigious brand name with global footprint can attract and retain talent
Leading competitive position in an oligopoly industry
One of only two brokerages (C.B. Richard Ellis) with global scale and full product suite
Financial crisis has allowed JLL to consolidate weaker, regional brokerages
Global commercial real estate transaction volume remains 35% below pre-recession levels
$500m expected in 2013 versus $758m in 2007
Industry cap rates have largely priced in future interest rates increases
14.5x 2014 P/E, mid-single digit FCF yields, and projected earnings growth of 15%+
JLL will benefit from a recovery in EMEA transaction volume, a falling U.S. unemployment
rate, and long-term exposure to emerging market growth
Margin Expansion Opportunity
JLLs EBITDA margin is ~300bps below its closest competitor, CBRE
Newly installed, GE-trained CFO may drive cost efficiencies
Investment Highlights

Page 3 / Confidential
Modest valuation relative to growth expectations
JLLs 14.5x 2014 P/E multiple appears too cheap given its competitive position
European real estate recovery, a strengthening U.S. economy, and emerging market growth
should lead to 15 20% EPS growth for the next few years
Capitalization & Multiples Financial Statistics
Fiscal Year End Dec 31st 2009 2010 2011 2012 LTM
Share Price (US$) $102.63 Americas $1,032.7 $1,261.2 $1,525.3 $1,746.7 $1,850.3
Diluted Shares 45.2 EMEA 646.5 728.8 973.7 1,048.9 1,165.3
Market Cap $4,635.1 % Growth (25.8%) 12.7% 33.6% 7.7% 28.8%
Add: Debt 815.6 Asia Pacific 541.2 678.5 816.5 875.6 933.7
Add: Deferred Obligations 130.3 Invest Mgmt 260.2 245.5 275.5 285.4 275.5
Less: Cash (119.7) Corporate 11.4 (6.4) (23.9) (23.9)
Enterprise Value $5,461.3 Total Revenue $2,480.3 $2,925.5 $3,584.9 $3,932.8 $4,200.9
% Growth (8.0%) 17.9% 22.5% 9.7% 9.6%
Trading Multiples
EV / LTM EBITDA $475.8 11.5x EBITDA
(1)
$238.6 $336.8 $394.9 $436.2 $475.8
EV / 2014E EBITDA 530.6 10.3x Capex (44.2) (47.6) (91.5) (94.8) (95.1)
LTM P/E $5.62 18.3x EBITDA - Capex $194.3 $289.1 $303.4 $341.4 $380.7
2014E P/E 7.07 14.5x EPS
(2)
$1.75 $3.77 $4.83 $5.48 $5.62
2015E P/E 8.08 12.7x ROE 5.7% 11.3% 13.2% 13.5% 13.0%
Source: JLL Corporate Filings
(1) Excludes non-recurring restructuring and acquisition costs
(2) Excludes non-recurring and intangible amortization expense

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Top-Tier brand with leading position in Europe and Asia
JLL's Holds Leading Market Share in Europe and Asia
2010 2011 2012 LTM
Americas Revenue
Jones Lang LaSalle $1,261.2 $1,525.3 $1,746.7 $1,850.3
C.B. Richard Ellis 3,217.5 3,673.7 4,103.6 4,393.1
Europe Revenue
Jones Lang LaSalle $728.8 $973.7 $1,048.9 $1,165.3
C.B. Richard Ellis 936.6 1,076.6 1,031.8 1,141.9
Asia Revenue
Jones Lang LaSalle $678.5 $816.5 $875.6 $933.7
C.B. Richard Ellis 669.9 788.8 817.2 866.1

#1 market share in
Europe and Asia
Lipsey's Commercial Real Estate Brand Survey
Firm 2013 2012 2011 2010 2009
C.B. Richard Ellis (CBRE) 1 1 1 1 1
Jones Lang LaSalle 2 3 3 3 4
Colliers 2 2 2 2 3
Cushman & Wakefield 3 4 4 2 2
Newmark Grubb Knight Frank 4 5 5 6 5
Cassidy Turley 5 7 8 8 9
Source: Lipsey Commercial Real Estate Training

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Global real estate transaction volume continues to recover
Transaction volume remains 35% below pre-recession levels
$500m expected in 2013 versus $758m in 2007
JLL expects global transaction volumes to grow by 10% in 2014
Source: JLL Q4 2013 Market Perspectives

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European volumes are accelerating
Source: JLL Q4 2013 Market Perspectives
EMEA transaction volume grew 31% in Q3 2013
JLL's EMEA Division is Under-Earning
2008 2009 2010 2011 2012 LTM
Americas
Revenue $933.0 $1,032.7 $1,261.2 $1,525.3 $1,746.7 $1,850.3
EBITDA 115.0 134.0 184.0 201.0 210.0 214.1
% Margin 12.3% 13.0% 14.6% 13.2% 12.0% 11.6%
EMEA
Revenue $870.8 $646.5 $728.8 $973.7 $1,048.9 $1,165.3
EBITDA 50.0 11.0 38.0 57.0 75.0 95.7
% Margin 5.7% 1.7% 5.2% 5.9% 7.2% 8.2%
Asia
Revenue $536.2 $541.2 $678.5 $816.5 $875.6 $933.7
EBITDA 18.0 44.0 62.0 70.2 78.0 79.6
% Margin 3.4% 8.1% 9.1% 8.6% 8.9% 8.5%
JLLs EMEA business should experience operating leverage as it grows
Source: Company filings

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Industry consolidation has favored the largest competitors
The 2009 financial crisis led to an industry reshuffling
Grubb & Ellis, formerly a Top-5 firm, filed for bankruptcy in February 2012 and merged with
Knight Frank in April 2012
Poorly positioned middle-market brokers have lost market share
Full product-suite model has cost advantages over boutiques
Transitionally-oriented boutiques (HFF, Eastdil Secured, Marcus & Millichap, etc.) generally
dont offer property management and leasing services
JLL can underbid on transactional fees in order to win recurring property management
business and long-term client relationships
Along with CBRE, JLL is the only firm with a truly global footprint
Real estate is a local business, and global clients demand expertise in various geographies
Representatives for multi-million dollar transactions are risk-averse
Harder to be fired for hiring a top-tier brand like JLL or CBRE
The real estate services business has evolved more and more into two models, the global model where you have mulitiple service
lines and very broad geography to service clients around the globeThen you have the niche models. Anything in the middle is hard
because either youre competing against a global company with clout and infrastructure or a niche player who does a single job in a
single location better than anyone. Cushman & Wakfields CEO (March 2012)


Page 8 / Confidential
Ability to reinvest cash flows at attractive ROIs
JLL has taken advantage of the crisis by investing in growth
55% of earnings have been reinvested into acquisitions over the past three years
Roll-up of boutiques provides for continued compounding (generally preferably to buybacks)
Generally pays 7 8x EBITDA for its deals, translating into immediate value creation
Acquisitions have translated into robust growth over the past three years
13% revenue and 18% EPS 3-year CAGR expected in 2013

Page 9 / Confidential
Long-term Organic Growth CAGR
Even after deducting revenue contributed from acquisitions, JLL has grown at a 12%
CAGR over the past seven years
This compares favorably against 16% total revenue growth
JLL's Organic Growth (Illustrative)
2005 2006 2007 2008 2009 2010 2011 2012
Total Revenue $1,390.6 $2,013.6 $2,652.1 $2,697.6 $2,480.7 $2,925.6 $3,584.5 $3,932.8
% Revenue CAGR 16.0%
Inorganic Revenue Contribution
2006 - Spauling & Slye ($150m) 97.3
2007 - 13 bolt-on deals 151.0
2008 - 15 Deals incl. Staubach 386.0
2009 - No acquisitions
2010 - No acquisitions
2011 - King Sturge ($350m) 197.0
2012 - 4 deals ($16m) 8.0
Implied Organic Revenue $1,390.6 $1,916.2 $2,403.7 $2,063.2 $1,846.4 $2,291.3 $2,753.2 $3,093.5
% Organic Growth 37.8% 25.4% (14.2%) (10.5%) 24.1% 20.2% 12.4%
% Organic CAGR 12.1%
Source: Company filings, press releases, CapitalIQ
(1) Based on management's estimate of 7% growth contribution for H1 2006
(2) Management indicated that M&A added 5-10% to 2007 growth
(3) Deals contributed $193m to 2008 revenue, and we annualized that figure since Staubach closed in July 2008
(4) Undisclosed. We assume that JLL paid 2x revenue
(1)
(2)
(4)
(3)

Page 10 / Confidential
New CFO may improve JLLs cost structure
JLLs consolidated EBITDA margins remain 300 bps below CBRE
Christie Kelly, former CFO of Duke Realty and a 20-year veteran of General Electric, joined
as JLL as the CFO in May 2013
Margin expansion is one of Ms. Kellys top priorities
Begun to exit unprofitable segments (e.g. closure of U.K. branch offices, sale of Swedish
asset management business, etc.)
Will introduce new internal productivity measures to balance growth versus profitability
6%
8%
10%
12%
14%
16%
18%
2005 2006 2007 2008 2009 2010 2011 2012 LTM
C.B. Richards Jones Lang LaSalle
Comparative EBITDA Margins
300bps gap
Source: Company filings

Page 11 / Confidential
Interest rate risks are overblown
Average U.S. cap rates are 6.5% - 7.0%, representing a 400bps spread to 10-yr treasuries
This wide spread reflects a well-choreographed expectation of higher interest rates
Source: HFF Q3 2013 report

Page 12 / Confidential
Transaction activity is more dependent on a strengthening economy
Indicators such as GDP growth, unemployment rate, and the health of capital markets are
more predictive of transaction volumes
Leasing, in particular, is highly correlated to the unemployment rate
Leasing revenue, representing 32% of JLLs business, has lagged the transactional
segments on high E.U. and U.S. unemployment
Source: HFF Q2 2013 report

Page 13 / Confidential
JLL is under-covered by Wall Street
$5bn business covered by a small hand-full of analysts
J.P. Morgan and Barclays are the sole bulge bracket analysts
Business model mismatch: J.P. Morgans analyst covers the REIT industry
The sellside focuses on relative rather than absolute valuation
Relative valuation is not applicable when an entire sector becomes cheap
Moreover, a direct comparison to CBG fails to capture JLLs exposure to a European
recovery, long-term Asian growth, and margin expansion opportunity
Source: Bloomberg

Page 14 / Confidential
We believe JLL should trade at a premium to the S&P
Advisory-focused investment banks are a decent comparable
Business posses robust capital efficiency, strong brand names, and minimal principal risk
At a 22x 2014 P/E multiple, JLL would be worth $155/share, or a 50% increase from the
current share price
We believe a 20x 25x P/E is warranted given JLLs growth prospects, competitive position
in a oligopoly market, and exposure to the emerging markets
A European real estate recovery, a strengthening U.S. leasing market, and growth in Asia
should drive consistent EPS growth of 15 20%+

Valuation Capital Efficiency
LTM EV / LTM 2014 LTM LTM
Mkt Cap EV EBITDA P/E P/E ROA ROE
Investment Banks
Lazard 5,765 n.a. n.a. 25.1x 18.5x 3.6% 14.5%
Evercore 2,175 n.a. n.a. 37.0x 21.4x 7.2% 14.6%
Greenhill 1,726 1,737 21.5x 37.3x 25.8x 12.2% 15.3%
Average 33.2x 21.9x 7.7% 14.8%
Global CRE Brokers
Jones Lang LaSalle $4,635 $5,461 11.5x 18.3x 15.5x 6.0% 13.0%
C.B. Richard Ellis $8,735 $10,253 10.4x 21.1x 16.1x 6.3% 21.6%
Sources: Company filings, CapitalIQ

Page 15 / Confidential
An illustrative discounted cash flow model yields a $150 fair value
Historical Est Illustrative Kerrisdale Projections Term Value
($ in Millions) 2011A 2012A 2013E 2014E 2015E 2016E 2017E 2018E 2019E
Americas $1,525.3 $1,746.7 $1,921.4 $2,113.5 $2,324.9 $2,510.8 $2,661.5 $2,821.2
% Growth 20.9% 14.5% 10.0% 10.0% 10.0% 8.0% 6.0% 6.0%
EMEA 973.7 1,048.9 $1,206.2 $1,387.2 $1,595.2 $1,754.8 $1,895.2 $1,971.0
% Growth 33.6% 7.7% 15.0% 15.0% 15.0% 10.0% 8.0% 4.0%
Asia 816.5 875.6 $945.6 $1,002.4 $1,082.6 $1,212.5 $1,358.0 $1,520.9
% Growth 20.3% 7.2% 8.0% 6.0% 8.0% 12.0% 12.0% 12.0%
Investment Mgmt + Corp 269.1 261.5 $253.7 $261.3 $269.1 $277.2 $285.5 $294.1
% Growth 4.7% (2.8%) (3.0%) 3.0% 3.0% 3.0% 3.0% 3.0%
Total Revenue $3,584.6 $3,932.7 $4,326.9 $4,764.3 $5,271.8 $5,755.3 $6,200.1 $6,607.1 $6,572.1
% YoY Growth 22.5% 9.7% 10.0% 10.1% 10.7% 9.2% 7.7% 6.6% 6.0%
EBITDA $396.5 $437.5 $484.6 $571.7 $685.3 $805.7 $930.0 $991.1 $985.8
% Margin 11.1% 11.1% 11.2% 12.0% 13.0% 14.0% 15.0% 15.0% 15.0%
EBIT $313.7 $358.7 $397.9 $476.2 $579.7 $690.4 $805.8 $858.7
Less: Taxes (25% Rate) (78.4) (89.7) (99.5) (119.1) (144.9) (172.6) (201.4) (214.7)
Net Operating Profit After Tax $235.3 $269.0 $298.4 $357.2 $434.8 $517.8 $604.3 $644.0
Add: Depreciation & Amortization $82.8 $78.8 $86.7 $95.5 $105.6 $115.3 $124.2 $132.4
Less: Capital Expenditures (excl M&A) (91.5) (94.8) (100.0) (118.2) (127.0) (138.7) (149.4) (159.2)
Less (Add): Changes in Working Cap (99.5) (7.7) (34.1) (37.9) (43.9) (41.9) (38.5) (35.2)
Free Cash Flow $127.1 $245.3 $251.0 $296.6 $369.5 $452.6 $540.7 $582.0
Discount Factor (10% Discount Rate) 0.95 0.87 0.79 0.72 0.65 0.59
Exit EBITDA Multiple 10.0x
Implied Terminal Value $9,858.2
Discounted Terminal Value $5,836.3
Add: Discounted Forecast Period Cash Flows 1,726.0
Less: Existing Net Debt (826.2)
Discounted Cash Flow Valuation $6,736.1
/ Diluted Shares Outstanding 45.2
Fair Value per Share $149.15




Wall Streets Clouded View on EMC




2

EMC: The Alphabet Soup of Data


Information Storage 70% of revenues. Virtualization 23% of revenues.

Products (Hardware & Software) 55% of Revenues. Services 45% of
revenues.

Gross Profit Split: 65% Storage & 31% Virtualization.

EMCs Alphabet Soup of Products (A Geeks Wonderland): Storage Area
Network (SAN), Network Attached Storage (NAS), Direct Attached Storage
(DAS), Virtual SAN, AllFlash XtremIO, Atmos, Avamar, , Data Domain,
Isilon, Pivotal, ViPR Software Defined Storgae, VMAX, VNX (Celerra and
CLARiiON) , VNXe, VPLEX, VSPEX.

Companys strategy of both R&D and scalable acquisitions drives
competitive product/service offerings.

3
The Bear Case



EMCs current decelerated growth is secular, not cyclical.

Flash storage and softwaredefined storage will cannibalize traditional
hard disk drives.

Public cloud is only a threat (and not an opportunity) that
disintermediates IT spend from both EMC (hardware) and VMware
(software).

VMwares entrenched vSphere gets displaced by OpenSource and
Microsofts HyperV.

Recent premiumpriced acquisitions of Data Domain and Isilon are
evidence of lack of internal product development.



4

Valuation and The Bull Case

EMC forward P/E only 11.5X. EMC stub valued at just 45X earnings, ex.
VMware stake ($30 billion) and net cash ($8.5 billion) account for 75% of
EMCs market cap ($51 billion).

The Bear Case has to be so overwhelming right as to render EMC a
broken growth company.

Given the Companys entrenched ecosystem, sticky customers and
unparalleled distribution (direct sales force) key new products such as
Pivotal (the Android operating system of cloud computing), XtremeIO
and ViPR should rampup quickly in the hundreds of millions of dollars.

Companys new $6 billion stock buyback quite accretive at current
valuation.

Stock downside 10% to $22. Stock upside/fair value $32$35, or 33%
upside.
5

6





The information and statistical data contained herein have been obtained from sources, which we believe to be
reliable, but in no way are warranted by us to accuracy or completeness. We do not undertake to advise you as to any
change in figures or our views. This is not a solicitation of any order to buy or sell. We, our affiliates and any officer,
director or stockholder or any member of their families, may have a position in and may from time to time purchase
or sell any of the above mentioned or related securities. Past results are no guarantee of future results.

This report includes candid statements and observations regarding investment strategies, individual securities, and
economic and market conditions; however, there is no guarantee that these statements, opinions or forecasts will
prove to be correct. These comments may also include the expression of opinions that are speculative in nature and
should not be relied on as statements of fact.

Wedgewood Partners is committed to communicating with our investment partners as candidly as possible because
we believe our investors benefit from understanding our investment philosophy, investment process, stock selection
methodology and investor temperament. Our views and opinions include forwardlooking statements which may
or may not be accurate over the long term. Forwardlooking statements can be identified by words like believe,
think, expect, anticipate, or similar expressions. You should not place undue reliance on forwardlooking
statements, which are current as of the date of this report. We disclaim any obligation to update or alter any forward
looking statements, whether as a result of new information, future events or otherwise. While we believe we have a
reasonable basis for our appraisals and we have confidence in our opinions, actual results may differ materially from
those we anticipate.

The information provided in this material should not be considered a recommendation to buy, sell or hold any
particular security.
Fat Pitch Capital, LP
"... we try to exert a Ted Williams kind of discipline. In his book The Science of
Hitting, Ted explains that he carved the strike zone into 77 cells, each the size
of a baseball. Swinging only at balls in his "best" cell, he knew, would allow him
to bat. .400; reaching for balls in his "worst" spot, the low outside corner of the
strike zone, would reduce him to .230.

In other words, waiting for the Fat Pitch would mean a trip to the Hall of Fame;
swinging Indiscriminately would mean a ticket to the minors."

Warren Buffet
Robert W. Deaton, CFA
Managing Partner
Fat Pitch Capital, LP
1355 Greenwood Cliff, Suit #150
Charlotte, NC 28204
T# +980-207-0252
Cell# +704-996-0828
robertdeaton@fatpitchcapital.com
www.fatpitchcapital.com

R. J. Meurer, Jr.
Managing Partner
Fat Pitch Capital, LP
1355 Greenwood Cliff, Suit #150
Charlotte, NC 28204
T# +781-452-7365
Cell# +781-812-3407
rj@fatpitchcapital.com
www.fatpitchcapital.com

High Percentage Idea for Manual of Ideas Conference 2014
THE
MANUAL
OF
IDEAS

TM

Our high percentage idea for 2014 is H&R Block. The companys
stock looks good when viewed through the prism of our checklist.

The Fat Pitch Capital Checklist:

Durable competitive advantage with fortress balance sheet

High returns on invested capital with low capital intensity

Shareholder oriented management team

A price that affords a margin of safety

Durable competitive advantage
World's largest tax preparer
12,000 offices with 80,000 tax professionals

98% brand awareness
(similar to Coca-Cola, McDonalds and Walmart)

Over 25 million tax returns filed in 2013

Industry leading client retention


Fortress Balance Sheet
No net debt

Foolish flow ratio:
(current assets - cash) / current liabilities = 26.18%
High returns on invested capital with low capital intensity:

ROA (TTM): 11.9%*

ROE (TTM): 51.8%*

Cap-ex as % of revenue: 4%
*Source: Morningstar

Shareholder oriented management team:

William Cobb became CEO in May 2011

Streamlined operations

Shareholder friendly capital allocation
FY 2012
Dividends $200 million
Share Repurchases: $200 million

FY 2013
Dividends: $217 million
Share repurchases: $315 million
H & R Block in 2011
H & R Block Today
Tax Preparation
Assisted
Online, Mobile, Desktop
International


Financial Services
Emerald Prepaid Debit Card
Refund Transfer
Emerald Advance Line of Credit
Peace of Mind
A price that provides a margin for safety:

Rev 2900
Ebitda margin 0.3
Ebitda 870
Cap ex% 0.04
Cap ex 116
Taxes 214
FCF 540
FCF yield 7%
Shares outstanding 274
Market price 29.53
Market cap 8,091
Net cash 285
Enterprise value 7,806
Free Cash Flow 540
FCF yield 7%
Price Target
Target price = $38, based on 5% FCF yield

Current price = $29.28

Discount to estimated intrinsic value = 30%


Potential catalysts and opportunities
Sell bank

Affordable Care Act expands market by
approximately 24 million

Online returns growing faster than
leading competitors

Tax plus: Continued growth of Emerald Debit Card
HR Block = Fat Pitch
MURPHY USA I NC. ( NYSE: MUSA)


BEST I DEAS 201 4

Half Moon Capital
2
Half Moon Capital
Disclaimer

Half Moon Capital, LLC (HMC) is not providing investment advice through this material. This presentation
is provided for informational purpose only as an illustration of HMCs investment philosophy and shall not be
considered investment advice or a recommendation or solicitation to buy or sell any securities discussed
herein. As of the date of this presentation HMC continues to own the securities discussed herein. These
opinions are not intended to be a forecast of future events, a guarantee of future results, or investment advice.
Past performance is not indicative of future results, and no representation or warranty, express or implied, is
made regarding future performance.

HMC or its affiliates may engage in securities transactions that are inconsistent with this communication and
may have long or short positions in such securities. The information and any opinions contained herein are as
of the date of this material, and HMC does not undertake any obligation to update them. Information
contained in this presentation has been obtained from sources which we believe to be reliable, but we do not
make any representation as to its accuracy or its completeness and it should not be relied on as such.

This material does not take into account individual client circumstances, objectives, or needs and is not
intended as a recommendation to any person who is not a client of HMC. Securities, financial instruments,
products or strategies mentioned in this material may not be suitable for all investors. HMC does not provide
tax advice. Investors should seek tax advice based on their particular circumstances from an independent tax
advisor.

In reaching a determination as to the appropriateness of any proposed transaction or strategy, clients should
undertake a thorough independent review of the legal, regulatory, credit, accounting and economic
consequences of such transaction in relation to their particular circumstances and make their own
independent decisions.




3
Half Moon Capital
Overview

Launched July 1, 2011
Classic value-oriented investment partnership in the spirit of Benjamin
Graham and the original Buffett Partnership
Focused on equity securities in less efficient areas of the market
Intensive research driven investment process
Concentrated portfolio of best ideas
Goal: Consistent, positive returns compounded over the longer-term
Top 10 performance in 2012 and YTD 2013 in long-bias hedge fund category*




*Per Barclay Hedge rankings
4
Half Moon Capital
Investment Philosophy

Value: Trading price significantly divergent from intrinsic value
Technical and behavioral dynamics lead to inefficiencies in the near and medium-term
Disconnects create asymmetrically skewed risk/ return opportunities
Emphasis on margin of safety for downside protection
Selectively contrarian mindset
Unbiased analysis of overlooked and out-of-favor companies
Generalist approach
Flexible mandate to look across all industries and sectors for the most appealing opportunities
Concentrated fund of high conviction ideas
Deep knowledge of each situation provides an edge and mitigates risks






5
Half Moon Capital
Sources of Opportunity

Small and mid-capitalization companies
Frequently neglected or lack institutional following ($300M - $5B market capitalization)
Out-of-favor and misunderstood companies
Structural shifts in company and industry dynamics
Market overreaction to a large, but solvable challenge
Special situations
Corporate actions and market events create mis-pricings
Perceived complexity or lack of easily accessible information causes investor aversion
Spin-offs, post-reorg equities, stressed/distressed, demutualizations, merger securities, recaps, etc.






6
Half Moon Capital
Investment Strategy and Process
Identify mispriced securities
- Idea generation: Systematic screens, news media, recurring situations, personal network, etc.
Evaluate reason for the mispricing through intensive research
- Assess fundamentals: FCF generation, earnings quality, ROIC and asset value relative to price
- Public filings, primary calls, management, trade publications, etc.
Find catalysts that may lead to value realization
Size Position
- Particular consideration to conviction/ edge, liquidity, leverage and market/ sector exposure
Closely monitor and track
7
Half Moon Capital
Eric DeLamarter - Curriculum Vitae

Prior to founding Half Moon Capital in 2010, Eric DeLamarter earned an M.B.A.
from The Heilbrunn Center for Graham & Dodd Investing at Columbia Business
School, with a concentration in applied value investing. While attending Columbia
Business School, Eric was a research analyst at Stelliam Investment Management,
a value-oriented hedge fund, where he focused on identifying and evaluating
investment opportunities across various sectors. Prior to Columbia Business
School, from 2006 to 2008, Eric was an associate at Lineage Capital, LLC, a
middle-market private equity fund, where his responsibilities included evaluating
and structuring leveraged buyouts. From 2003 to 2006, Eric was an investment
banking analyst at RBC Capital Markets and during 2001, Eric was an equity
research summer associate at Merrill Lynch. Eric earned a B.A. in history from the
University of Michigan in 2002.



Half Moon Capital



Murphy USA Inc. (NYSE:MUSA)
8
9
Murphy USA (MUSA)
Summary
Gas stations adjacent Walmart
Misunderstood business model
Obscured fundamentals
Underappreciated return and growth
profile
Overstated risks
Insider buying
Several catalysts
+50% upside



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NYSE:MUSA - Share Price
Note: Net debt includes $131 net proceeds from 12/17 sake if ND ethanol plant
Current Trading Statistics
(USD in Millions)*
Ticker NYSE:MUSA Net Debt / LTM EBITDA 0.7x
Date 12/27/2013
52-Week Range $46.91 - $36.12 EV / LTM EBITDA 5.9x
Stock Price $41.88 EV / 2014 EBITDA 6.4x
Shares Out. (Basic) 47.0 EV / LTM EBITDA - capex 6.3x
Market Cap $1,968.4 EV / 2014 EBITDA - capex 7.0x
Net Debt $249.0
Enterprise Value $2,217.4
Earnings Yield (LTM EBIT/EV) 13.9% EV / LTM FCF 9.5x
Earnings Yield (2014 EBIT/EV) 12.2% EV / 2014 FCF 10.4x
FCF Yield (LTM FCF/EV) 10.5%
FCF Yield (2014 FCF/EV) 9.6%
ROIC (LTM) 28.4%
Float 95.6% Target Price $65.00
Short Interest 8.8% Premium to Current 55.2%
ADTV 20.6
*Except per share data; Note: FCF = EBITDA - capex - cash taxes - chg. WC
10
Background
Regional owner and operator of small-format retail gas stations
Founded in 1996 based on the European kiosk-style gas station in retail parking
lots
Focused on volume sale of retail fuel vs C-store merchandise
1,200 locations in the SE and MW, 85% adjacent to Walmart

Murphy Oil (MUR) Spin-off
Spun-off from $12B market cap E&P and S&P 500 constituent MUR on August
19, 2013
Rationale: focus business and unlock value



11
Murphy USA (MUSA)
Thesis
Consensus erroneously focus on lower margins and consolidated financials (which include volatile,
non-core segments that have been sold or are being sold)
Obscured higher EBITDA and FCF, attractive return profile (ROIC 2x peers) and structural
advantages which make the on-going business less sensitive to oil price swings
Cursory sell-side coverage, wait and see mentality from buy-side
Meaningful recent insider buying; likely year-end portfolio clean-up selling pressure (spin-off)
Trading at significant discount to peers and absolute SOTP value
7.1x LTM EBITDA-capex (normalized), 7.0x base case CY2014E EBITDA-capex
Equity offers +50% near-term upside
Downside protection:
Retail segment real estate worth more than current EV
Strong balance sheet
Catalysts
Sale of non-core ethanol plants
Estimated after-tax value: $44M-47M
Removes low return, volatile segment and focuses the business
Increased awareness and appreciation for the quality of the business and its near-term growth
prospects
Margin expansion from increased composition of larger floor plan stores
Announcement of dividend or restructuring (conversion to REIT or MLP)
12
Investment Merits: Overview
Operational Advantages
1. Own midstream assets
2. Shipper status on pipelines
3. Relationship with Walmart
4. Small format

Result
Maintain competitive fuel gross margins while also being a low cost provider
Lower % margins, but much higher dollar margins at the unit level
More rapidly manage oil price fluctuations
Highly scalable business




13
Investment Merits: Strategic Assets
Fuel Sourcing Advantages
Midstream Assets: Owns 6 terminals
Wholesale business (fuel sales to
external customers)
Priority is to source low cost gas for retail
segment, remainder sold in the market
Consolidated within its retail segment numbers
for competitive reasons
1B gallons were sold wholesale (to external
customers) at a 4c per gallon margin in 2012
Shipper status on Colonial pipeline:
Procure gas at lower prices than competitors
Opportunistically sell space on the pipeline when
prices are elevated (as it did in 2012 for 8c a
gallon rather than sell wholesale at 4c)
Real Estate
Owns +90% of locations



Current Station Sites
Midstream Assets
x
14
Investment Merits: Walmart Relationship
Walmart Relationship
+10 year relationship
910 of 1,200 MSUA locations with agreement to purchase and build +200 more
over next 3-years
Discount program: 1-3c per gallon customer reward paid by WMT
Walmart card reduces interchange fee
Proximity to highly trafficked supercenters supports high volume model
MUSA owned land provides independence




15
Investment Merits: Unit Economics
Store Metrics
Lower overhead
Lower breakeven
Higher GM/ ft
2
Higher EBITDA
ROIC 2x peers
Optimized layout
Margins will converge
with its peers as
converts and rolls out
more 1,200 ft
2
stores




* NACS 2012 State of the Industry Report; CST, PTRY, CASY, ATD reporting
Note:
- Existing footprint: 208 ft2 (77% of locations) and 1,200 ft2 (4% of locations). Average size for CASY, CST, PTRY and SUSS is 3,000 ft2
- Top Quartile' includes MUSA; 'Large Franchises' is comprised of 28 companies (including MUSA) that each have >500 stores
Unit Economics Comparison (Annual per Store)
($000s, except unit level data) MUSA Industry*
208 ft
2
Layout 1,200 ft
2
Layout Average Top Quartile Large Franchises
Capital Costs
Capex - Buildout & Land 1,850 2,100 2,460 2,460 2,460
Capex - Maintenance 26 31 37 43 38
Fuel
Gallons Sold 3,324 3,324 1,526 1,985 1,477
Cents/ Gallon 12.9 12.9 18.1 13.2 17.7
Gross Margin 428 428 267 364 262
Breakeven Margin (Cents/ Gallon) 5.5 5.5 8.5 7.5 5.0
Merchandise (Including Foodservice)
Revenue 1,860 1,980 1,384 1,968 1,626
Revenue/ ft
2
8.942 1.650 0.461 0.656 0.542
Gross Margin 242 307 392 632 540
GM%Revenue 13.0% 15.5% 28.4% 32.1% 33.2%
GM/ ft
2
($s) 1,163 256 131 211 180
Total
Gross Margin 670 735 659 996 801
Overhead (SG&A, CC, etc) 360 360 526 714 593
EBITDA 310 375 132 282 209
EBITDA-Maint. Capex 285 344 95 239 171
ROIC 15.4% 16.4% 3.9% 9.7% 6.9%
* NACS 2012 State of the Industry Report; CST, PTRY, CASY, ATD reporting
Note: 'Top Quartile' includes MUSA; 'Large Franchises' is comprised of 28 companies (including MUSA) that each have >500 stores;
16
Investment Merits
Result
Maintain competitive fuel gross margins while also being a low cost provider
Operates at 56% of the average industry operating costs with lower breakeven fuel margins*
Cash breakeven: 6.6c vs 12.1c industry ave






High volume, low cost position leads to lower % margins than its peers, but
much higher dollar margins at the unit level
Per store: 50% higher EBITDA and 65% higher FCF per store and 2x the ROIC
More rapidly manage oil price fluctuations
Largest GM drop from 2010-2011 was 34bps vs 300bps for its public peers
Since 2009 fell below cash breakeven only once in Q109




*Per NACS 2013 data
17
Growth Opportunity
Open 60 stores/ year with 200 openings over the next 3 years
and 400-500 more through 2020 within Walmart network
All in the 1,200ft
2
format, financed from FCF, half the land already acquired
New stores ramp to capacity almost immediately and each contribute $375k in
annual EBITDA or incrementally $75M in EBITDA, $69M EBITDA-mcapex by
2015
Low cost of build-out make business more scalable and flexible



200 Store Expansion Plan
Prior to
6/30/2013 12/31/13 12/31/14 12/31/15 Total
Land cost/ store($000s) 400
Land acquired (units) 100 50 50 0 200
Land cost ($000s) 40,000 20,000 20,000 0 80,000
Capex/ store($000s) 1,700
Stores built (units) 75 75 50 200
Capex ($000s) 127,500 127,500 85,000 340,000
Total Cost 147,500 147,500 85,000 420,000
GP/ store ($000s) 735 735 735 735
Producing units 25 150 200
GP contribution ($000s) 18,383 110,295 147,060 275,738
EBITDA-Maint. Capex/ store ($000s) 344 344 344 344
Producing units 25 150 200
Total EBITDA-Maint. Capex contribution ($000s) 8,608 51,645 68,860 129,113
Pre-tax return 16%
18
Management
CEO Andrew Clyde
Joined at the spin-off
Formerly downstream industry consultant at Booz & Co.
Strategy consultant to MUSA
Architect of the optimized 1,200ft
2
format

Insider Ownership
Hold 6% of S/O
Insider purchases
CEO Clyde, 2k shares (12/13-12/16)
Direct Deming, 25k shares (11/25)




19
Non-core Assets
Ethanol Facilities
Began sale of both plants following the spin-off
Dec. 19: Sold Hankinson, ND plant for $170M, $131M after-tax
130M gallon capacity sold for $1.31/ gallon
Remaining Hereford, TX plant being sold ($47M after-tax value)
105M gallon capacity estimated sale at $0.60/ gallon

Result
Removes non-core, low ROIC, volatile business
Performance drag: Drought in 2012 compressed corn crush for ethanol,
resulting in a $38M hit to MUSA consolidated earnings
Proceeds used for debt reduction and future growth capex


20
Renewable Identification Numbers (RINs)
Overview
RINs are created by blending ethanol and bio-diesel fuels
Sold in the market (exchange trading started on CME in May) to companies
that are unable to meet annual quotas as set by the EPA
In 2012 D6 ethanol RINs traded for $0.05-0.10 per gallon
FDAs increasing requirements under Renewable Fuel Standards 2 (RFS2) led
to a spike in RIN prices (ethanol RINs up to $1.45 per gallon in July 2013)
RINs prices currently $0.30

MUSA
RINs created in MUSA Wholesale business (not related to ethanol plants)
15M RINs per month capacity with 100% contribution margin
Normalized EBITDA: $30M per year ($0.25 per RIN, 10M RINs/ month)



21
Financial Performance
On-going Retail Business
Excludes: ethanol and refining
(divested in 2011)
Strong FCF Profile: Low
maintenance capex and zero to
slightly negative WC
requirements



Financial Performance
($000s)
Revenue 2010 2011 2012 LTM
Petroleum 13,377,841 16,586,845 16,854,985 16,253,824
Merchandise 1,969,220 2,115,567 2,144,347 2,162,496
Other (RINs) 9,042 9,538 11,708 79,954
Total Revenue 15,356,103 18,711,950 19,011,040 18,496,274
Fuel Gross Profit 484,186 625,683 556,668 602,641
Fuel GM 3.6% 3.8% 3.3% 3.7%
Merchandise Expense 1,717,177 1,851,867 1,855,641 1,881,595
Merchandise GM 12.8% 12.5% 13.5% 13.0%
Total Gross Profit 745,271 898,921 857,082 963,496
Total GM 4.9% 4.8% 4.5% 5.2%
Total EBITDA 263,026 374,110 300,448 377,596
Margin 1.7% 2.0% 1.6% 2.0%
EBITDA (ex-RINs) 253,984 364,572 288,740 297,642
Capex
Growth 147,347 48,626 72,895 178,145
Maint. (Including Terminals) 29,900 28,890 30,250 23,050
Total Capex 177,247 77,516 103,145 201,195
EBITDA-Maint. Capex 233,126 345,220 270,198 354,546
Less: Chg. WC
Less: Taxes (38%) 81,380 123,618 92,059 121,965
Unlevered FCF 151,746 221,602 178,139 232,581
22
Murphy USA (MUSA)
Risks
Secular decline in gasoline consumption: MUSAs stations are located in the SE and
MW, regions with a lower adoption of alternative fuel vehicles and limited
transportation alternatives to cars
Spike in oil prices: low cost sourcing and history of effectively managing through
challenging pricing environments
Walmart relationship: MUSA is not permitted to sell higher margin prepared foods,
but are allowed to sell fountain drinks. WMT also has right of first refusal on the
sale of any MUSA land. Mutually beneficial relationship mitigates risk of separation.
MUSA owns land limiting WMTs leverage

Downside Protection
Real estate value of retail network greater than current EV
Strong balance sheet
Asset base could be a source of liquidity (collateral for an ABL or through sale-
leasebacks)



23
Valuation
Relative Basis
5.9x EV/ LTM EBITDA, 3-4 turns less than its closest peers
EBITDA-mcapex and EBIT multiple gap even more pronounced





More attractive return profile, growth prospects, competitive advantages and
asset-base (terminals, ethanol plants and 90% of store real estate owned)
9-10x LTM EBITDA implies $65-75 per share, 55-80% upside to
current ($59-67 per share, 40-60% upside normalized *)










Peer Comparison
(US$ in Millions)
LTM LTM EV/ Stores EBITDA/ EBIT/ RE EBITDA Total Fuel Fuel % Capex
EV EBITDA EBIT EBITDA EBITDA-MCapex EBIT (000s) Stores Stores ROIC % Owned Margin GM GM of GM % Rev.
Casey's General Stores, Inc. CASY $3,404 $375 $254 9.1x 11.5x 13.4x 1,749 $214.7 $145.3 16.4% 99% 5.2% 16.5% 14.2% 23% 4.4%
Alimentation Couche-Tard Inc. TSX:ATD.B $17,436 $1,522 $986 10.9x 13.5x 16.7x 5,878 $258.9 $167.8 13.1% 23% 3.7% 12.8% 22.5% 26% 1.5%
CST Brands, Inc. CST $3,368 $399 $277 8.4x 9.4x 12.2x 1,034 $385.9 $267.9 23.0% 61% 3.3% 9.8% 18.8% 47% 1.8%
The Pantry, Inc. PTRY $1,283 $205 $88 6.2x 9.0x 14.6x 1,562 $131.5 $56.2 6.0% 26% 2.9% 11.4% 11.4% 26% 1.0%
Murphy USA Inc. MUSA $2,217 $378 $307 5.9x 6.3x 7.2x 1,179 $320.3 $260.7 28.4% 90% 2.1% 5.8% 12.9% 68% 0.9%

*RINs: 10M gallons/ month x 30c/RIN
24
Valuation
Absolute Basis
Good business at a low quality business price
Normalized LTM: 6.6x EV/ EBITDA, 9.0% FCF yield
Normalized 2014: 6.4x EV/ EBITDA, 9.5% FCF yield
















Financial Performance
($000s)
Revenue 2010 2011 2012 LTM 2014E 2015E
Petroleum 13,377,841 16,586,845 16,854,985 16,253,824 16,994,880 18,338,880
Merchandise 1,969,220 2,115,567 2,144,347 2,162,496 2,427,840 2,619,840
Other (RINs) 9,042 9,538 11,708 79,954 36,000 30,000
Total Revenue 15,356,103 18,711,950 19,011,040 18,496,274 19,458,720 20,988,720
Total Gross Profit 745,271 898,921 857,082 963,496 928,231 992,791
Total GM 4.9% 4.8% 4.5% 5.2% 4.8% 4.7%
Total EBITDA 263,026 374,110 300,448 377,596 346,561 365,121
Margin 1.7% 2.0% 1.6% 2.0% 1.8% 1.7%
EBITDA (ex-RINs) 253,984 364,572 288,740 297,642 310,561 335,121
EBITDA-Maint. Capex 233,126 345,220 270,198 354,546 316,261 332,624
Unlevered FCF 151,746 221,602 178,139 232,581 213,828 223,137
Assumptions:
- RINs: 10M gallons/ month x 30c/ RIN; Fuel margin: 13c/ gallon; tax rate: 38%; Ave stores: 1,265 (2014), 1,365 (2015)
25
Valuation
Sum-of-the-Parts Analysis
(US$ in Millions)*
Downside Base Upside Notes
MUSA Stores (Core business)
EV/ EBITDA 1,500.0 2,800.0 3,150.0 6x $250M EBITDA, 8x and 9x $350M LTM EBITDA (peers trade 8-10x)
EV/ EBITDA-mcapex 1,840.0 3,200.0 4,160.0 8x $230M, 10x and 13x $320M LTM EBITDA-capex (peers trade 10-13x)
Retail Franchise Asset Value 2,458.0 2,693.8 2,811.7 1,179 x $2.0, $2.2M and $2.3M per owned store + $100M terminal assets
MUSA Current (Average above) 1,932.7 2,897.9 3,373.9
MUSA Growth Plan 210.0 300.0 300.0 200 stores over next 2-3 years, cost $2.1M/ store, 20% IRR
Ethanol Assets
Hankinson, ND 131.0 131.0 131.0 Sold 12/19 for $170M, 130M gallons x $1.31/ gallon ($131M after-tax)
Hereford, TX 44.0 47.0 47.0 105M gallons x $0.50-0.60/ gallon; after tax (acquired in 2010 for $40M)
Total Proceeds - Assets for Sale 175.0 178.0 178.0
Enterprise Value 2,317.7 3,375.9 3,851.9
Total Debt 642.4 642.4 642.4
Total Cash 262.5 262.5 262.5 Excludes proceeds from Hankinson plant sale
Less: Current Net Debt 379.9 379.9 379.9
Equity Value 1,937.8 2,996.0 3,472.0
Equity Value per Share $41.23 $63.75 $73.87 47M shares outstanding
Premium to Current (1.6%) 52.2% 76.4%
*Except per share data
26
Murphy USA (MUSA)
Catalysts
Sale of remaining ethanol plant
Estimated after-tax value: $44M-47M
Removes low return, volatile segment and focuses the business
Increased awareness and appreciation for the quality of the business and its
near-term growth prospects
Demonstrated stand-alone financial performance
Margin expansion from increased composition of larger floor plan stores
Announcement of dividend or restructuring (conversion to REIT or MLP)


Half Moon Capital



Appendix
27
28
Murphy USA (MUSA): Detailed Financials
Notes:
- Historically MUSA consolidated financials included
refining in 2010 (divested in 2011) and ethanol (being sold)
- MUSA does not provide separate financial information for
the wholesale segment for competitive reasons
- Any fluctuations in its financial contribution can be
considered intercompany since the wholesale businesss
purpose is to support retail
- In order to estimate contribution separately from core-
retail, wholesale and RIN, retail EBITDA per store is
assumed to be is $320k per year and RIN revenue is
assumed to have 100% EBITDA margins
Financial Performance
($000s, except unit level data)
Revenue 2010 2011 2012 LTM
Petroleum 13,377,841 16,586,845 16,854,985 16,253,824
Merchandise 1,969,220 2,115,567 2,144,347 2,162,496
Other (RINs) 9,042 9,538 11,708 79,954
Total Revenue 15,356,103 18,711,950 19,011,040 18,496,274
Fuel Expense 12,893,655 15,961,162 16,298,317 15,651,183
Fuel Gross Profit 484,186 625,683 556,668 602,641
Fuel GM 3.6% 3.8% 3.3% 3.7%
Merchandise Expense 1,717,177 1,851,867 1,855,641 1,881,595
Merchandise GM 12.8% 12.5% 13.5% 13.0%
Total Gross Profit 745,271 898,921 857,082 963,496
Total GM 4.9% 4.8% 4.5% 5.2%
Station Expense 396,053 433,821 447,102 458,464
SG&A 86,192 90,990 109,532 127,436
D&A 55,336 61,136 66,913 70,219
Other 261 449 1,893 2,043
EBIT 207,429 312,525 231,642 305,334
Taxes 81,380 123,618 92,059 121,965
Tax % 39% 40% 40% 40%
EAT 126,049 188,907 139,583 183,369
Total EBITDA 263,026 374,110 300,448 377,596 Includes overhead
Margin 1.7% 2.0% 1.6% 2.0%
EBITDA (ex-RINs) 253,984 364,572 288,740 297,642
EBITDA (Retail, ex-wholesale) 343,680 356,480 367,040 372,640 $320k/store
Implied Wholesale EBITDA 9,042 9,538 11,708 4,956
Capex
Growth 147,347 48,626 72,895 178,145
Maint. (Including Terminals) 29,900 28,890 30,250 23,050
Total Capex 177,247 77,516 103,145 201,195
EBITDA-Maint. Capex 233,126 345,220 270,198 354,546
Less: Chg. WC
Less: Taxes (38%) 81,380 123,618 92,059 121,965
Unlevered FCF 151,746 221,602 178,139 232,581
29
Murphy USA (MUSA): Unit Financials
Unit Level (Per store) 2010 2011 2012 LTM
Stores
Start 1,048 1,099 1,128 1,150
New 51 30 37 30
Closed (1) (1)
End 1,099 1,128 1,165 1,179
Avg Number Stores 1,074 1,114 1,147 1,165
Revenue and Costs
Fuel margin per gallon (dollars) 0.114 0.156 0.129 NA
Gallons sold per month 307 278 277 NA
Merch. revenue per month 154 158 156 NA
Merchandise margin 13.1% 12.8% 13.5% 13.0%
Fuel Costs (Annual) 12,005 14,328 14,210 13,440
Merchandise Costs (Annual) 1,599 1,662 1,618 1,616
Station Costs (Annual) 369 389 390 394
SG&A (Annual) 80 82 95 109
30
Murphy USA (MUSA)
M&A Appeal: Private Equity
FCF profile and asset base (ie. real
estate, terminals) support leverage
Lower economic sensitivity
Fragmented industry presents
consolidation opportunity for an
established platform such as MUSA



31
Half Moon Capital
Half Moon Capital, LLC
304 Park Avenue South, 11
th
Floor
New York, NY 10010
Ph: 646.490.6744
eric@halfmooncapital.com
www.halfmooncapital.com




Land Developer Needs TLC
Build your dream portfolio with UCP
Presented by J ake Rosser
Date: J anuary 8, 2014
Build Your Dream Portfolio with UCP
Company Overview
IPO in J uly 2013 at $15.00 per share
UCP is a hybrid land developer and home builder
Primarily acquires and develops land for
residential use
Increased push into home building promises to
unlock significant value
Focused on high growth western markets with
three quarters of operations based in California
and a growing presence in Washington
1/8/2014 2
Ticker: UCP
Price: $14.50
Capitalization
Mkt Cap: $266M
EV: $208M
UCP
Build Your Dream Portfolio with UCP
UCP, an Orphaned Home-Builder Looking for a
Home
Poorly received IPO
Underwhelming results from conglomerate parent diminished demand
Small market-cap ($266M) failed to attract institutional interest
Poorly timed IPO
Concurrent with IPOs of several mainstream homebuilders including WCI, WLH,
TPH and TMHC
Taper tantrum hammered housing stocks immediately after IPO
Hybrid business model focused on development first and building
second adds complexity.
1/8/2014 3
Build Your Dream Portfolio with UCP
Wilbur Ross Like
History
Markings of a Wilbur Ross
distressed industry roll-up
PICO capitalized UCP in 2008 to
take advantage of fire-sale prices
during the worst of the housing
crisis.
Over $190M in capital deployed to
take advantage of dislocation in
housing market.
Over 80% of lots acquired between
2008-2011 at distressed prices
1/8/2014 4
Lots by Vintage
Build Your Dream Portfolio with UCP
Significant Land Holdings consisting of 6,659
Lots in Strategic Coastal Locations
1/8/2014 5
Build Your Dream Portfolio with UCP
Land Portfolio to Fuel Future Growth
Ample land supply provides visibility into future
development potential
No need to recycle cash flow into land replenishment
Existing holdings equate to 8 years of supply at current sales pace
Deliveries through 2015 sourced from current inventory
Land pipeline should allow UCP to grow through the
housing recovery
Guidance for revenue growth of 100% in 2014
1/8/2014 6
Build Your Dream Portfolio with UCP
Hybrid Homebuilding and Land Development Strategy
Provides Optionality
Flexibility of land development and home building allows
for highest return of capital
Less capital intensive than home building alone resulting in lower
inventory carrying costs
Land sale versus development decision is determined by return on
capital
Land holdings are a hidden asset dampening the need for
reinvestment and creating potential for capital return to
shareholders.
Mark-to-market impairments less likely with land recorded
at historical cost
1/8/2014 7
Build Your Dream Portfolio with UCP
Significant Value Capture through Home Building
Funds raised from IPO will allow UCP to develop its land holdings
Home building subsidiary, Benchmark Communities, launched in 2010
Increased community count from 2 to 9 over the last year
Expects a doubling of community count in 2014 with
approximately 1,100 lots
Existing land portfolio capable of supporting 62 communities
Increased home deliveries from 5 to 62 on year over year basis during
Q3
Rise of 27% in Y/Y home ASPs from $271K to $345K
Lower gross margins at 22% compared to 33% for land development
but much higher absolute profits
1/8/2014 8
Build Your Dream Portfolio with UCP
What is UCP worth?
Book value analysis
P/B multiple of 1.2 compared to industry average of 2.2
Return of 83% with industry multiple
Newly minted Homebuilding IPO peers including TPH, WLH, WCIC and TMHC,
possess a P/B value of 1.7
Return of 67% with rerating to IPO peer P/B
Direct comp of TPH has a P/B value of 1.9 indicating a potential return of 58%
Trades below liquidation value
Enterprise value of $208M including net cash of $58M
Compare to $171M in real estate assets, carried at historical cost,along with $58M
in net cash or $229M
1/8/2014 9
Build Your Dream Portfolio with UCP
Long-lived Assets Understate True Economic Value
GAAP accounting standards require land be carried at lower of
historical cost or fair value
Accounting treatment materially undervalues UCPs raw land holdings
More than 80% of lots purchased before 2012 with the majority of purchases
incurred in 2008/2009, the worst years of the housing crisis.
According to Case-Schiller, in UCPs core markets of San Francisco
and Seattle, housing prices have risen 53% and 25% respectively from
trough levels.
1/8/2014 10
Build Your Dream Portfolio with UCP
UCP Markets Have Seen Rapid Price Appreciation Over the Past Year
1/8/2014 11
Build Your Dream Portfolio with UCP
Private Buyer Recent Deals Highlight Value
Tri-Points (TPH) acquisition (Nov, 2013) of Weyerhaeusers (WY)
homebuilding lots.
A total of 27,000 lots spread across Arizona, California, Nevada and Texas for
$2.7B or $100k per lot
On balance, lots in CA are more expensive than lots in AZ, NV and TX
Applying comp to UCP equates to $665.9M a 2.2x return from current EV
Toll Brothers (TOL) acquisition (Nov, 2013) of lots owned by privately
held Shapell Industries
A more direct geographical compare to UCPs geographic footprint
A total of 5,200 lots concentrated in San Francisco, Los Angeles and Carlsbad
TOL paid $1.6B for the lots for a price per lot of $308K. We apply a 70% discount
to TOLs per price to account for TOLs focus on higher-end homes.
Applying comp to UCP equates to $615M, a 2x return from current EV
Debt-free balance sheet enhances appeal of UCP as an acquisition
candidate.
1/8/2014 12
Build Your Dream Portfolio with UCP
Housing Fundamentals Support Strong Case for Appreciation
According to the Case-Shiller 20-city Composite Home Price Index,
home prices remain 20% below peak levels.
According to NAR, homes are more affordable now than any of the
previous 40 years prior to the crash in 2008.
Current cycle has legs
Most up-cycles in home prices last 5-10 years
The US is clearly in a home-price up-cycle that has a lot of room to run. Mark
Zandi, Chief Economist for Moodys Analytics
Household creation dipped to .5M for five years between 2007-2011,
compared to normalized levels of 1M suggesting significant pent-up
demand
According to NAR, the nationwide supply of homes stands at 5 months
compared to a normalized level of 10 months.
1/8/2014 13
Build Your Dream Portfolio with UCP
Historic collapse in housing starts
Housing starts remain well below trend and would need to hit 1.7M to
meet current demand.
1/8/2014 14
Build Your Dream Portfolio with UCP
Household Formation has Recovered More Quickly than
Housing Starts
1/8/2014 15
Build Your Dream Portfolio with UCP
US Households Have Restored Their Balance Sheets
1/8/2014 16
Build Your Dream Portfolio with UCP
Risks
Real estate cycle
J ob growth, interest rates, population growth, and consumer confidence will dictate
strength and duration of cycle
Execution risk
Build-out of new communities must show attractive returns on capital to entice
investors
Small market cap and thin trading liquidity (75K shares per day)
Limited float and small market cap make it less likely that UCP is included in real
estate ETFs and index funds
Less attractive to institutional investors
Majority ownership
PICO Holdings 58% ownership could make an acquisition or activist campaigns
more difficult
1/8/2014 17
Build Your Dream Portfolio with UCP
Catalysts
Valuation is its own catalysts - trades below liquidation value
Ramp in Home-building operations should spur development in book
value
Increase in housing starts increases the value of UCPs land portfolio
Attractive buyout candidate
1/8/2014 18
Build Your Dream Portfolio with UCP
Conclusion
Homebuilding operations should catalyze growth in book value and
expand margins while creating a long run-way for growth.
One of the cheapest ways to participate in the recovery of the housing
market
Asymmetric return potential with low downside risk and significant
upside
Simple NAV story, a dollar trading for $0.50 based upon undeveloped
land
Buyout candidate
Homebuilders are land constrained and UCP provides exposure to high growth
west coast markets
Selling for less than liquidation value with $58M in net cash
M&A comps suggest 2x return
1/8/2014 19
Build Your Dream Portfolio with UCP
Thank You
We try to profit by always remembering the obvious than
from grasping the esoteric. It is remarkable how much long-
term advantage people like us have gotten by trying to be
consistently not stupid instead of trying to be very
intelligent.
CHARLIE MUNGER
20
CRAWFORD CAPITAL PARTNERS, LP
Crawford Fund Management, LLC
Two Oliver Street, 6
th
Floor
Boston, MA 02109
info@crawfordfunds.com
Best Ideas 2014 Conference
J anuary 8, 2014
January 2014
Important Notices
This presentation is not intended as, and does not constitute, an offer to sell any securities or a
solicitation of any person or any order to purchase any securities. No person should rely upon
information in this document, but should rely exclusively on the Confidential Offering
Memorandum in deciding whether to invest in the partnership. This presentation is for
informational purposes only and should not be construed as investment, legal, tax or other
advice.
Investments in the Fund are subject to risks and uncertainties, including the risk of loss of
principal as described in the Funds Offering Memorandum. Investors are encouraged to read
the Offering Memorandum and direct any questions to management of the Fund prior to
investing. There can be no assurance that the Funds objectives will be met or that losses will
not be incurred.
This confidential document has been prepared solely for the information of the person to
whom it has been delivered on behalf of the Fund and may not be reproduced or used for any
other purpose. Each person accepting this document agrees to return it to Crawford Capital
Partners promptly upon request. This confidential document is accurate as of its date, and no
representation or warranty is made as to its accuracy after that date.
2
CRAWFORD CAPITAL PARTNERS, LP
January 2014
3
CRAWFORD CAPITAL PARTNERS, LP
Leading well-managed player in genetic based diagnostic medicine
Exposed to high growth segments in early innings of adoption
Innovative companyan R&D leader with a promising pipeline of new products
Stock out of favor and heavily shorted due to heightened uncertainty resulting from a
Supreme Court ruling, new competition and reimbursement cut threats
MYGN($21.11)
January 2014
Myriad Current Products
4
CRAWFORD CAPITAL PARTNERS, LP
January 2014
Myriad Market Opportunity
5
CRAWFORD CAPITAL PARTNERS, LP
January 2014
New Product Pipeline
6
CRAWFORD CAPITAL PARTNERS, LP
January 2014
Current New Product Launches
7
CRAWFORD CAPITAL PARTNERS, LP
January 2014
MYGN: Core Investment Tenets
8
CRAWFORD CAPITAL PARTNERS, LP
Innovative long-term focused company exposed to high growth markets in their infancy
IP pioneer in gene diagnostics; leading creator of new products
Important growth fieldgene tests add insight to save lives and costsdoctors must adopt to stay relevant; large Intl opportunity
Competent management with meaningful stock ownership, Excellent sales, marketing and R&D
Protective moats around the business
Beyond the tests, MYGN has built proprietary database of gene variants with superior error performance to the public database
Reputation built over years with prescribing physicians dealing with critical diseases on a daily basisneed accuracy,
comparability, fast turnaround timesvery hard to do thisrequires much more than a lab
Largest portfolio of IP resulting from focused accumulation of R&D investment conducted in licensed labs
Strong business economics and financial position
Strong FCF generator; High and rising ROIC (see appendix), Adding to intrinsic value rapidly
No debt and 516 mil in cash ($6.22/share) for buybacks and reinvestment
Overblown fears and static sell-side analysis create buying opportunity
Supreme court ruling limited in scope leaving much IP intactnotably MYGN-created cDNA
Reimbursement cut headlines sound draconian, but in reality are likely to be slower and more moderate than expected
Myriad is a step ahead of competition with recent launches and pipeline
Maturation of basic BRAC segment is expectedlower prices and competition may accelerate adoption---trade margin for growth
High skepticism (45% shorted) creates squeeze conditions if company continues to execute
Takeout candidate by a larger firmhopefully after compounding intrinsic value first
January 2014
MYGN: Investment Risks/Concerns
9
CRAWFORD CAPITAL PARTNERS, LP
Probable end of BRAC Monopoly: Supreme court ruling ended patentability of
naturally occurring genes; Synthetic genes created by MYGN remain protected but
they will now have to fight to defend them
New competition: Major labs with scale (Quest/ Bio-Reference) and smaller players
have launched competing product with much lower price points
Radical reimbursement cuts: Medicare rates (10-15% of revenue) have seen
proposed 48% cuts; private payers may follow suit; court ruling and competition have
catalyzed
Extreme short interest: Sometimes the shorts are the smart moneymust take the
bear case seriously
January 2014
MYGN: Valuation Metrics
10
CRAWFORD CAPITAL PARTNERS, LP
MYGN
BiotechIndustry
January 2014
MYGN: Valuation Summary
11
CRAWFORD CAPITAL PARTNERS, LP
Our pessimistic DCF valuation suggests a value of: $34/share
Pricing for all tests collapses 30% across entire revenue base over 24 months
Myriad unit growth fades faster due to competition and despite lower pricing and higher quality product/service
Net margin drops from 24% to 15%; Operating margin from 37% to 22%; Cost restructuring keeps it from being even worse
Our optimistic DCF valuation suggests a value of: $52/share
Pricing drop for all tests contained to 15% over 24 months
Myriad unit growth continues on prior trajectory--market share losses offset by higher industry unit growth from lower prices
Net margin drops from 24% to 18.5%; Operating margin from 37% to 28%; Cost restructuring keeps it from being even worse
Relative valuation metrics (P/E, P/FCF, EV/Sales) look attractive relative to history and growth
potential; P/B looks attractive relative to historical and prospective ROE
No Credit for additional imbedded call options: Crescendo Bioscience, PARP Collaborations;
Companion Diagnostic J Vs; Value accretion from large repurchases of undervalued stock
January 2014
Appendix: MYGN ROIC Components
12
CRAWFORD CAPITAL PARTNERS, LP
January 2014
Appendix: MYGN Pessimistic Case Summary
13
CRAWFORD CAPITAL PARTNERS, LP
January 2014
Appendix: MYGN Optimistic Case Summary
14
CRAWFORD CAPITAL PARTNERS, LP
Crestonplc
SmallUKmarketingservicesholdingcompanytradingaround8xearnings
PresentedbyChristianOlesen
OlesenValueFundL.P.
www.OlesenValueFund.com
christian.olesen@olesenvaluefund.com
6108666200
StopsmokingcampaignconductedbyEMO,oneof
Crestonsagencies,fortheUKDept.ofHealth
2
Summary
Crestonplc(LSE:CRE,95pasof1/7/14)
Owns~20smalladvertising,PRandothermarketingservices
agencies,mostlyintheUK
Attractivebusiness withverylowcapitalrequirements,
mostlyvariablecosts (labor)stable,highfreecashflow
Debtfree balancesheet
Tradesat8.4x adj.trailingearnings
Acquisition bycompetitorHavas orotherbuyerisa
possibility,butmaybealongwaysoff
Earningsgrowthandmultipleexpansionarelikely
3
Agenda
I. BusinessOverview Communications
II. BusinessOverview Health
III. BusinessOverview Insight
IV. HistoryandManagement
V. MarginDecline
VI. KeyFinancialandValuationData
VII. Peers
VIII. Catalysts
IX. Conclusion
X. Q&A
XI. AboutOlesenValueFundL.P.
4
BusinessOverview Communications
Crestonisaholdingcompanythatownsseveralsmall
agencies,whichareengagedinadvertising,PR,market
research,andothermarketingservices.
3segments:
Communications
55%ofrevenues,46%ofoperatingincome
11agenciesengagedinadvertising,mediarelations,brandconsulting,search
marketing,websitecreation,dataplanningandmanagement,crisismanagement,
directmarketing,customerrelationshipmanagement(CRM),instoremarketing,
outdoormarketing,eventmarketing,andmanyotherareas.
AgenciesincludeTullo MarshallWarren,NelsonBostock andEMO
Traditionalmedia,online,mobile.
Topclients(yearindicateswhenclientrelationshipwasestablished):Danone Baby
(99),Unilever(90),Infiniti(07),Diageo(02),Sainsburys(07)
~15%operatingmargin
BusinessOverview Health
Health
28%ofrevenues,33%ofoperatingincome
9agenciesprovidingadvertising,branding,crisismanagement,publicaffairs,
graphicdesign,internalcommunications/salesforceeducation,patienteducation,
etc.,primarilytolargehealthcarecompanies
AgenciesincludeCooney/Waters,TheCorkery Group,RedDoorCommunications
Topclients(yearindicateswhenclientrelationshipwasestablished):Gilead(03),
CDC(99),AmgenGlaxoSmithKlineJV(11),Astellas (07),UCB(08)
Approx.halfofrevenuesgeneratedinU.S.,therestmostlyUK
2530%operatingmargin
5
BusinessOverview Insight
Insight
17%ofrevenues,21%ofoperatingincome
2agencies(ICMandMarketingSciences)providingvariousmarketresearch
services,suchasbrandtrackinganddevelopment,categorymanagementresearch,
panels,politicalpolling,customerchurn/retentionanalysis,etc.
Topclients:Danone Baby(99),Sainsburys(07),Tesco(92),ReckittBenckiser
(12),Canon(01)
2030%operatingmargin
Halfofrevenuesfromtop20clients,withavg.tenure9years
~20differentagencies
Consolidatedoperatingmargin1318%(after~2.5mil.
corporateexpenses)
6
HistoryandManagement
Formedin2001asreversemergerbyDonElgie;
BarrieBrienisCOO&CFO
Builtthroughseveralacquisitions,20012006
Financedbymixofearnouts,equityanddebt
SoldDLKWin2010atgoodprice,paidbackdebt
3small,conservativeacquisitions,20102012
Elgie andBrienown~4%total;Ibelieveall
employeesanddirectorsown1215%(mostly
becausesomeearnoutpaymentswereinstock)
7
MarginDecline
Marginshavedeclinedsincetherecession
DepartureofkeypeopleatICM
LossofSanofi account
SluggishUKeconomy;poorbusinessconfidence
8
18.5%
18.3%
20.2%
18.5%
19.2%
17.9%
15.9%
13.9%
13.5%
12.8%
0%
5%
10%
15%
20%
25%
FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 LTM
ConsolidatedOperatingMargin
KeyFinancialandValuationData
LTMrevenues:74mil.
LTMpretaxincomebef.nonrecurringitems,
lessnormalizedtaxes:6.9mil.(11.3p/share)
Netcash:1.8mil.(excl.1.7mil.earnout
liabilities)
Marketcap:58mil.(95p/share)
Adj.trailingP/E:8.4x
Expecteddividendyield:3.8%
9
Peers
Crestontradesatthelowestearningsmultiple andhasthe
lowestleverageamongitspeers
10
Name
Market Cap
(USD mil.)
Est. P/E
Curr FY
Net debt-to-
EBITA
Large, global holding companies
WPP 30,192 16.7x 2.0x
Publicis Groupe 19,045 18.3x 0.6x
Omnicom Group 18,723 19.0x 1.4x
Interpublic Group 7,586 21.7x 1.7x
Havas 3,285 16.3x 1.8x
Miscellaneous marketing firms
Dentsu-Aegis 11,592 35.6x 3.2x
STW Communications 524 11.5x 1.7x
Ipsos 2,418 13.1x 3.6x
Smaller, UK-listed marketing services companies
Chime Communications 556 17.3x 1.3x
M&C Saatchi 372 20.4x 0.4x
Huntsworth 351 11.8x 3.2x
Cello Group 108 11.9x 1.4x
Next Fifteen Communications 85 9.7x 1.4x
Creston 95 8.4x (0.0x)
Notes: Net debt includes earn-out and similar liabilities.
Catalysts
InAug2012,Havas bought6%ofCrestonintheopenmarket
Nodevelopmentslast1years
Corporateexpenses areapprox.25%ofadj.EBITAhigh
becauseCrestonissmallforapubliclytradedholding
company,savingsshouldbelargeinamerger
Ithinkanacquisition byHavas oranotherbuyerremainsa
possibility,butmaybealongwaysoff
Improvingbusinesssentiment intheUK,possiblehigher
utilizationofbalancesheet,andmovingpastpriorissues
(ICM,Sanofi)mayboostearningsaswellasthemultiple
withinthenext23years.
11
Conclusion
8.4xearningsmultipleisanattractivepriceforthiscompany
Valuationconsiderations:
Positives:
Attractivebusinessmodelwithverylowcapitalrequirements,veryhigh
returnoncapital,etc.deservesaboveaveragemultiple
Underutilizedbalancesheet(accretiveacquisitions,returnofcapitalto
shareholders,lowriskoffinancialdistress,easiertofinanceatakeover)
Acquisitionpotential
Negatives:
Small/illiquidusuallytradesatlowermulple(indenitely)
Poormargintrackrecordlastfewyears,butmaybeexplainable
Shouldprobablytradeatlowteensmultiple(atleast30%undervalued);
intrinsicvalueincreasessteadily overtimeasearningsaccrue
If30%undervaluedandvalueincreases10%peryear,20%IRR ifstockfairly
valuedin3years
12
13
Q&A
14
Christopher Karlin
Aquitania Capital Management, LLC
Chimera Investment Corp. (CIM)
January 6, 2014
Disclaimer
The discussion of portfolio investments represents the views of the investment manager.
These views are current as of the date of this commentary but are subject to change
without notice. As of the date of this publication, Aquitania Capital Management has a
position in the securities mentioned herein and may purchase or sell shares at any time
without notice. All information provided is for information purposes only and should not be
considered as investment advice or a recommendation to purchase or sell any specific
security. Security examples featured are samples for presentation purposes and are
intended to illustrate our investment philosophy and its application. While the information
presented herein is believed to be reliable, no representations or warranty is made
concerning the accuracy of any data presented. Portfolio composition will change due to
ongoing management of the portfolios. References to individual securities are for
informational purposes only and should not be construed as recommendations by
Aquitania Capital Management or its members.
Aquitania Capital Management
Aquitania Capital Management seeks to maximize risk-adjusted returns by identifying
and capitalizing on securities trading at values significantly divergent from their
respective fair values through:
an intensive fundamental research discipline
a private equity valuation methodology
an event-oriented perspective
Long-Biased, global investor across the capital structure
Seeking dislocations where our counterparties are making uneconomic decisions
Asymmetric reward-to-risk situations with high conviction in a variant thesis through intensive
independent research
Securities that are either being accidentally overlooked or actively avoided by most investors
Chimera Investment Corp.
Chimera (CIM) is a mortgage REIT formed in 2007 and managed by FIDAC, a wholly-
owned subsidiary of Annaly Capital Management (NLY)
CIM pays FIDAC a flat fee on equity of 1.5% (0.75% from 11/12 until resolution of accounting issues)
Chimera primarily owns non-agency residential mortgage backed securities
Managing credit risk is the principal value driver
Financial leverage is significantly lower at .5x D/E @ 6/30/13 compared to agency mortgage REITS at
5.0x 7.0x
Portfolio has great structural leverage from retaining subordinate and mezzanine tranches of re-REMIC
securitizations done in 2009 2012
Non-agency portfolio was purchased at very low cost over $2.1b discount on $2.3b fair value portfolio
Chimera offers a highly-levered upside to an improving housing market without
significant downside exposure
Market Capitalization: $3.2b, P/B: 1.1x, Dividend Yield: 11.5%
How ACM Views CIM
Chimera is effectively a closed-end bond fund selling at a deep discount to NAV
Closed-end because of delinquent filer status (which should disappear in 2014)
ACM believes CIMs calculation of economic book value is highly conservative
Minimal risk
Deep discount
Modest leverage @ 0.5x D/E for recourse debt
Not dependent on continued housing improvement, but exposed to a sharp decline
Management is restrained from engaging in value-destructive behavior
And there are catalysts
Resolution of delinquent filing status
Cash flow on maturing securitization deals should increasingly flow to CIM-held paper
Large Interest-Only portfolio has negative duration
Possible takeout
Why Might CIM Be Mispriced?
Financial statements are not current due to accounting restatement
Potential NYSE delisting resulting from non-current financials
Very limited communications with investors
GAAP accounting treatment wildly deviates from cash economics
Priced below $5 a share
Trades with agency mREIT peer group although facing different set of risks and
opportunities
Mortgage Portfolio Structure
Agency Portfolio $2.1b @ 6/30/13
Maintains REIT registration and 40 Act exemption under whole pool test
Financed with $1.5b of repos
Leverage (D/E) 2.5x
Agency portfolio is highly liquid and constitutes dry powder for opportunistic investment
Non-Agency Portfolio $2.6b @ 6/30/13
Focused on prime credit: Alt-A ARM, 30Y whole jumbo
Unlevered
Portfolio primarily created in 2009-2011 at steep discounts and using draconian loss assumptions
Structural leverage created by 10 securitizations in 2009-2012 left CIM with subordinate and mezzanine
tranches at very low cost basis
Management has opportunistically managed credit risk in 2009-2013 period
Credit performance has exceeded loss assumptions in 2009-2013
Accounting Issues
Essence of accounting restatement is that GAAP treats investment grade (ASC
310-20) and non-investment grade securities (ASC 310-30 & ASC 325-40)
differently
Impacts whether losses flow through income statement (310-20) or through income statement
and other comprehensive income (loss) (310-30 & 325-40)
Book value, cash flow and taxable income are not impacted
Restating financials requires performing impairment tests on each CUSIP
2012 10-K filed 12/31/13
New Auditor (Ernst & Young) offers unqualified opinion on financials
Auditor identifies material weaknesses in internal controls as of 12/31/12
Management implemented resources and processes to remediate weaknesses in 2013
Cash Economics
Oxford English Dictionary definition of Chimera:
(2) A thing that is hoped or wished for but in fact is illusory or impossible to achieve
Accurately conveying the economics of a private mortgage portfolio of subordinate securites via GAAP
Accounting bears little relation to cash economics
Book value likely understates economic value
Most non-agency securities held are private, non-rated and with no public market
Loss assumptions used are undisclosed but described as draconian
Company estimates fair value then gets broker quotes which often have a 20pt bid/ask
Management estimate are used if within broker quote
GAAP earnings do not relate to cash flows
GAAP earnings driven by large amortization of discounts on securities and Other Than Temporary Impairments
GAAP forces recognizing OTTI even if no deterioration in performance of loan
Taxable earnings likely exceed cash flows due to amortization of discounts
Dividends at 90% of taxable income likely consist of some principal payments
Inputs
Book Value + Dividends grew 5.6% (est.) in 2013, 21.3% in 2012, 3.1% in 2011
and 11.3% in 2010
Since we cant see CIMs portfolio, what can we look at to validate economics?
Monthly reports on the securitizations show how the collateral is performing
ABX index pricing and price visibility into comparable underlying securities
Changes in housing market
Performance and commentary from other mREITs
Underlying Collateral Has Performed Well
Underlying Collateral Has Performed Well
Source: Chimera Financial Update, October 2013
Securitization Collateral Has Performed Well
ABX Indices Have Performed Well
ABX AAA 2006-1
+9.4%
2012
+0.7%
2013
ABX Indices Have Performed Well
ABX AAA 2007-01
ABX Indices Have Performed Well
ABX AA 2006-1 Index
Scenarios
Null Hypothesis CIM reported book value is representative of economic value
$2.98 @ 09/30/13, Est. $3.00 at 12/31/13
$2b in accreted discounts were recorded at purchase
Variant Hypothesis CIM reported book value understates economic value
Underlying collateral has shown significant improvement
Market pricing on comparable securities has risen faster than growth in CIM book + dividends
Housing market has markedly improved in last 24 months
Loss assumptions set at purchase date (heavily weighted to 2009-2011) were highly
conservative
Estimated Portfolio at 6/30/13
Consolidated RMBS & Loans 4,118,000 $ 58%
Consolidated RMBS & Loans, Retained 1,746,005 $ 37%
Agency RMBS 2,059,000 $ 44% 2,059,000 29%
Non-Agency RMBS 497,000 11% 497,000 7%
Non-Agency Senior IO 284,000 6% 284,000 4%
Cash & Equivalents 142,000 3% 142,000 2%
4,728,005 $ 100% 7,100,000 $ 100%
Repurchase Agreements, Agency RMBS (1,470,000) (1,470,000)
Other Assets
Other Liabilities (165,000) $
Economic Book Value 3,093,005 $
Economic Book Value per share 3.01 $
Figures in blue are ACM estimates
GAAP Portfolio Economic Portfolio
6/30/2013
Securitization Waterfall
Consolidated
Securitizations
Total Original
Face
Total Tranches
Sold
Total of Tranches
Retained
Amount 9,187,991 $ 5,252,316 $ 3,935,676 $
% of Original Face 43%
Consolidated
Securitizations
Total Remaining
Face
Remaining Face
of Tranches Sold
Remaining Face
of Tranches
Retained
Amount 5,086,648 $ 1,974,339 $ 3,112,309 $
% of Original Face 55% 38% 79%
% of Remaining Face 61%
2008 - 2010
Securitizations
Total Remaining
Face
Remaining Face
of Tranches Sold
Remaining Face
of Tranches
Retained
Amount 4,316,166 $ 1,280,696 $ 3,035,469 $
% of Original Face 47% 24% 77%
% of Remaining Face 70%
At Origination
As of June 30, 2013
Valuation
Asset/Liability Prinicpal/Notional Value
Senior 126 $ 57.02 $ 71.85 $ 67.00 $ 88.00 $ 80.00 $ 100.80 $ 90.00 $ 113.40 $
Senior, interest only 3,012,868 4.51 135,880 4.08 122,869 15.00 451,930 25.00 753,217
Subordinated 1,057,821 44.72 473,058 51.79 547,794 65.00 687,584 75.00 793,366
Subordinated, interest only 256,072 6.32 16,184 6.35 16,253 10.00 25,607 20.00 51,214
RMBS transferred to consolidated VIEs, retained 3,600,000 33.33 1,200,000 42.88 1,543,782 55.00 1,980,000 62.50 2,250,000
Securitized loans held for investment, retained 77,500 100.00 105,000 140.03 108,524 140.00 108,500 140.00 108,500
8,004,387 $ 24.11 $ 1,930,193 $ 29.23 $ 2,339,310 $ 40.65 $ 3,253,722 $ 49.43 $ 3,956,411 $
Agency RMBS 1,756,580 $ 103.09 1,810,858.32 $ 102.85 $ 1,806,697 1,806,697 1,806,697
Repurchase agreements, Agency RMBS (1,528,025) (1,528,025) (1,528,025)
Other Assets 674,453 $ 674,453 $ 674,453 $
Other Liabilities (166,014) (166,014) (166,014)
Economic Book Value 3,126,421 $ 4,040,833 $ 4,743,522 $
Economic Book Value Per Share 3.04 $ 3.93 $ 4.62 $
Upside from 1/3/14 closing price of $3.14 25% 47%
Figures in blue are ACM estimates
Cost Basis 12/31/12 Fair Value ACM Low Est. Value ACM High Est. Value
Catalysts
Regaining current filing status
2011 10K was filed on 3/8/13
2012 10-K was filed on 12/31/13
2013 10-Qs and 10-K should be filed over the next few months
Annaly is likely to purchase CIM once financials are clean
CIM has been unable to raise equity and will not be able to raise equity via S-3 until achieving
1 year as a current filer
Annaly modified its charter to allow for up to 25% non-agency securities
Annaly recently acquired CreXus which it also managed
CreXus was an mREIT focused on CMBS
1.1x book value, 13% premium
Annaly currently owns 4.4% of CIM
Catalysts
Cash flow should increase significantly
Securitizations create tranches that receive cash flow both simultaneously and sequentially
CIM sold off most of the senior tranches
The subordinated tranches should begin receiving increasing amounts of monthly cash flow as
the senior tranches are paid off
Improving performance on the underlying provides further support
Filing status provides insurance against dilution at the expense of accelerating portfolio growth
A Q U I T A N I A C A P I T A L M A N A G E M E N T
4 7 0 0 N C A P I T A L O F T E X A S H WY . , S U I T E 5 2 4
A U S T I N , T E X A S 7 8 7 4 6
5 1 2 3 2 9 - 5 9 9 9
I N F O @A Q U I C A P . C O M
WWW. A Q U I T A N I A C A P I T A L . C O M
Contact
JANUARY 2014

Young Capital
Management, LLC
Austex Oil
Best Ideas 2014
DISCLAIMER IMPORTANT NOTICE
The Presentation does not constitute an offer to sell, or a solicitation of an offer to purchase, any securities. Any such offer or solicitation will be
made in accordance with applicable securities laws.
The Presentation is being provided on a confidential basis solely to those persons to whom this Presentation may be lawfully provided. It is not to
be reproduced or distributed to any other persons (other than professional advisors of the persons receiving these materials). It is intended
solely for the use of the persons to whom it has been delivered and may not be used for any other purpose. Any reproduction of the
Presentation in whole or in part, or the disclosure of its contents, without the express prior consent of Young Capital Management, LLC (the
Company) is prohibited.
No representation or warranty (express or implied) is made or can be given with respect to the accuracy or completeness of the information in
the Presentation. Certain information in the Presentation constitute forward-looking statements about potential future results. Those results may
not be achieved, due to implementation lag, other timing factors, portfolio management decision-making, economic or market conditions or other
unanticipated factors. Nothing contained herein shall be relied upon as a promise or representation whether as to past or future performance or
otherwise.
The views, opinions, and assumptions expressed in this presentation are as of December 2013, are subject to change without notice, may not
come to pass and do not represent a recommendation or offer of any particular security, strategy or investment.
The Presentation does not purport to contain all of the information that may be required to evaluate the matters discussed therein. It is not
intended to be a risk disclosure document. Further, the Presentation is not intended to provide recommendations, and should not be relied upon
for tax, accounting, legal or business advice. The persons to whom this document has been delivered are encouraged to ask questions of and
receive answers from the general partner of the Company and to obtain any additional information they deem necessary concerning the
matters described herein.
None of the information contained herein has been filed or will be filed with the Securities and Exchange Commission, any regulator under any
state securities laws or any other governmental or self-regulatory authority. No governmental authority has passed or will pass on the merits of
this offering or the adequacy of this document. Any representation to the contrary is unlawful.
Young Capital holds positions in Austex Oil (AOK AU). It reserves the right to buy or sell those or any other stock at any time without further
notification.
PAGE 2
Young Capital
Management, LLC
Introduction to
Josh Young/ Young Capital
CIO of Young Capital Management, LLC - launched in September
2010, with a focus on public and private oil and gas investments

Josh was previously an Investment Analyst for Karlin Asset Management,
a multi-billion dollar, single family office, nominated as Institutional
Investors Single Family Office of the Year in 2008
Meaningful participant in public equity offerings of small oil and gas e&ps (data
publicly available from deal tracking services), some up 3x+ within 24 months

Profiled in Oil and Gas Investor Magazine,
interviewed on the Ellis Martin Report
and by The Energy Report, author of numerous
Seeking Alpha articles on oil & gas investments

Speaker at industry and investment conferences,
including Platts, Louisiana Energy Conference,
Oil, Gas & Money Conference, Global Resource
Investment Conference, and The Deep Value Summit
PAGE 3
Young Capital
Management, LLC
Past Performance: Deep Value Summit
PAGE 4
Young Capital
Management, LLC
Gastar (GST) traded up >100% within 7 months of
pitch at the May 2013 Deep Value Summit
Next idea is similar, except more downside protection
Less leverage, faster growth, and bigger discount to reserve value
Austex Oil (AOK AU / ATXDY)
Opportunity Overview
Austex is an oil and gas exploration and production
company (E&P)
Focused on vertical development of a proven, highly economic
Mississippi Lime field in Kay County, Oklahoma
Austex trades primarily in Australia despite US Assets
Australian Stock market has underperformed
Austex has been overlooked despite substantial reserve and
production growth in the midst of Australian market turmoil
Austex stock has substantially lagged its high-growth, oil
producing peers despite better drilling economics and rapid
growth
Discount to comps on EV/EBITDA, EV/production, and EV/reserves
Discount to intrinsic value: recent PWC fairness opinion, sell side
research, and independent engineer proved reserve value
PAGE 5
Young Capital
Management, LLC
Austex Oil (AOK)
Why Austex
Small company - easy to look through production growth
and economics
Small, easily understood quantity of capital deployed
Rapid and accelerating production growth, readily observable
and still early stage
High rates of return
Good economics make sustainable growth more likely
Seeing substantial production increases in the part of the play they
are active in
Recent, material outside confirmations of valuation
PWC fairness opinion 50-100% premium to stock price
Investment bank price targets at 100%+ premium
Sophisticated private equity investor (took Herbalife private in
2002) recently bought 30% of company, got incremental reserve
engineering report confirming value
PAGE 6
Young Capital
Management, LLC
Austex Oil (AOK)
Why Austex
Why Austex?
Small cap E&Ps have outperformed index, AOK has not
Potential for stock price to catch up
PAGE 7
Young Capital
Management, LLC
Austex Oil (AOK)
Overview
Small, rapidly growing Mississippi
Lime Pure-Play
Grew from 200 boepd to 1000
boepd in 2012-13
Deployed approximately $25
million in capex
Achieved production growth with
capital efficiency of ~$32,000 per
boepd
Austex drills vertical wells and
participates as a non-op with
Range Resources in horizontal wells
Austex has achieved substantially
better than average well economics
(90+% IRR), far exceeding the
50% IRR shown above in the Credit
Suisse chart for the Mississippi Lime
PAGE 8
Young Capital
Management, LLC
Austexs Snake River Project is in a predominantly oily
area of the play, in Range Resources (RRC) core area
Austex Oil (AOK)
Investment Thesis
Investment thesis:
At $0.135, Austex has a ~$61 million market cap
At over 1000 boepd, Austex trades at less than $100,000/boepd,
despite substantial growth this year and likely growth next year
Comparable companies like Synergy (SYRG) trade as high as- $300,000
per boepd
Synergy currently produces ~3,000 boepd
At its current growth rate, Austex could be producing 3,000 boepd by the
end of 2014, or an implied $20,333 per boepd
Austex trades for ~1/4 of its $250 million proved reserve value
Most capital efficient, rapidly growing public companies trade at a premium
to their proved reserve value
RBS and GMP have published research with price targets for Austex
stock of $0.28-30 per share
PWC fairness opinion in December 2013 with a valuation of $0.20-
0.27 per fully diluted share
Incentivized to come out with a low number can triangulate to $0.30+
PAGE 9
Young Capital
Management, LLC
Austex Oil (AOK)
Comparative Economics
GMP (international investment bank providing
research coverage on AOK) did a study on ~140 oil
and gas resource plays, ranking them by their
economics
If Austex play were included, using GMPs economics
from their research report, it would be top decile
Companies with top decile plays trade at premiums to
their proved reserve values and at high cash flow
multiples
Comps trade at significant premiums to Austex
Austexs field is delineated new wells likely to perform well
PAGE 10
Young Capital
Management, LLC
Austex Oil (AOK)
Relevant Comps
Austex trades at ~3.5x EV/2014 EBTIDA, and at ~2x EV/Exit rate
2014 EBITDA
Trades at <$100,000 per boepd and <$30,000 per exit 2014 boepd
Trades at ~1/4 value of proved reserves
Most closely resembles Synergy Resources (SYRG), which trades at
~8x EV/2014 EBITDA and at ~4x EV/Exit rate 2014 EBITDA
SYRG trades at ~$300,000 per boepd and ~$100,000 per exit 2014
boepd
SYRG trades at ~3x value of proved reserves
Other rapidly growing oil focused companies trade at ~$150,000
per boepd, ~$80,000 per exit 2014 boepd, and at >1x proved
reserves
These comps include GPOR, KOG, TPLM, MHR, AREX, PVA, SN and
others
PAGE 11
Young Capital
Management, LLC
Austex Oil (AOK)
Aligned, High Performing Board
Three out of seven seats held as designees for the
largest shareholder, which owns 30% of the stock
Largest shareholder is entities owned / controlled
by Michael Stone, former CEO of JH Whitney, who
took Herbalife private in 2002 and public in 2004
This is a recent development, and is a significant
step up in corporate governance
With the stock trading at 1/3 of proved reserve
value and 2x exit 2014 EBITDA, this appears not to
have been priced into the stock yet
PAGE 12
Young Capital
Management, LLC
Oil Industry Comparative Economics
Austex Oil
Introduction to Josh Young, Young Capital

Comparative Economics of Unconventional Plays

Austex Oil (AOK)
PAGE 13
Young Capital
Management, LLC
1
BOURBON
J.P. ROLANDEZ, CFA
The L.T. Funds
Geneva, January 8th 2013
2
Established 1948 as a sugar mill in the Bourbon island. Established 1948 as a sugar mill in the Bourbon island.
The Bourbon island was renamed The Bourbon island was renamed R R union union in 1848. in 1848.
Spreads as a diversified conglomerate until 2001. Spreads as a diversified conglomerate until 2001.
Focuses on shipping, then marine services since then. Focuses on shipping, then marine services since then.
500 offshore oil & gas services boats in operation. 500 offshore oil & gas services boats in operation.
11 000 employees, 35% Europeans, 33% Africans. 11 000 employees, 35% Europeans, 33% Africans.
96% of its vessels outside Europe (60% in Africa). 96% of its vessels outside Europe (60% in Africa).
EUR 1.3 EUR 1.3 Bn Bn sales (e 2013) i.e. 10% sales (e 2013) i.e. 10% cagr cagr since 2005. since 2005.
Listed in 1998. EUR 1.5 Listed in 1998. EUR 1.5 Bn Bn Market Cap. Market Cap.
What is BOURBON ?
3
SWOT Analysis
Strengths Weaknesses
Management Offshore oil exploration dependency
Strategy Dependency to Total (23% of sales)
Co-leader worldwide High debt levels
Vessels efficiency Nigeria dependency
Young fleet Brazilian market unprofitable
Opportunities Threats
Size & reputation Key supplier dependency
Shallow offshore Price wars by less efficient, older ships, in USD
Subsea market Emerging competition in efficient vessels
Sales & leasebacks with capital gains Ship leases residual values
East African Coast Next growth phase
4
Summary Forecasts
(En EUR Mn) 2011 2012 2013 (e) 2014 (e) 2015 (e) Score /10
Sales 1 008 1 186 1 300 1 400 1 500 Sector 7
Operating margin (%) 8,5 13,6 15,9 16,5 16,8 Company 9
Net income 3 52 175,0 275,0 225,0 Management 8
EPS (EUR) 0,10 0,58 1,95 3,06 2,50 Financial analysis 6
ROE (%) 0,5 3,1 11,5 15,9 12,1 Risk analysis 6
Net gearing ratio (%) 138 146 100 80 65 Total 36
5
Investment Case
Growth company.
Excellent management in a competitive sector.
Key competitive advantages operationally
Potential for long-term margin improvement
Fairly valued (EV/EBITDA 2013e: 8.0x).
Financially about to degear, by about 50 %.
6
7
Disclaimer
The material in this report was produced by The L.T. Funds.
The information and opinions contained in this report have been obtained from public sources
believed to be reliable, but no representation or warranty, express or implied, is made that such
information is accurate or complete and it should not be relied upon as such. Information and
opinions contained in the report are published for the assistance of recipients, but are not to be
relied upon as authoritative or taken in substitution for the exercise of judgement by any
recipient, and are subject to change without notice. This report is not, and should not be
construed as, an offer document or an offer or solicitation to buy or sell any investments.

The L.T. Funds accept no liability whatsoever for any direct or consequential loss arising from
any use of material contained in this report. This report is confidential and is submitted to
selected recipients only. It may not be reproduced (in whole or in part) to any other person.

The L.T. Funds and/or persons connected with them may effect or have effected a transaction
for their own account in the investments referred to in the material contained in this report or
any related investment before the material is published to any L.T. Funds customers. On the
date of this report, The L.T. Funds, persons connected with them and their respective
directors and/or representatives and/or employees may have a position in any of the
investments mentioned in this report and may purchase and/or sell the investments at any
time in the open market or otherwise, in each case either as principal or as agent.

This report is prepared for professional investors and is not intended for Private Customers in
the United Kingdom as defined in FSA rules and should not be passed on to any such persons.
For the purpose of distribution in the United States this report is only intended for persons
which can be defined as Major Institutional Investors under U.S. regulations. Any U.S. person
receiving this report and wishing to effect a transaction in any security discussed herein, must
do so through a U.S. registered broker dealer.

By accepting this document you agree to be bound by the foregoing limitations.

THE L.T. FUNDS (2014). All rights reserved.
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BEST IDEAS CONFERENCE 2014
PEPSICO
60 Commerce Drive
Wyomissing, PA 19610
www.lountzis.com
JANUARY 7, 2014 2
PRESENTATION OUTLINE

PEPSICO
BACKGROUND
GLOBAL
BRANDS
LEADING MARKET POSITIONS
EMERGING MARKETS
ADJACENT CATEGORIES
COMPETITIVE OPERATIONAL STRENGTHS
FINANCIALS

INVESTMENT THESIS
SEPARATE BEVERAGES AND SNACKS
TRIAN WHITE PAPER
BEVERAGES
SNACKS
VALUATIONS
















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PEPSICO

BROADLY DIVERSIFIED FOOD AND BEVERAGE
COMPANY
GEOGRAPHICALLY
200 COUNTRIES
BUSINESS SEGMENTS
PEPSICO AMERICA FOODS
PEPSICO AMERICA BEVERAGES
PEPSICO EUROPE
PEPSICO ASIA, MIDDLE EAST, AFRICA
GLOBAL PRODUCT MARKET SHARES
#1 IN SALTY SNACKS
#1 HOT CEREALS
#1 SPORTS DRINKS
#2 IN CARBONATED SOFT DRINKS
#2 FRUIT JUICES




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PEPSICO
KEY FOUNDING EVENTS
PEPSI-COLA FOUNDED IN 1898
FRITO-LAY CREATED BY MERGER IN 1961
FRITO COMPANY (ELMER DOOLIN 1932)
H.W. LAY COMPANY (HERMAN LAY 1932)

PEPSICO CREATED IN 1965
MERGER OF PEPSI-COLA AND FRITO-LAY

KEY EARLY PRODUCTS
PEPSI-COLA
MOUNTAIN DEW
DIET PEPSI
FRITOS, CHEETOS, RUFFLES, ROLD GOLD










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HISTORICAL TIMELINE

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HISTORICAL TIMELINE

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4 BUSINESS UNITS
PEPSICO AMERICAS FOODS
FRITO-LAY NORTH AMERICA (FLNA)
QUAKER FOODS NORTH AMERICA (QFNA)
LATIN AMERICAN FOOD AND SNACK BUSINESSES(LAF)
PEPSICO AMERICAS BEVERAGES (PAB)
NORTH AMERICA AND LATIN AMERICA BEVERAGES
PEPSICO EUROPE
BEVERAGES, FOODS AND SNACKS IN EUROPE AND SOUTH
AFRICA
PEPSICO ASIA, MIDDLE EAST AND AFRICA(AMEA)
BEVERAGES, FOODS AND SNACKS IN AMEA












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PEPSICO
6 REPORTABLE SEGMENTS
FRITO-LAY NORTH AMERICA (FLNA)

QUAKER FOODS NORTH AMERICA (QFNA)

LATIN AMERICA FOODS (LAF)

PEPSICO AMERICAS BEVERAGES (PAB)

EUROPE

ASIA, MIDDLE EAST, AFRICA (AMEA)
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BUSINESSES AND GEOGRAPHY

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SALTY SNACKS
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OPPORTUNITIES
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COMPETITIVE OPERATIONAL
STRENGTHS
PROCUREMENT

MANUFACTURING

DISTRIBUTION (DSD)

MARKETING

INNOVATION

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VALUATION
STOCK PRICE $82 MARKET CAPITALIZATION $131 BILLION

DIVIDEND YIELD 2.8%

SELLING AT 17X 2014 EARNINGS ESTIMATES
11X 2014 EV/EBITDA

KEY ISSUES
BEVERAGE INDUSTRY CHALLENGES
RISING ADVERTISING AND MARKETING EXPENDITURES
DECLINING COMMODITY COSTS
RISING MARGINS
ADDITIONAL COST CUTT

NEXT FEW YEARS
REVENUE GROWTH OF 4-6%
EPS GROWTH OF 7-9%

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TRIAN

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TRIAN


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TRIAN

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TRIAN

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TRIAN

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TRIAN

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TRIAN

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TRIAN

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TRIAN

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GLOBAL SNACK FOOD SEGMENT
GLOBAL INDUSTRY RETAIL SALES
2002-$73 BILLION
2012-$119 BILLION

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GLOBAL SNACK FOOD SEGMENT
AMONG BEST FOOD COMPANIES IN THE WORLD WITH
HIGHEST MARGINS IN THE US VS PEERS



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BEST CORPORTE LEADERSHIP IN SNACK FOODS
OPERATIONALLY
CAPITAL ALLOCATION

MOST INNOVATIVE AND ADAPTABLE COMPANY IN THE GLOBAL
SNACK FOOD INDUSTRY
HISTORICAL INDUSTRY LEADER
PRODUCTS
SERVICES
DISTRIBUTION

TECHNOLOGY DRIVEN AND DATA DRIVEN CULTURE
OPERATIONAL EFFICIENCIES
REDUCE COSTS
IMPROVE PRODUCTION
SOURCING
DISTRIBUTION








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TRIAN

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TRIAN

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TRIAN

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TRIAN

JANUARY 7, 2014 1
BEST IDEAS CONFERENCE 2014
PREFERRED SECURITIES
USB SERIES F (FRAP)
WFC SERIES R (FRAP)

60 Commerce Drive
Wyomissing, PA 19610
www.lountzis.com
JANUARY 7, 2014 2
PRESENTATION OUTLINE
PREFERRED STOCK BACKGROUND
DESCRIPTION
TYPES OF PREFERRED STOCKS
TAX BENEFITS
MARKET SIZE
YIELD HISTORY

USB 6.5% SERIES F (FRAP)

WFC 6.625 SERIES R PFD (FRAP)




JANUARY 7, 2014 3
PREFERRED STOCK


HISTORICALLY TRACE ORIGINS BACK TO 16
TH

CENTURY ENGLAND
ISSUED IN THE 1850S IN THE UNITED STATES
BECAME A MORE COMMON FINANCING TOOL IN THE
1980S FOR UTILITIES
OVER THE PAST SEVERAL YEARS FINANCIAL
INSTITUTIONS HAVE BEEN BIGGEST ISSUERS

JANUARY 7, 2014 4
PREFERRED STOCK
FEATURES
PREDETERMINED DIVIDEND RATE SIMILAR TO
CORPORATE DEBTS
CLASSIFIED AS EQUITY ON BALANCE SHEET
IN BANKRUPTCY SUBORDINATE CLAIMS TO DEBT
HOLDERS BUT SENIOR TO COMMON STOCKHOLDERS
DIVIDEND PAYMENTS ARE NOT TAX DEDUCTIBLE TO
CORPORATE ISSUER FOR TRADITIONAL PREFERRED
FACE VALUES ARE $25 AND $1000
$25 FOCUS UPON RETAIL INVESTOR
$1000 FOCUS UPON INSTITUTIONAL INVESTOR
DIFFERENCE BETWEEN $25 AND $1000 FACE VALUE
IS THE $25 DOES NOT TRADE WITH ACCRUED
INTEREST WHILE THE $1000 TRADE WITH ACCRUED
INTEREST


JANUARY 7, 2014 5
PREFERRED STOCK

JANUARY 7, 2014 6
PREFERRED STOCK

HYBRID SECURITY WITH CHARACTERISTICS OF BOTH
DEBT
EQUITY
SENIOR TO COMMON STOCK BUT SUBORDINATE TO OTHER DEBT








JANUARY 7, 2014 7
PREFERRED STOCK


JANUARY 7, 2014 8

PREFERRED STOCK


JANUARY 7, 2014 9
PREFERRED STOCK
TAX BENEFITS





JANUARY 7, 2014 10
PREFERRED STOCK
TAX BENEFITS









JANUARY 7, 2014 11
PREFERRED STOCK


JANUARY 7, 2014 12
PREFERRED STOCK

JANUARY 7, 2014 13
PREFERRED STOCK
MARKET SIZE


JANUARY 7, 2014 14
PREFERRED STOCK




JANUARY 7, 2014 15
PREFERRED STOCK

JANUARY 7, 2014 16
PREFERRED STOCK
CREDIT QUALITY
EXCELLENT BANKS

PURCHASE BELOW, AT OR SLIGHTLY ABOVE PAR

DIVIDEND PAYMENT
YIELDS 400BP ABOVE 10 YEAR TREASURY
TAX BENEFITS
QDI
DRD
FIXED RATE TO ADJUSTABLE RATE
REDUCE INTEREST RATE RISK
LOWER DURATION

JANUARY 7, 2014 17
PREFERRED STOCK
USB 6.5% SERIES F PFD (FRAP)
Depositary Shares Each Representing a 1/1,000th Interest in a Share of
Series F Non-Cumulative Perpetual Preferred Stock
Issuance Date: January 23, 2012
Initial Public Offering Price: $25.00 per depositary share
NYSE Symbol: USB.M
Earliest Permitted Redemption Date: January 15, 2022
Noncumulative Dividends: Paid quarterly in arrears on January 15, April 15,
July 15 and October 15 of each year, commencing on April 15, 2012, when,
as and if declared, at a rate per annum equal to 6.50% from April 15, 2012 to,
but excluding, January 15, 2022, and thereafter at a floating rate per annum
equal to three-month LIBOR plus a spread of 4.468%
Liquidation Preference: $25 per depositary share

DIVIDEND PAYMENT 1.625/SHARE
44 MILLION SHARES OUTSTANDING
CURRENT YIELD 6.11% YIELD TO CALL 5.53%
JANUARY 7, 2014 18
PREFERRED STOCK
WFC 6.625 SERIES R PFD (FRAP)
Depositary Shares Each Representing a 1/1,000th Interest in a
Share of Series R Non-Cumulative Perpetual Preferred Stock
Issuance Date: December, 16 2013
Initial Public Offering Price: $25.00 per depositary share
NYSE Symbol: WFC.R
Earliest Permitted Redemption Date: March 15, 2024
Noncumulative Dividends: Paid quarterly in arrears on March 15,
June 15, September 15 and December 15 of each year,
commencing on March 15, 2014, when, as and if declared, at a
rate per annum equal to 6.625% from March 15, 2014 to, but
excluding, March 15, 2024, and thereafter at a floating rate per
annum equal to three-month LIBOR plus a spread of 3.69%
Liquidation Preference: $25 per depositary share

DIVIDEND PAYMENT 1.65625/SHARE
30 MILLION SHARES OUTSTANDING
CURRENT YIELD 6.43% YIELD TO CALL 6.24%
JANUARY 7, 2014 19
PREFERRED STOCK









JANUARY 7, 2014 20
PREFERED STOCK

JANUARY 7, 2014 21
PREFERRED STOCK

JANUARY 7, 2014 22
PREFERRED STOCK

JANUARY 7, 2014 23
PREFERRED STOCK







JANUARY 7, 2014 24
PREFERRED STOCK

JANUARY 7, 2014 25
PREFERRED STOCK

Post Holdings, Inc. [POST:NYSE]
0 Copyright 2013 Elevation Capital Management Limited
7 8 January 2014
IMPORTANT DISCLOSURE - PART I
The information contained in this presentation has been prepared solely for informational purposes and is not intended to be investment advice.

The nancial analysis and documents referenced by Elevation Capital Management Limited (Elevation Capital) regarding Post Holdings, Inc.
(POST) are based on publicly available information.

Elevation Capital, believes that the information herein is correct at the time of compilation; however does not warrant the accuracy of the
information.

Any assumptions, assessments, estimates, projections or the like (collectively, Statements) regarding future events or which are forward-looking
in nature constitute only subjective views, outlooks or estimations, are based upon Elevation Capitals current expectations or beliefs, are subject to
change due to a variety of factors, including uctuating market conditions and economic factors, and involve inherent risks and uncertainties, many
of which cannot be predicted or quantied and are beyond Elevation Capitals control. Actual results could difer materially from those set forth in,
contemplated by, or underlying these Statements. In light of these risks and uncertainties, there can be no assurance and no representation or
warranty is given that these Statements are now or will prove to be accurate or complete in any way in the future.

Elevation Capital disclaims any obligation to update the information contained herein and reserves the right to modify or change its conclusions at
anytime in the future without notication.

Elevation Capital advises that the Elevation Capital Value Fund is in the business of buying and selling public securities/equities. The Elevation
Capital Value Fund owns Post Holdings, Inc. listed on the NYSE as at the date of this presentation. It is possible that there will be developments in
the future that cause the Elevation Capital Value Fund to change its position regarding Post Holdings, Inc. and possibly increase, reduce, dispose of,
or change the size of its investment in the Post Holdings, Inc.

Elevation Capital and the Elevation Capital Value Fund reserves the right to change its investment in Post Holdings, Inc. at anytime in future without
notication.


Copyright 2013 Elevation Capital Management Limited 1
IMPORTANT DISCLOSURE - PART II
The content of this material is intended to provide general information only and does not take into account the investment objectives, nancial
situation or needs of any particular person. Elevation Capital Management Limited (we, us or our) strongly recommends that any potential
investor in our products obtains professional advice as to their individual requirements before making any investment decision.

Elevation Capital Management Limited is registered as a nancial service provider in New Zealand under the Financial Service Providers
(Registration and Disputes Resolution) Act 2008 (FSP# 9601). Christopher Swasbrook is also registered under that Act (FSP# 110649); he is,
however, not an authorised nancial adviser for the purposes of the Financial Advisers Act 2008. Despite such registration, neither Elevation Capital
Management Limited nor Mr Swasbrook are providing any nancial advisory services to any person as a result of the content of this presentation.

All opinions, statements and analysis expressed are based on information believed to be accurate at the date of compilation, but is subject to
revision by us at any time. If information is from an external source, we believe that information to be authentic and reliable. We issue no invitation
to anyone to rely on this material and intend by this statement to exclude liability for any such opinion, statement and analysis. Reference to
taxation or the impact of taxation does not constitute tax advice. The level and bases of taxation may change. Past performance is not necessarily
an indication of future returns.

Investments in the Elevation Capital Value Fund and Elevation Capital Global Value Fund of Funds (the Fund/s) are subject to investment risk,
including possible delays in repayment and loss of income and capital invested. The value of your investments may fall below the price you paid for
them. You may also not earn any income on your investments. Neither Elevation Capital Management Limited, its directors, the trustee of the Funds
nor any other person guarantees any particular rate of return on, or the performance of, the Funds, nor do we guarantee the repayment of capital
from the Funds.

A copy of the investment statement for the Funds is available from:

Elevation Capital Management Limited,
PO Box 911145, Victoria Street West, Auckland 1142, New Zealand;
Or by requesting a copy at: info@elevationcapital.co.nz
Copyright 2013 Elevation Capital Management Limited 2
A long and storied history
1895 Postum Cereals Company founded by C.W. Post
1925 Acquired Jell-O gelatin
1927 Acquired Bakers chocolate
1928 Acquired Maxwell House cofee
1929 Acquired General Foods Company
1929 Changes name to General Foods Corporation
1985 Acquired by Philip Morris Companies
1989 Philip Morris merged General Foods with Kraft Foods to form the Kraft General Foods division
1995 Kraft General Foods renamed Kraft Foods
2008 Post Cereals spun of from Kraft and merged with Ralcorp Holdings as Post Foods, LLC.
2012 Post Foods unit spun of from Ralcorp as Post Holdings, Inc. and listed on NYSE (7 February)


3 Copyright 2013 Elevation Capital Management Limited
Built over the last 117 years
4 Copyright 2013 Elevation Capital Management Limited
1897 1919 1937 1984 2000 2013 Future?
Stable Staples
Unpredictable Futures
Now owns a number of recognised brands
5 Copyright 2013 Elevation Capital Management Limited
#3 Player in US
! Third-largest cereals business in the US (10.4%)
#1 Kellogg, #2 General Mills, #4 Quaker Oats (PepsiCo)
The US Ready-To-Eat (RTE) Cereal industry has
approximately 92% household penetration
Scale and brands provide a large barrier to entry
! Posts domestic market share declined from
approximately 12.2% in FY09 to 10.4% today
This was due to a broken network that caused
signicant disruption to business under Ralcorp
management prior to spin-of
Despite this poor performance, Posts cereal business
remains highly cash generative
6 Copyright 2013 Elevation Capital Management Limited
Kellogg,
34%
General
Mills, 33%
POST,
10.40%
Others, 23%
US Cereal Market (USD 10 Billion)
As at 30 September 2013
Historical nancials dont tell the full story
7 Copyright 2013 Elevation Capital Management Limited
POST Kellogg General Mills
Share Price
*
$47.33 $60.43 $49.91
Market Cap
*
$1.5B $21.9B $31.7B
Gross Margin
*
39.6% 37.2%

35.6%
Operating Margin
*
10.4% 10.9% 15.6%
Net Margin
*
3.0%
**
6.7% 9.8%
ROA
*
0.9%
**
7.7% 9.2%
ROE
*
2.1%
**
37.8% 26.2%
Net Debt / Equity
*
0.67x 2.51x 1.10x
P/B
*
1.05x 7.72x 4.66x
* Data Source: Thomson Reuters as at 16 December 2013 Post as at 30 September 2013, Kellogg as at 28 September 2013 and General Mills as at 25 August 2013
** Based on adjusted net earnings of $31.1M reported by Post as at 30 September 2013
8 Copyright 2013 Elevation Capital Management Limited
from a low growth single category participant
to a consumer products holding company,
operating in center-of-the-store, active
nutrition and private label categories.
*
Post is transforming
* From POST 2013 Annual Report (page 4)
Post is led by an exceptional CEO
8 Unconventional CEOs and Their Radically Rational Blueprint for Success
Tom Murphy Henry Singleton
Bill Anders John Malone
Katharine Graham Bill Stiritz
Dick Smith Warren Bufett

"He's probably among the best moneymakers of the past 30 years... he's a
Warren Bufett-like character, but stays out of the limelight.
- John McMillin (Prudential Securities)

9 Copyright 2013 Elevation Capital Management Limited
The only 3 you can
invest with today
Bill Stiritz - Post Chairman & CEO
Bill Stiritz Chairman / CEO
! 79 years old
! Owns 1.1% of Post as of 11 November 2013 based on 32,688,799
shares outstanding
! Base salary of $1 per year, the rest in stock options @ market prices

! 1,550,000 non-qualied stock options were granted at $31.25 per
share
*
in May 2012. 600,000 stock options were granted at $40.30 per
share
*
in October 2013. The options vest over the course of 3 years but
are not exercisable until Stiritz is no longer an ofcer of the Company.
Stiritz was also granted 312,500 restricted stock units.
10 Copyright 2013 Elevation Capital Management Limited
* Closing price of the stock on the date of grant
Bill Stiritz - a long history of value creation
1964 Joined Ralston Purina at the Grocery Products Division (pet food and cereals)
1971 Became General Manager of Grocery Products Division
1981 Named CEO of Ralston Purina Company at the age of forty-seven
1980s Initiated an aggressive stock repurchase program
1984 Acquired Continental Baking
1986 Acquired Energizer Battery from Union Carbide for $1.5 billion
1994 Spun-of a collection of smaller brands into a new entity Ralcorp
1998 Sale of the companys protein businesses to DuPont in a $1.5 billion stock deal
1998 Spun-of Agribrands International
2000 Spun-of Energizer Holdings
2001 Agribrands International acquired by Cargill
2001 Nestle acquired Ralston Purina for $10.4 billion
2008 Ralcorp acquired Post Cereals from Kraft Foods for $2.6 billion
2012 Spun-of Post Holdings from Ralcorp
2013 ConAgra acquired Ralcorp for $5 billion


11 Copyright 2013 Elevation Capital Management Limited
Bill Stiritz has delivered strong returns
12 Copyright 2013 Elevation Capital Management Limited
A dollar invested with Bill Stiritz when he became CEO of Ralston Purina was
worth $57 nineteen years later.
*
* The Outsiders p136-137
He is now at it again
13 Copyright 2013 Elevation Capital Management Limited
Since spin-of in January 2012, the Company has
! Repurchased ~5% of outstanding shares at a price of $30.50 (Sept 2012);
! Acquired Attune Foods for $9 million (Jan 2013);
! Acquired Organic and Natural Cereal, Granola and Snacks Business of Hearthside Food Solutions
for $158 million (May 2013, 7.3x EBITDA);
! Acquired Premier Nutrition Corporation for $180 million (Sept 2013, 8.4x EBITDA);
! Announced acquisition of Dakota Growers Pasta Company for $370 million (Sept 2013, 8.4x
EBITDA);
! Announced acquisition of Golden Boy Foods for CAD 320 million (Dec 2013, 10.6x EBITDA);
! Announced acquisition of Dymatize Enterprises for $380 million (Dec 2013, 9.5x EBITDA)

Posts transformation proceeding rapidly
14 Copyright 2013 Elevation Capital Management Limited
Old New
Post Foods
Ready-To-Eat Cereals (2.5% sales growth in FY13)
US Market = ~US10B (Declining 2.2% in FY13)
Post Foods Attune Foods
Branded and Private Label
Natural / Organic Cereals (High single-digit growth)
Granola and Snack
Active Nutrition
Sports Nutrition and Weight Loss (Double-digit growth)
Meal Replacement Substitutes
Protein Opportunities
Private Label Business
Private Label Servicing
Experienced in private label business from Ralcorp
! Continued rollup following Stiritz's Ralcorp public LBO model
Leverage up to achieve higher returns on equity
Pruning less protable businesses
Expand into related businesses that have higher returns and growth
Opportunistic large share buybacks
! Potential Exit Strategies
Acquisition target for one of its main competitors in the RTE cereals market
! e.g., Quaker Oats (PepsiCo)
Acquisition target for other major players in the Packaged Food Industry
! e.g., ConAgra
Sale to Private Equity or Other
Stiritzs future strategy for Post?
15 Copyright 2013 Elevation Capital Management Limited
Past Transactions = Valuation Benchmark
16 Copyright 2013 Elevation Capital Management Limited
Date Acquirer Target Price EBITDA Multiple
Sep 2013 Joh. A. Benckiser D.E Master Blenders USD9.8B 16x 2013 EBITDA
Feb 2013 BRK/3G HJ Heinz USD27B 13.6x EBITDA
Nov 2012 ConAgra Ralcorp USD5.0B 11.0x EBITDA
July 2012 Campbell Soup Bolthouse Farms USD1.6B 9.5x 2012 EBITDA
April 2012 Nestle Pzer Baby Food Unit USD11.9B 19.8x 2012 EBITDA
*
Feb 2012 Kellogg Pringles (P&G) USD2.7B 11.0x EBITDA (LTM)
July 2011 Nestle Hsu Fu Chi USD1.7B 16.8x EBITDA
*
March 2011 General Mills 50% of Yoplait USD1.12B 12.6x 2010 EBITDA
Jan 2010 Nestle Kraft Foods frozen pizza business USD3.7B 12.5x 2009 EBITDA
Jan 2010 Kraft Cadbury USD19.6B 13.0x 2009 EBITDA
May 2008 Mars Wrigley USD23B 18.1x EBITDA
*
July 2007 Kraft Danone biscuit business USD7.2B 13.2x 2007 EBITDA
Dec 2001 Nestle Ralston Purina USD10.3B 15.7x 2000 EBITDA
Aug 2001 PepsiCo Quaker Oats USD14.4B 16.0x EBITDA
March 2001 Kellogg Keebler Foods USD4.7B 10.5x EBITDA
Oct 2000 Unilever Bestfoods USD25.1B 14.6x EBITDA
Average: 13.0x EBITDA
* Excluded from average calculation
What is Post potentially worth?
17 Copyright 2013 Elevation Capital Management Limited
! Post is currently trading at a range of 10.7x 11.4x Adjusted EBITDA
*
! Industry Transaction Average = 13.0x EBITDA (Based on Elevation Capital data set slide 16)
! If we believe 12x or 13x FY2014 Estimated EBITDA is a fair transaction multiple for the
transforming Post
Post is trading at a discount (34%-79%) to Elevation Capital Value Funds cost basis
Post is trading at a discount (12%-51%) based on a current market price of $47.33 (as at 16
December 2013)
EBITDA
(US$M)
Assumed
EBITDA Multiple
Est. EV
(US$M)
Est. Value per
Share (US$)
Implied Premium /
Discount
**
EC FY2014 Estimated
EBITDA (incl. announced
acquisitions) - Low*
316.2
11x 3,478 $43.50 9%
12x 3,794 $53.17 34%
13x 4,110 $62.84 58%
EC FY2014 Estimated
EBITDA (incl. announced
acquisitions) - High*
337.7
11x 3,715 $50.76 28%
12x 4,053 $61.09 54%
13x 4,391 $71.42 79%
* Based on a share price of $47.33 as at 16 December 2013, and an Elevation Capital estimated FY2014 EBITDA range of $316.2M ($9.67 per share) to $337.7M ($10.33 per share)
** Based on Elevation Capital Value Fund s cost basis of US$ 39.79 per share
Cash Flow + Stiritz = Interesting Opportunity
18 Copyright 2013 Elevation Capital Management Limited
POST FOODS

POST HOLDINGS
Center-of-the-Store
Active Nutrition
Private Label
Others?
Contact Us


Elevation Capital Management Limited
PO Box 911145
Victoria Street West
Auckland 1142
New Zealand

Phone: + 64 9 307 6741
Email: info@elevationcapital.co.nz




Copyright 2013 Elevation Capital Management Limited 19
Independent Tinking
[In-de-pend-ent Tink-ing] indpendnt THiNkiNG verb
Is essential to long term investment success. We are ofen contrarian and do not pay
attention to index compositions when making investment decisions. We believe
that when youre several thousand miles away from Wall Street in a diferent nation,
its easier to be independent and buy the things that other people are selling, and sell
the things that other people are buying. We also believe that cash is sometimes the
most attractive investment.
Disciplined Investing
[Dis-ci-plined In-vest-ing] disciplined investing verb
Te market presents opportunities every day, but disciplined investing is as much
about the opportunities you do not take. Our investments are premised on the
concept of Margin of Safety which we believe reduces risk.
INDEPENDENT THINKING -
DISCIPLINED INVESTING
Manitok Energy Inc.
Vision to see what others overlook
Investors are Hearing the Noise but not Listening to the Facts
Randall Abramson, CFA
CEO and Portfolio Manager
Trapeze Asset Management Inc.
Disclaimer
This presentation is for informational and reference purposes only and shall not be construed to constitute any form of investment
advice. Nothing contained herein shall constitute an offer, solicitation, recommendation or endorsement to buy or sell any security or
other financial instrument. Investment accounts and funds managed by Trapeze Asset Management Inc. may or may not continue to
hold any of the securities mentioned. Trapeze Asset Management Inc., its affiliates and/or their respective officers, directors,
employees or shareholders may from time to time acquire, hold or sell securities mentioned. We have no obligation to update the
information contained herein and may make investment decisions that are inconsistent with the views expressed in this presentation.
It should not be assumed that any of the securities transactions or holdings mentioned were or will prove to be profitable, or that the
investment decisions we make in the future will be profitable or will equal the investment performance of the securities mentioned.
Past performance is no guarantee of future results and future returns are not guaranteed.

This presentation does not take into consideration the investment objectives, financial situation or specific needs of any particular
person. Trapeze Asset Management Inc. has not taken any steps to ensure that any securities or investment strategies mentioned are
suitable for any particular investor. Any information is not to be relied upon in substitution for the exercise of independent judgment.

The information contained herein has been drawn from sources which we believe to be reliable; however, its accuracy or
completeness is not guaranteed. We make no representation or warranties as to the accuracy, completeness or timeliness of the
information, text, graphics or other items contained in this presentation. We expressly disclaim all liability for errors or omissions in, or
the misuse or misinterpretation of, any information contained in this presentation.

All products and services provided by Trapeze Asset Management Inc. are subject to the respective agreements and applicable terms
governing their use. The investment products and services referred to herein are only available to investors in certain jurisdictions
where they may be legally offered and to certain investors who are qualified according to the laws of the applicable jurisdiction.
Nothing herein shall constitute an offer or solicitation to anyone in any jurisdiction where such an offer or solicitation is not authorized
or to any person to whom it is unlawful to make such a solicitation.
Founded in 1999
Affiliated broker-dealer, Trapeze Capital Corp. (TCC), founded in 1998
Traditionally focused on separately managed accounts
TAMI and TCC together have assets under administration of approx. $330 million (12/31/12)
Trapeze provides discretionary portfolio management for institutions and high net worth
individuals, primarily through separately managed accounts. We are value investors seeking long-
term capital growth by investing in securities with potential for above-average appreciation, while
striving to avoid permanent loss of capital. We do so using fundamental research and proprietary
methodologies
About Trapeze
Strategies
60% global
large cap
40% mid and
small cap
100% global
large cap
75%
corporate
bonds
25% dividend
paying equities,
REITs, prefs
Notional guidelines
The Manitok Investment Thesis
Risk / Reward profile is extremely favourable:
Currently trading at $2.15, compared to our estimated value of approximately $4.50 and
growing

Experienced team has deployed approximately $3 billion of capital in the Alberta
Foothills over many years

Majors have shifted budgets away from the Foothills to unconventional resource
plays, the lack of competition reduced land acquisition costs

Relative to unconventional wells, conventional wells decline at lower rates and
have greater reserves, implying quick paybacks and higher IRRs

Stock trades at a significant discount to its peers, its reported NAV and its implied
value despite having a small amount of debt, an impressive track record of drilling
success and production growth

Short Term Noise has Created an Opportunity
Recent flow-through financing created an overhang on the stock

Announced the first disappointing well results, at Cabin Creek, perhaps eliminating
it as a future core area

Previous COO left the company

Entice acquisition created uncertainty about the future direction

WTI declined and Edmonton par differential widened

Downward revision to 2013 guidance due to disappointing third quarter results
related to timing issues and production mix
Investment Risks
Investing in a junior oil and gas, exploration and production company entails
certain risks that are documented in the Companys Annual Information Form and
include the following:

Commodity price volatility
Production rates may decrease in an unpredictable manner
Failure to replace reserves resulting in depletion
Access to capital markets and additional funding requirements
Uncertainty of reserves estimates based on assumptions prepared by third party
engineers
Corporate Snapshot (all figures in CAD)
MEI (TSX Venture Exchange)
Market Capitalization @ $2.15 per share $162 million
Common Shares Outstanding (post October financing) 75,530,640
Insider Ownership (undiluted/diluted) 5.9% / 9.4%
Total Net Debt as at September 30, 2013 $21.4 million

Current Production 5,500 boe/d
Oil Weighting 55%
Proved plus Probable Reserves 15 million boe
Reserve Life Index 13.2 years
Gross Undeveloped Land (84% avg. working interest) 327,900 acres
Asset Package Producing Conventional Oil & Gas in Southern Alberta
The Foothills large contiguous land package in the Alberta Foothills belt, covering
more than 200,000 undeveloped net acres
Prospective for light, sweet Cardium oil and Mannville liquids-rich natural gas

Quirk Creek farm-in on lands held by Legacy Oil + Gas in Southern Alberta
covering 21 gross sections (13,440 gross acres)
Prospective for light, sweet Cardium oil

Entice agreement with Encana grants access to nearly 9 townships (96,800 net
acres) near Calgary, Alberta with provisions in the agreement to capture additional
sections
Primarily prospective for Glauconite, Ellerslie and Nisku light, sweet oil
Oil Price to Remain Robust
The marginal cost of oil production acts as a floor for the oil price
Price may overshoot or undershoot temporarily but the marginal cost of
production has been rising at 11% per year
10
30
50
70
90
110
130
150
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Marginal cost
The Foothills Opportunity
Acquired land in the Foothills near under-utilized infrastructure at attractive prices
as majors shifted focus to unconventional resource plays

Original oil in place of up to 20 million barrels per section over six sections

100% drilling success 20 for 20 in the Stolberg area

Discovery of new Cardium oil sheet at Stolberg could add significant production
and reserves

Potential value creation in the Foothills (including Northern, Central and Southern
Alberta) implies 181 net future development locations and a net present value
@10% of $1.4 billion

The FoothillsStolberg
A conventional folded, thrust-belt formation
Successful exploitation requires experience, seismic data and well control
Large NPVs, high IRRs and quick payouts on Stolberg Cardium wells

MEIs Stolberg Wells Are Best in Class
Average IP rates have been far above the peer group
Continuing Along the Foothills BeltQuirk Creek
Farm-in with Legacy Oil + Gas at Quirk Creek in Southern Alberta
MEI paid 100% of the costs to drill, complete and equip one Hz Cardium
well to earn a 70% WI on 7 sections (3,136 net acres)
First well was successful at 200 boe/d, additional well results by February


The Entice Opportunity
Agreement with Encana to spend $106 million over a three year period

Covers 96,800 net acres, only 25 km from Calgary

Over 55 log leads on potential oil pools, each pool could have between 500,000
and 8 million barrels of recoverable oil

Potential for risked recoverable oil reserves of 180 million barrels based on
primary recovery from Glauconite, Ellerslie, Pekisko, Nisku and other Devonian
formations over multiple zones

Large contiguous land base allows the development of efficient, scalable
operations:
all-in costs per well of $1.6 to $1.9 million
projected IRR of 82% to 150%
NPV of $3.0 million to $9.0 million per well

3 year primary term plus an option to extend for an additional 3 years

Enticethe Next Core Area
Reduces the company-wide risk profile and increases exposure to oil
Impressive Track Record of Growth
-
1,000
2,000
3,000
4,000
5,000
6,000
Q4/10 2010 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13E 2013
exit
Production (boe/d)
Light Sweet Crude Generates Big Netbacks
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
Q4/10 2010 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13
Operating Netbacks ($ per boe)
Yet Trades at a Discount to its Peer Group
$-
$50,000
$100,000
$150,000
$200,000
$250,000
EV/boe/d
Share Price Versus Estimate Value
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
Q
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Share Price Estimated Value at $70,000/boe/d
Note: Estimated value calculated as $70k x average flowing barrels in the quarter minus net debt, divided by
shares outstanding. Q4 2014 estimate is based on exit 2014 production guidance.

Capital Management
October 2013 issued 5.6 million common shares on a CEE flow-through basis at
$3.60 per share and 1.4 million common shares on a CDE flow-through basis at
$3.35 per share

NCIB in place, purchased 2,235,400 common shares YTD at an average price of
$2.62 per share, less than 3 to 4 times next years projected funds from operations
per share

History of well-timed share issuances:


Management are Astute Buyers of the Stock
Hypothetical FCF Calculation from 2014e Production Alone
Manitok Energy
Hypothetical FCF Calculation Stolberg Well Economics
well cost 5
2014E production, annual average 6,100 average WI 75%
decline rate 30% first year rate boe/d 354
barrels to replace (boe/d) 1,830 annualized 129,251
total barrels 667,950
net to MEI 96,938
forecasted funds from operations 70 $ in millions
less maintenance capex 27 $ wells needed 7
FCF 43
per share 0.57 $ maintenance capex 27
multiple 6x 7x 8x
Implied Value 3.43 $ 4.00 $ 4.57 $
Valuation
Has never traded as cheaply relative to its valuation metrics

Currently trading at an EV of $35,000 per boe/d, 4.5x Q3 annualized cash flow and
2.3x 2014 cash flow guidance

Trading at a discount to its 2012 reported reserve based NAV/shr of $2.84

Value added through 2013 and the addition of Entice should raise the current NAV
to approximately $3.50

Should be trading closer to $4.50 per share based on an EV per boe/d of $70,000,
which is supported by the hypothetical FCF valuation

Our private market value estimate is $5.75 per share in a takeout scenario based on
an EV per boe/d of $85,000




Catalysts Going Forward
Management recently released solid guidance for 2014 and should be rewarded
once they deliver on their plans:
Average production 6,000 to 6,200 boe/d
Exit rate 7,100 to 7,500 boe/d
Operating netback of $35.90 per boe
Funds from operations of $68 to $72 million


Pending drilling results:
Stolberg Cardium Hz well #21 production test results anticipated in January
Quirk Creek well #2 is currently being drilled, production testing in February
Entice seismic is currently being reprocessed, drill program to begin later in Q1 2014


Additional Upside
New Cardium sheet at Stolberg could add significantly to production and reserves
in 2014

Success above the conservative expectations at Entice

Any further recovery in natural gas prices could create incremental value for
shareholders since the Foothills Belt contains large, liquids-rich gas resources in the
Cardium and Mannville formations




Return Potential
Could trade at $6.00 per share by the end of 2014 if the stock trades at an EV of
$70,000 per boe/d based on current guidance
Our 3-year target is over $8 per share or >50%/year potential ROR
Full development of the Foothills could create $1.4 billion of value:
Vision to see what others overlook
www.trapezeasset.com

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