Black Swan Dexteritas

We are a private, independent investment management firm focused in the technology sector.

At Black Swan Dexteritas, we are dedicated to generating strong financial performance for our investors and fostering long-term relationships with our clients to create exceptional investment opportunities while keeping in mind each client’s return and risk objectives. We promote strong independent governance and frequent reporting, and strive to provide superior transparency for all of our investors.

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Who We Are

Black Swan Dexteritas
Black Swan Dexteritas Inc. (“BSD”) was founded in 2012 by Kim Bolton and is a technology focused investment management firm. BSD’s objective is to achieve superior performance in the markets by utilizing a bottoms-up approach in finding mispriced stocks within the technology sector and diversifying within various subsectors to minimize risks while maximizing returns. At BSD, we work closely with each client to understand their return and risk objectives, which may span from capital preservation to cash flow generation.

We believe superior transparency is the key to showing our conviction and commitment to what we do at Black Swan Dexteritas. We publish a “Weekly Commentary” to our investors to keep them updated on key economic drivers and portfolio related news, and inform of the performance results and holdings held within the fund.

Black Swan Dexteritas Inc. is a private, independent investment management firm. We are a registered Investment Fund Manager, Portfolio Manager, Commodity Trading Manager and Exempt Market Dealer with the Ontario Securities Commission.

As of April 2017, we manage USD $47,500,000 under all of our investment platforms.

Major Milestones
MARCH 2012 – Incorporated as a Canadian, Ontario based, investment management company

DECEMBER 2012 – Ontario Securities Commission (“OSC”) grants BSD their Investment Fund Manager, Portfolio Manager and Exempt Market Dealer registration

MAY 2013 – OSC grants BSD their Commodity Trading Manager license

JULY 2013 – BSD initiates the systematic Global Technology Hedge Fund investment thesis

OCTOBER 2013 – The Cayman Emerging Manager Platform (“EMP”) / BSD Global Technology Hedge Fund launched.

MAY 2014 – BSD Global Technology Hedge Fund was chosen to be the sub-adviser of Redwood Asset Management’s Pension Class Mutual Fund.

JUNE 2014 – BSD successfully completed their OSC Field Compliance Review.

MAY 2015 – BSD Global Tech Hedge Fund L.P.

Investment Team

Our Approach

Why Invest in a Global Technology Hedge Fund?

The technology sector has traditionally served as an essential constituent in any investment portfolio, and we believe that innovation and invention often associated with this sector will ultimately drive the next leg of growth in the stock market. We seek out technology companies that have proprietary technologies which will provide them with the competitive advantage for sustainable growth, and favor companies that have a stellar track record in pushing the frontiers of technology in their respective subsectors. At BSD, we believe buying and holding these companies and are trading at reasonable valuations will maximize our returns and minimize our risks over the long term.

At BSD, we have formed an Investment Advisory Committee for the team to seek out global technology themes and trends to overweight and underweight various subsectors. The Committee consists of the BSD team and investors that have significant experience in the technology field.
We utilize a proprietary system to identify potential investment opportunities in the universe of technology stocks through quantitative means. Many metrics are considered such as the company size, growth stage, margins, and recent price action that may indicate oversold/overbought stocks.
The attractiveness of the subsector is determined by doing extensive research on market trends and Total Addressable Market. We then make an assessment on whether the sector fits our growth stage criteria for the stocks we hold in our portfolio. Levels of competition in the subsector is also crucial in our assessment for the subsector to determine if long term value exists for all of our investments.
Upon finding a suitable investment for our portfolio, we engage in further due diligence including but limited to analyzing company business model, quarterly/annual reports, earnings/conference calls, and proprietary research. Recent events and news are analyzed more closely to determine if any material changes have occurred in the company that may lead to a secular shift in business model and ultimately price trends.
We believe that sound diversification within this sector is key to maximizing risk-adjusted returns. We hold 35 to 40 stock positions in different technology subsectors to gain exposure to the broader market where opportunities in other industries may exist. Despite having a remarkable investment approach in place, we also utilize many hedging tools at our disposal to minimize volatility and ultimately reducing our drawdowns. We use various derivatives to generate additional alpha for the portfolio by keeping a close watch on market sentiments and macro-driven events and positioning our portfolio accordingly.

Global Technology Fund

Investment Thesis

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The derivatives overlay portion of the portfolio both hedges and leverages our stock portfolio by evaluating macro fundamentals, technicals and capital flow investment changes, and using futures and options on futures in equity indices, ETFs, fixed income products, commodities and currencies, to opportunistically capitalize on these events. The derivatives are positioned to lessen the volatility of our downside risk and complement our long bias mandate.

Our proprietary investment process and risk management process will appeal to investors by shielding subscribers from costly setbacks when markets fall and earning respectable returns with a hurdle rate of 8%.

Performance

Fund Platform
Cayman EMP /
BSD Global Tech
Hedge Fund

LAUNCH DATE October 1st, 2013
TOTAL ASSETS USD $5,600,000
STRUCTURE Segregated Portfolio
ELIGIBLE INVESTORS Foreign Investors
RRSP ELIGIBILITY No
BENCHMARK 50% Nasdaq Composite and 50% Russell 2000
INVESTMENT MANAGER Emerging Asset Management Ltd, Bermuda
INVESTMENT ADVISOR Black Swan Dexteritas Inc., Toronto
CUSTODIAN / PRIME BROKER Interactive Brokers LLC, Greenwich, CT
FUND ADMINISTRATOR Apex Fund Services Ltd., Bermuda / Toronto
AUDITORS Deloitte LLP, Walkers LLP
LEGAL ADVISORS Walkers LLP, Stikeman Elliott, Toronto

BSD Global Tech Hedge Fund L.P.

LAUNCH DATE May 5th, 2015
TOTAL ASSETS USD $1,000,000
STRUCTURE G.P./L.P.
ELIGIBLE INVESTORS North American Investors
RRSP ELIGIBILITY No
BENCHMARK 50% Nasdaq Composite and 50% Russell 2000
INVESTMENT MANAGER BSD G.P. Inc., Toronto
INVESTMENT ADVISOR Black Swan Dexteritas Inc., Toronto
CUSTODIAN / PRIME BROKER Interactive Brokers LLC, Greenwich, CT
FUND ADMINISTRATOR Apex Fund Services Ltd., Toronto
AUDITORS MNP LLP
LEGAL ADVISORS Stikeman Elliott, Toronto

Separately Managed
Accounts

LAUNCH DATE May 1st, 2015
TOTAL ASSETS USD $33,500,000
STRUCTURE Account Specific
ELIGIBLE INVESTORS North American Investors
RRSP ELIGIBILITY No
BENCHMARK 50% Nasdaq Composite and 50% Russell 2000
INVESTMENT MANAGER Account Specific
INVESTMENT ADVISOR Black Swan Dexteritas Inc., Toronto
CUSTODIAN / PRIME BROKER Interactive Brokers LLC, Greenwich, CT
FUND ADMINISTRATOR Account Specific
AUDITORS Account Specific
LEGAL ADVISORS Account Specific

Terms and Conditions
Cayman EMP /
BSD Global Tech
Hedge Fund

VALUATION DATE Last business day of month
MINIMUM INVESTMENT $150,000
REDEMPTIONS Monthly
MER CEILING 2%
MANAGEMENT FEE 2%
PERFORMANCE FEE 20%
HIGH WATER MARK Yes
HURDLE RATE 8%

BSD Global Tech Hedge Fund L.P.

VALUATION DATE Daily
MINIMUM INVESTMENT $50,000
REDEMPTIONS Monthly
MER CEILING 3%
MANAGEMENT FEE 2%
PERFORMANCE FEE 20%
HIGH WATER MARK Yes
HURDLE RATE 8%

* Management fees and expenses may be associated with hedge fund investments. Please read the BSD Global Tech Hedge Fund S.P. Supplement before investing. Hedge funds are not guaranteed, their values change frequently and past performance may not be repeated. The indicated rate of return is the historical compounded total return including changes in share value and reinvestment of all dividends.

** The benchmark is a blend of 50% Nasdaq Composite Index and 50% Russell 2000 Index. The blended index is chosen as the indices are generally followed as indicators of the performance of technology stocks and growth stocks, and our portfolio has approximately 50% of positions more correlated with the Nasdaq Composite Index, and 50% of positions more correlated with the Russell 2000 Index.

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News

  • Weekly BSD Global Tech Hedge Fund Update

     What happened this past week? Global stock exchanges experienced quite a bit of volatility but didn’t make much net movement (the SPX was about flat; the Nasdaq lost 70 bps; the major European bourses were higher by 50 bps; and, although the Shanghai Composite did rally ~2.5% on Friday this only cut the week-to-date lose to ~ 2.2%). The makeup of the U.S. market though wasn’t terrific – important sub-groups like banks, semis, cap goods, transports, materials, and autos all underperformed badly while utilities, telecoms, staples, and REITs surged. U.S. economic growth is still on a strong path and the FOMC policy bias has become quite hawkish (a large majority of Fed officials seem comfortable taking the Fed Funds rate into restrictive territory according to the minutes this week) but the rest of the world is on a more nebulous economic footing (China’s data wasn’t awful this week but growth is clearly decelerating). The U.S.-China trade backdrop has actually improved quite a bit in the last couple of weeks (if anything this may now be an upside risk to the extent Trump and Xi meet at the G20 and some type of a détente is achieved) but Italy is still a very severe macro overhang (the S&P hasn’t paid too much attention to Italy but woke up to the problem this week as the Bund-BTP 10 year spread blew through 300bps). Corporate earnings has been a powerful firewall, acting as a shield for the S&P from the multitude of macro headwinds, but it’s been fraying at the margin of late and this more than anything explains why the S&P has traded so poorly since the start of October (PPG is far from a bellwether of Corporate America but its preannouncement back on October 8 did more than anything to blow a hole through the EPS firewall and that breach made the S&P much more sensitive to macro problems). The first half of October gloom is probably overdone and the Q3 reporting season when all is said and done will likely look better than it does at the end of this week (and the ~$179 consensus for 2019 should stay intact which means the PE below 2800 is attractive at sub 16x). Meanwhile, U.S.-China at this point is turning into an upside risk. However, the reports during the week of October 22 will be crucial to re-establishing the EPS firewall (and specifically, CAT/MMM/PHM/PNR/UTX/VZ (Tuesday morning), TXN (Tuesday night); BA/FCX/GD/ITW/T/UPS (Wednesday morning), AMD/F/MSFT/V/XLNX (Wednesday night); and, AMZN/CY/EXPE/GOOGL/INTC/WDC (Thursday night) and until that shield is back in place the S&P will churn between 2750-2800 (and if the earnings firewall attenuates further, the index could revisit its lows or worse). The big focus in the coming week will be on earnings (the week of October 22 is the peak volume period of the Q3 season with a third of the Dow index and 30% of the S&P 500 reporting) although a few macro catalysts will be important, including the flash PMIs for October (Wednesday, October 24), the ECB meeting (Thursday, October 25), U.S. Q3 GDP (Friday, October 26), and Italy (the EU and rating agencies are expected to weigh in on the budget).   The bottom line is, the non-fundamental stage of the recent sell-off may take a few more days to shake out, but the equity markets have a compelling risk/reward around the world and this October correction should be thought of as an opportunity. Your BSD Global Tech investment mandate is 100% fully invested across 10 tech vendor sectors and a number of legitimate technology end-users, while carrying a substantial slightly out-of-the-money put option position to protect us from those unexpected market drawdowns. If the market’s fundamental / technical / capital flow foundations suffer a material change, We will adjust our long biased stock portfolio and our derivatives hedge. We have a ‘shopping list’ of technology vendors and end-users ready to invest when those inevitable pullbacks occur. Meanwhile, our technology stock portfolio still permits us to participate in the melt-up of this secular bull market.

  • Daily BSD Global Tech Hedge Fund Update

    Overnight, China said its economy grew by 6.5% in the third quarter, missing expectations. Chinese equities surged, however, as officials took steps to support the market. European markets closed flat as Brussels looked to reduce tensions with Italy. The U.S. stock markets started the day surging as P&G shares led the DOW higher after strong sale numbers. After the European close, a couple of the regional Federal Reserve offices cut their Q3 and Q4 GDP forecasts, which for the remainder of the trading day had investors look to take risk off. Options expiration has led to a jump in volumes and trepidation remains high considering the recent jump in volatility and the well-chronicled history around late October trade.

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