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

  • Daily BSD Global Tech Hedge Fund Update

    Japanese markets closed higher for an 11th straight session while a broader index of Asian shares was little changed on Tuesday. European markets closed lower today, as investors monitored the latest political developments in the euro zone. The Dow lifted above the 23K mark for the first time, helped by earnings reports from UNH and JNJ, but pared to end the day slightly below the milestone. The Nasdaq and S&P were little changed on the session. The U.S. Treasury curve flattened, narrowing in the 30-5-year spread to its lowest level in 10 years. Short rates held the gains after a hotter than expected September import price index reading. The Canadian dollar and peso saw volatility after a joint statement from Canadian and Mexican NAFTA negotiators that indicated talks will extend past this year, and U.S. Trade Represenative Lighthizer expressed dismay at the deal’s slow progress. Today’s gainers were healthcare and telecom, with most other sectors ending the day in the red. The Greenback lifted across the board as Brexit concerns and Catalonia continued to weigh on FX sentiment. Gold prices dropped back below $1,300 as the dollar firmed. Oil prices saw early gains evaporate as Iraq production appears to remain untouched, despite the unrest in the Kurdish region. – After Market Movers: – HCLP Resumes $0.15/unit distribution in Q3; Announces $100M unit Buyback program (12.3% of market cap); +14.0% afterhours – IBM Reports Q3 $3.30 v $3.28e, Rev $19.2B v $18.7Be; Affirms FY17 ‘at least $13.80’ v $13.78e; +3.2% afterhours – NAVI Reports Q3 $0.55 v $0.50e, Rev $355M v $365Me; -1.6% afterhours – SCSS Reports Q3 $0.62 v $0.68e, Rev $403M v $415Me; Refreshes share buyback to $500M (40% of market cap); -5.4% afterhours – MOBL Reports prelim Q3 Rev $42-43M v $45Me; Names CFO to CEO post, effective immediately; -10.5% afterhours

  • Weekly BSD Global Tech Hedge Fund Update

    There were a lot of headlines this past week, but the broader narrative didn’t shift dramatically (the Dow, S&P, and Nasdaq all climbed ~20-40bp, while the R2K finished down `50bp, the European bourses finished the week flat, and the Asian market played catch-up from the previous week’s holidays). However, an evolution does appear to be occurring at the margin with regards to reflation – after several weeks of pro-reflation headlines (going back to China’s inflation numbers of 9/11), the tenor of news will likely turn more mixed and as a result the powerful reflation trade could enter a period of consolidation (at least). Meanwhile the clouds in Washington are growing darker by the day (i.e. the Trump-Corker feud, the White House hardline immigration and NAFTA demands …). Earnings season takes centre stage in the coming week with dozens of major companies reporting third-quarter earnings. Companies reporting include Netflix on Monday; Johnson & Johnson, IBM, Goldman Sachs and UnitedHealth on Tuesday; United Continental and Abbot Labs on Wednesday; Verizon and Blackstone on Thursday, and GE, Proctor & Gamble and Honeywell on Friday. Forecast for the S&P 500 earnings overall have come down sharply, and the last big cut came as analysts assessed the damage to insurance company profits from Category 4 hurricanes hitting the southern U.S. and Puerto Rico. After the second quarter’s big 12 percent jump in S&P 500 profits, third-quarter earnings are expected to grow by just 4.4 percent, or 7.1 percent if insurers are excluded. The earnings season outlook gets tougher from here, especially by Q1 2018. Last year’s year-over-year earnings growth for S&P 500 companies makes for increasingly tough comps. As a result, in early 2018, it;s going to get tougher to be bullish. This recent market melt-up is typical of final, climatic stages of a secular bull market, and there’s pretty compelling evidence of things getting stretched, but trying to predict a market pullback is a gambler’s game, which BSD will not get sucked into. The BSD Global Tech Hedge Fund is up 22.3% year-to-date, and 570 bps ahead of our 50/50 Nasdaq/Russell benchmark, while carrying a 50% short equity indice derivatives position (on the notional value of the stock portfolio), which will protect us from inevitable market drawdowns. Eventually, We will be given the opportunity to take profit on our short derivatives hedge, and employ our gains, and cash, into our ‘shopping list’ of technology vendors and technology end-users. Meanwhile, our stock portfolio will still permit us to participate in the melt-up of this secular bull market.

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