Whitney R.

Tilson phone: 646 329 6890

Managing Partner WTilson@KaseCapital.com

April 3, 2017

Dear Partner,

In March, our fund was down 3.0% vs. +0.1% for the S&P 500. Year to date, its down 4.0% vs.
+6.1% for the S&P 500.

Overview
We continue to underperform a raging bull market not just this year and last, but in many ways
going back eight years (we just passed the eighth anniversary of the market bottom in early
March 2009). Its been one of the longest, strongest bull markets in history and nearly all
actively managed funds have struggled to keep up with the S&P 500 index, whose performance
has been driven by a handful of popular tech stocks like Apple, Google, Microsoft, Amazon and
Facebook. And woe unto managers with a short book theyve underperformed the most.

As Ive discussed in past letters, I am not willing to suspend my valuation principles and chase
performance, which is what I believe a lot of human beings, index funds, and high-powered
supercomputers are doing. Instead, I continue to look for stocks that are either undiscovered or
situations in which I believe I have an edge, often by knowing one or more of the key people
(recent examples include Mondelez, CSX and Pershing Square Holdings).

I dont know when this bull market will end but all of them eventually doand when it does,
we will be ready. As Buffett wrote in his latest annual letter:

Charlie and I have no magic plan to add earnings except to dream big and to be prepared mentally
and financially to act fast when opportunities present themselves. Every decade or so, dark clouds
will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur,
its imperative that we rush outdoors carrying washtubs, not teaspoons. And that we will do.

Our fund today is very cash-rich, at 57% long (meaning 43% cash), and well hedged, with 19%
short exposure.

CSX
There was very good news in March regarding our second-largest holding, CSX, when the
company capitulated to the activist campaign led by Mantle Ridge and agreed to install railroad
legend Hunter Harrison as CEO with a four-year contract and appoint five new directors. I am
highly confident that Harrison will once again work his magic and the result will be a 50-100%
gain in the stock in the next 18-36 months. CSX stock, however, was down 4.1% in March, as
Harrisons appointment was widely expected and short-term-oriented investors banked some
profits.

This is what I wrote about CSX in my annual letter:

5 West 86th Street, #5E, New York, NY 10024

 CSX offers us another bite at the Hunter Harrison apple. Harrison is a legend in the railroad
industry for the remarkable turnarounds he led at Illinois Central, Canadian National and, over the
past few years, Canadian Pacific, a very successful investment for us.

I invested in CP in December 2012 after attending the companys analyst/investor day, during
which I met Harrison and saw the remarkable strides the company had already made in less than
six months of his leadership. While the stock had already doubled over the previous 14 months to
~$100, I thought it still had plenty of room to run.

The story initially played out exactly as Id anticipated: the companys revenues rose at a healthy
clip and its operating ratio (a measure of costs) plunged, resulting in soaring earnings and the
stock price followed suit, peaking at over $200 in late 2014. I sold a fair amount of our position in
the high $100s and low $200s, banking substantial profits, and, with the turnaround mostly
complete, exited the position entirely last September.

A nearly identical story is now playing out at CSX. After failing in his attempt to have CP acquire
CSX, Harrison recently resigned from CP and teamed up with former CP board member Paul
Hilal, whos raised a $1+ billion fund focused exclusively on CSX. The goal is to install Harrison
as CEO so that he can work his magic yet again on another chronically underperforming railroad.

I know Harrison well from the years we owned CP, and Paul Hilal has been a close friend for
nearly three decades. I think its highly likely that they will strike a deal with CSX in the very
near future to make Harrison the CEO, and that he will once again far exceed expectations,
driving the stock up 50-100% from its current level of $47.09 in the next 18-36 months.

Mondelez
Our largest position, Mondelez, is down 2.8% this year, but there has been material good news.
When Kraft Heinz bid for Unilever in February, the shares of Mondelez fell because investors
assumed that any bid for the company was now off the table. But only two days later, facing
fierce opposition from Unilever, Kraft Heinz withdrew its bid and Mondelez shares rallied.

I now think its quite a bit more likely that Kraft Heinz will bid for Mondelez, which, unlike
Unilever, would welcome being acquired (at the right price of course my guess is the mid-$50s
vs. todays price of $43). Stay tuned this could happen quickly.

This is what I wrote about Mondelez in my annual letter:

I believe its highly attractive for two primary reasons: first, there is substantial opportunity to
increase margins, as this chart comparing Mondelez to its peers clearly shows:

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 Source: CapitalIQ, 2016 consensus analysts estimates; graph from Pershing Sq. investor
presentation

Second, I wouldnt be surprised to see Kraft Heinz acquire Mondelez in 2017 at a healthy
premium to todays price. There has been widespread speculation about this combination for
some time, but based on my knowledge of the company and many of the key people, I think its
more likely to happen than the consensus view.

Fannie Mae
Fannie Mae declined 33.1% in Q1 in the wake of an unfavorable court ruling in February. You
may recall from the discussion in my annual letter that the stock nearly tripled in the wake of
Trumps election based on investors belief that the Trump administration would strike a deal to
liberate Fannie Mae and Freddie Mac (the government-sponsored entities, or GSEs) from
government control. Heres an excerpt from an interview that Treasury Secretary Steve Mnuchin
did with Maria Bartiromo shortly after the election:

Maria: Would you move to have these privatized?

Mnuchin: Absolutely. We gotta get Fannie and Freddie out of government ownership. It makes
no sense that these are owned by the government and have been controlled by the government for
as long as they have. In many cases this displaces private lending in the mortgage markets and we
need these entities that will be safe; so let me just be clear well make sure that when theyre
restructured theyre absolutely safe and they dont get taken over again but we gotta get them out
of government control.

Maria: This is a big deal. These are huge institutions. You think thatif we saw that as not
complicated, wouldnt that have happened alreadythat it would get out of government?

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 Mnuchin: Well, I think with this administration [Obama] it hasnt been a priority. If it had been
a priority it would have. And in our administration its right up there in the list of the top 10
things that were going to get done and well get it done reasonably fast.

In this scenario, I think the stocks of the GSEs could appreciate 4-10 times, but nevertheless,
after the big run-up, I took some money off the table because this remains a highly risky
situation.

The risks were underscored when a sharply divided appeals court recently ruled 2-1 to largely
uphold a lower-court ruling that was unfavorable to the GSE shareholders. It was the wrong
decision, driven, I believe, not by the legal merits of the plaintiffs case but rather by two judges
not wanting to rule in a way that would enrich the investment funds who own most of the GSEs
stocks, so I think theres a good chance the decision is reversed on appeal.

But the primary way to win here remains a settlement between the shareholders and the Trump
administration. This will take some time, but I think the risk-reward equation here remains
favorable, especially at todays reduced price.

Conclusion
The long bull market has been difficult for fundamental, bottom-up stock pickers like me, but
Im increasingly optimistic that the environment going forward will be much more favorable.

I believe that our portfolio is attractively priced right now and poised to generate healthy,
market-beating returns going forward and should volatility arise, we are exceptionally well
positioned to take advantage of it.

I greatly appreciate your confidence, and remain steadfast in my commitment to earn it. Please
feel free to contact me with any thoughts or questions.

Sincerely yours,

Whitney Tilson

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 Kase Fund Performance (Net) Since Inception
200
Kase Fund
180
S&P 500
160

140

120

100
(%) 80

60

40

20

-20

-40
Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan-
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

Past performance is not indicative of future results.

Kase Fund Monthly Performance (Net) Since Inception

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Kase S&P Kase S&P Kase S&P Kase S&P Kase S&P Kase S&P Kase S&P Kase S&P Kase S&P Kase S&P Kase S&P Kase S&P Kase S&P Kase S&P Kase S&P Kase S&P Kase S&P Kase S&P Kase S&P
Fund 500 Fund 500 Fund 500 Fund 500 Fund 500 Fund 500 Fund 500 Fund 500 Fund 500 Fund 500 Fund 500 Fund 500 Fund 500 Fund 500 Fund 500 Fund 500 Fund 500 Fund 500 Fund 500
January 7.8 4.1 -6.3 -5.0 4.4 3.6 -1.8 -1.5 -5.5 -2.6 4.7 1.8 1.1 -2.4 1.9 2.7 2.4 1.7 1.9 -5.9 -3.6 -8.4 -1.6 -3.6 -2.8 2.4 12.6 4.5 4.5 5.2 -2.2 -3.5 -6.0 -3.0 -7.4 -5.0 0.2 2.0

February -2.9 -3.1 6.2 -1.9 -0.6 -9.2 -1.1 -2.0 2.9 -1.6 7.0 1.5 2.1 2.0 -3.1 0.2 -3.3 -2.1 -6.9 -3.3 -8.9 -10.8 7.3 3.1 4.1 3.4 -0.8 4.3 0.8 1.4 9.1 4.6 8.6 5.7 0.2 -0.1 -1.1 3.9

March 4.1 4.0 10.3 9.8 -2.6 -6.4 3.0 3.7 1.4 0.9 3.9 -1.5 3.9 -1.7 3.9 1.3 -0.8 1.1 -2.3 -0.5 2.9 9.0 4.6 6.0 -4.1 0.0 10.9 3.3 1.3 3.8 1.7 0.8 0.5 -1.6 3.9 6.8 -3.0 0.1

April 2.1 3.7 -5.1 -3.0 5.1 7.8 -0.2 -6.0 10.5 8.2 2.4 -1.5 0.6 -1.9 2.2 1.4 4.4 4.6 -0.9 4.9 20.1 9.6 -2.1 1.6 1.9 3.0 1.3 -0.6 0.1 1.9 2.1 0.7 0.5 1.0 0.7 0.4

May -5.7 -2.5 -2.8 -2.0 1.8 0.6 0.0 -0.8 6.6 5.3 -1.4 1.4 -2.6 3.2 1.8 -2.9 2.5 3.3 7.9 1.2 8.1 5.5 -2.6 -8.0 -1.9 -1.1 -13.6 -6.0 2.8 2.3 2.6 2.3 -1.9 1.3 -0.3 1.8

June 2.2 5.8 4.1 2.4 4.6 -2.4 -7.3 -7.1 2.9 1.3 0.1 1.9 -3.1 0.1 -0.2 0.2 -3.0 -1.5 -1.2 -8.4 -5.0 0.2 4.5 -5.2 -2.4 -1.7 0.5 4.1 -1.0 -1.3 -0.3 2.1 -4.5 -1.9 -2.1 0.3

July -0.7 -3.2 -3.6 -1.6 -1.1 -1.0 -5.0 -7.9 2.3 1.7 4.6 -3.4 0.5 3.7 -0.9 0.7 -5.4 -3.0 -2.5 -0.9 6.8 7.6 3.5 7.0 -4.6 -2.0 0.2 1.4 -0.1 5.1 2.0 -1.4 -1.1 2.1 0.8 3.7

August 4.1 -0.4 5.4 6.1 2.5 -6.3 -4.3 0.5 0.4 1.9 -0.9 0.4 -3.2 -1.0 2.9 2.3 1.7 1.5 -3.3 1.3 6.3 3.6 -1.5 -4.5 -13.9 -5.4 -7.2 2.3 -5.8 -2.9 -0.2 4.0 -2.9 -6.0 0.1 0.1

September -3.3 -2.7 -7.2 -5.3 -6.1 -8.1 -5.4 -10.9 1.7 -1.0 -1.6 1.1 -1.5 0.8 5.0 2.6 -1.1 3.6 15.9 -9.1 5.9 3.7 1.7 8.9 -9.3 -7.0 0.0 2.6 3.9 3.1 -1.7 -1.4 -3.8 -2.5 -3.3 0.0

October 8.1 6.4 -4.5 -0.3 -0.8 1.9 2.8 8.8 6.2 5.6 -0.4 1.5 3.5 -1.6 6.3 3.5 8.2 1.7 -12.5 -16.8 -1.9 -1.8 -1.7 3.8 7.0 10.9 1.6 -1.9 5.6 4.6 -1.4 2.5 8.2 8.4 1.8 -1.8

November 2.8 2.0 -1.5 -7.9 2.3 7.6 4.1 5.8 2.2 0.8 0.8 4.0 3.1 3.7 1.9 1.7 -3.6 -4.2 -8.9 -7.1 -1.2 6.0 -1.9 0.0 -0.6 -0.2 -4.5 0.6 0.2 3.0 2.6 2.7 -1.7 0.3 9.3 3.7

December 9.8 5.9 2.3 0.5 6.5 0.9 -7.4 -5.8 -0.4 5.3 -0.2 3.4 -1.3 0.0 1.4 1.4 -4.3 -0.7 -4.0 1.1 5.5 1.9 0.5 6.7 0.1 1.0 0.1 0.9 3.6 2.5 -0.4 0.3 -2.4 -1.6 0.6 2.0
YTD
31.0 21.0 -4.5 -9.1 16.5 -11.9 -22.2 -22.1 35.1 28.6 20.6 10.9 2.6 4.9 25.2 15.8 -3.2 5.5 -18.1 -37.0 37.1 26.5 10.5 15.1 -24.9 2.1 -1.7 16.0 16.6 32.4 13.7 13.7 -7.3 1.4 3.8 12.0 -4.0 6.1
TOTAL

Past performance is not indicative of future results.

Note: Returns in 2001, 2003, 2009 and 2013-2016 reflect the benefit of the high-water mark, assuming an investor at inception.

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The T2 Accredited Fund, LP (dba the Kase Fund) (the Fund) commenced operations on January 1,
1999. The Funds investment objective is to achieve long-term after-tax capital appreciation
commensurate with moderate risk, primarily by investing with a long-term perspective in a concentrated
portfolio of U.S. stocks. In carrying out the Partnerships investment objective, the Investment Manager,
T2 Partners Management, LP (dba Kase Capital Management), seeks to buy stocks at a steep discount to
intrinsic value such that there is low risk of capital loss and significant upside potential. The primary
focus of the Investment Manager is on the long-term fortunes of the companies in the Partnerships
portfolio or which are otherwise followed by the Investment Manager, relative to the prices of their
stocks.

There is no assurance that any securities discussed herein will remain in Funds portfolio at the time you
receive this report or that securities sold have not been repurchased. The securities discussed may not
represent the Funds entire portfolio and in the aggregate may represent only a small percentage of an
accounts portfolio holdings. The material presented is compiled from sources believed to be reliable and
honest, but accuracy cannot be guaranteed.

It should not be assumed that any of the securities transactions, holdings or sectors discussed were or will
prove to be profitable, or that the investment recommendations or decisions we make in the future will be
profitable or will equal the investment performance of the securities discussed herein. All
recommendations within the preceding 12 months or applicable period are available upon request. Past
results are no guarantee of future results and no representation is made that an investor will or is likely to
achieve results similar to those shown. All investments involve risk including the loss of principal.

Performance results shown are for the Kase Fund and are presented net of all fees, including management
and incentive fees, brokerage commissions, administrative expenses, and other operating expenses of the
Fund. Net performance includes the reinvestment of all dividends, interest, and capital gains.

The fee schedule for the Investment Manager includes a 1% annual management fee and a 20% incentive
fee allocation. In practice, the incentive fee is earned on an annual, not monthly, basis or upon a
withdrawal from the Fund. Because some investors may have different fee arrangements and depending
on the timing of a specific investment, net performance for an individual investor may vary from the net
performance as stated herein.

The return of the S&P 500 and other indices are included in the presentation. The volatility of these
indices may be materially different from the volatility in the Fund. In addition, the Funds holdings differ
significantly from the securities that comprise the indices. The indices have not been selected to represent
appropriate benchmarks to compare an investors performance, but rather are disclosed to allow for
comparison of the investors performance to that of certain well-known and widely recognized indices.
You cannot invest directly in these indices.

This document is confidential and may not be distributed without the consent of the Investment Manager
and does not constitute an offer to sell or the solicitation of an offer to purchase any security or
investment product. Any such offer or solicitation may only be made by means of delivery of an approved
confidential offering memorandum.

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