aravis funds | spyglass us growth fund (ucits) - investor … update/q1... · 2021. 4. 22. ·...

Investor Update PresentationQ1 2021

• Founded in 2015

• Independently owned investment manager

• Headquartered in San Francisco, CA

• Nine Employees

Four-member research team

Five-member operations and marketing team

• $3.8 billion in assets under management

Spyglass Capital Management LLC

These materials may contain statements which may be considered “forward-looking statements,” which are not historical in nature. Words such as “anticipate,” “believe,” “could,”“estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “target” and “would” or words intended to identify such statements. These forward-looking statements include,among other things, projections, forecasts, estimates or hypothetical calculations with respect to income, yield or return, future performance targets, or potential future investments.No representation is made as to the accuracy, validity or relevance of any such forward-looking statement, and actual events are difficult to predict and may be substantiallydifferent. All forward-looking statements are based on our view on the date of this report, unless otherwise specified.

Firm Overview (as of 03/31/2021)

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The Spyglass Team and Outsourced Partners


James A. RobillardFounder, Managing Member & Chief Investment Officer

William X. MinorCFO & CCO

Patrick T. HigginsCOO & Head of Trading

Justin M. CharlesSenior Research Analyst

Denis R. ClohisyResearch Analyst

Research Operations

Williams TradingOutsourced Broker

Lance Marciano, Principal/COOKevin Monahan, Principal

Client Relations

Shane ChristiansenExecutive Assistant

Jacob M. GottaSenior Research Analyst

Jason K. BlatterVP, Operations & Trading

ACA Compliance Outsourced Compliance

Vanessa Fiore, Principal Consultant

Cowen Prime ServicesOutsourced BrokerHarry Shillingford, Managing Director

Peter R. KrisChief Client Officer

Dakota FundsOutsourced Marketing

Gui Costin, CEODan DiDomenico, President

Four-Member Client Relations Team

Aravis CapitalOutsourced Marketing

James Parker, Managing DirectorJames Alexander, Executive DirectorFour-Member Client Relations Team

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Investment Philosophy

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Value investors in rapidly growing companies

• Alpha Generation: Identify rapidly growing companies in secular growth markets

• Independent Fundamental Research: Model businesses out five years to exploit market inefficiencies

• Present Value Calculation: Provides “margin of safety” based on expected business fundamentals

• 25 Stocks: Concentrated strategy of best risk-adjusted investment ideas

Investment Process

Spyglass Capital Management LLC5

Fundamentally driven, independent, bottom-up research is our “Spyglass”

Spyglass builds a 25-stock portfolio of our best risk-adjusted ideas

Broad growth stock universe

Spyglass portfolio25 companies

Deep-dive analysis~100 high-quality growth

companies

Initial screen~250 companies

Valuation & portfolio construction

~40-60 companies

• Leadership position in secular growth industry

• Inspiring management team proven track record

• Sustainable competitive advantages

• Above-average long-term revenue growth

• Above-average long-term earnings growth

• Financially sound

• Attractive valuation

Seven Core Investment Criteria Required for Investment:

Stock price above the PV line: Represents increased risk

Stock price below the PV line:Represents increased opportunity

Discounted PV

Margin of Safety

How Spyglass thinks about volatility – in the absence of a change in fundamentals:

Stock Price

$

Time



Portfolio Construction

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• 25 stocks

• Position size limit of 7%

• Sub-industry concentration limit of 25%

• Diversified across sectors

• Diversified across growth rates

• Diversified across maturity of investment thesis

• Position sizes driven by discount to risk-adjusted present value


Portfolio is segmented into three growth-rate buckets:

Bucket 1: 10-15% revenue growth, 12-17% earnings growth with earnings growing more rapidly than revenues

Bucket 2: 15-25% revenue and earnings growth with a balanced relationship between revenue growth andoperating leverage

Bucket 3: +25% revenue growth rate will sometimes exceed earnings growth rates as the company invests in long-term growth which will eventually achieve scale


Discount Rate

Growth Rate

Bucket 110-15%

Bucket 3+25%

Bucket 215-25%

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Phase 2

Phase 1

Phase 3


Phase 3: Market broadly understands the key variables of the thesis however full value of the opportunity has not been realized


Portfolio is segmented into three phases:

Phase 2: Other investors are beginning to contemplate the variables Spyglass considers most important

Phase 1: Opportunity appears to by misunderstood by the broad market

Portfolio Construction (as of March 31, 2021)


Bucket 1 Bucket 2 Bucket 3Phase Weight

17%

51%

31%

Phase 3

Phase 2

Phase 1

Bucket Weight

32% 33% 34%

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Level 1 Level 2 Level 3

Near Term Business Model Impact

Slightly Positive to Slightly Negative

Moderately Negative Significantly Negative

Portfolio Weighting 27% 40% 32%


Business Model Impact of COVID-19 Crisis on Spyglass Portfolio

Portfolio Construction (as of March 31, 2021)

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Portfolio Overview (as of March 31, 2021)

Top 5 Holdings (3) Weighting

Splunk Inc. 5.9%

Affiliated Managers Group, Inc. 5.7%

Exact Sciences Corp. 5.3%

Beyond Meat, Inc. 5.2%

Palo Alto Networks, Inc. 5.1%

(1) Portfolio characteristics for Spyglass Capital provided by Bloomberg. Russell Midcap Growth (TR) characteristics and Russell 2500 Growth (TR) characteristics reflect Index factsheet data provided by FTSE Russell. S&P 500 (TR) data characteristics reflect SPDR S&P 500 ETF data provided by Bloomberg and S&P Global. In periods prior to October 2019, S&P 500 (TR) weighted market cap reflected the mean.

(2) Portfolio sector weightings are determined by the Bloomberg Industry Classification Standard (BICS) Industry SubGroup. Any deviation from a total equaling 100.00% is due to rounding. (3) Holdings, Characteristics and Market Cap information are based on a Spyglass Representative Portfolio.

Characteristics(1)Spyglass Capital(3)

Russell Midcap Growth

Russell 2500

Growth S&P 500

Weighted Market Cap (Billions) 21.3 24.6 7.7 468.5

Median Market Cap (Billions) 11.7 12.6 1.7 29.1

Number of Holdings 25 358 1,353 505

Long-term Earnings Growth Rates 25% 20% 17% 12%

Aerospace/Defense, 2.66%

Cash, 1.03%Commercial Services - Financial, 4.76%

Computer Software, 9.87%

E-Commerce/Products, 2.57%

E-Commerce/Services, 4.84%

Enterprise Software, 5.48%

Food, 5.20%

Internet Content-Entertainment, 4.70%

Internet Security, 9.95%

Investment Management/Advisory

Services, 5.72%

Medical - Biomedical/Gene, 8.56%

Medical - Drugs, 3.61%

Networking Products, 3.95%

REITS - Diversified, 2.13%

Resorts/Theme Parks, 3.24%

Retail - Automobile, 3.08%

Retail -Miscellaneous/Diversified,

3.97%

Retail - Perfume & Cosmetics, 4.54%

Retail - Restaurants, 2.52% Schools, 3.59%

Web Hosting/Design, 4.02%

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<$6B $6-12B $12-18B $18B+

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Portfolio Details

Inception Date October 1, 2015

Number of Holdings 25

Strategy AUM $3.8b

Active Share 94.0%

Portfolio Turnover (1 Year) 35.6%

Portfolio Companies Grouped by Market Cap(3)

Portfolio Sector Weightings(2)


Annualized Net Performance

Performance numbers are unaudited. Past Performance does not guarantee future results. There is no guarantee the recommended strategy will be successful. Spyglass Inception to Date: 10/01/2015. Performance is a composite calculated in a GIPS compliant manner. Russell Midcap Growth (TR) Index returns, Russell 2500 Growth (TR) Index returns, returns include dividends. Data source: Bloomberg and FTSE Russell.

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(October 2015 – March 2021)

0.5%

62.1%

99.0%

33.9%27.5%

23.5%

-0.6%

35.6%

68.6%

19.4% 18.4% 17.5%

2.5%

40.5%

87.5%

20.0% 19.9% 18.1%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

QTD 2021 FY 2020 1 YR 3 YR 5 YR Since Inception

Spyglass Capital Russell Midcap Growth (TR) Russell 2500 Growth (TR)

QTD FY 2020 1 YR 3 YR 5 YR Since Inception

Spyglass Capital 0.5% 62.1% 99.0% 33.9% 27.5% 23.5%

Russell Midcap Growth TR -0.6% 35.6% 68.6% 19.4% 18.4% 17.5%

Russell 2500 Growth TR 2.5% 40.5% 87.5% 20.0% 19.9% 18.1%

Earnings Based Valuations Most Recently Reported Qtr Spyglass Est.Y/Y Sales Y/Y EPS Sales surprise EPS surprise 5 Year EPS (2)

Ticker Wgt Company Name Growth Growth vs consensus vs consensus Growth RatePCRX 3.6% Pacira BioSciences Inc 7% 55% -1% 5% 17%TWTR 4.7% Twitter Inc 28% 52% 8% 25% 28%SQ 4.8% Square Inc 141% 39% -2% 34% 61%PANW 5.1% Palo Alto Networks Inc 25% 29% 3% 28% 17%CMG 2.5% Chipotle Mexican Grill Inc 12% 22% 0% -7% 26%FIVE 4.0% Five Below Inc 25% 12% 2% 4% 20%ANET 4.0% Arista Networks Inc 17% 9% 3% 4% 15%EQIX 2.1% Equinix Inc 10% 5% 0% 0% 10%GDDY 4.0% GoDaddy Inc 12% 2% 1% 10% 16%AMG 5.7% Affiliated Managers Group Inc 0% -7% 7% 14% 14%ULTA 4.5% Ulta Beauty Inc -5% -12% 6% 48% 15%MTN 3.2% Vail Resorts Inc -26% -28% 6% 61% 14%PFPT 4.9% Proofpoint Inc 13% -56% 2% NA 15%TDG 2.7% TransDigm Group Inc -24% -60% 0% 3% 17%BFAM 3.6% Bright Horizons Family Solutions Inc -28% -64% 1% NA 17%ASND 3.3% Ascendis Pharma A/S NA NA NA NA NA

59.4% 17% 0% 3% 18% 24%

Revenue Based Valuations Most Recently Reported Qtr Spyglass Est.Y/Y Sales Y/Y EPS Sales surprise EPS surprise 5 Year EPS (2)

Ticker Wgt Company Name Growth Growth vs consensus vs consensus Growth RateEXAS 5.3% Exact Sciences Corp 58% 5% 32%SPLK 5.9% Splunk Inc 41% 10% 23%EVBG 1.9% Everbridge Inc 32% 4% 26%SVMK 3.6% SVMK Inc 20% 1% 21%VRM 3.1% Vroom Inc 14% 1% 41%SFIX 2.6% Stitch Fix Inc 12% -2% 26%BYND 5.2% Beyond Meat Inc 4% -2% 52%NTNX 4.0% Nutanix Inc 0% 6% 11%LYFT 4.8% Lyft Inc -44% 2% NA

Average 36.4% 15% 3% 29%

Spyglass Weighted Average 16% 25%Russell 2500 Growth Index (1) 2% NA 17%Russell MidCap Growth Index (1) 11% 4% 20%S&P 500 (1) 9% 29% 12%

Portfolio Characteristics and Performance (based on prices and weightings as of March 31, 2021)

Spyglass Capital Management LLC 14

Note: GoDaddy, Palo Alto Networks, and Proofpoint EPS figures are Free Cash Flow per share, and Equinix EPS figure is FFO, as Spyglass believes these are the most relevant valuation metrics.SPLK YoY sales growth based on ARR growth in CY Q4 2020.(1) All estimates for the Russell 2500 Growth (TR) Index, the Russell Midcap Growth (TR) Index and the S&P 500 (TR) Index are provided by Bloomberg.(2) The 5-year EPS CAGR is a Spyglass estimate. Russell 2500 Growth (TR) CAGR, Russell Midcap Growth (TR) CAGR and S&P 500 (TR) CAGR are provided by Bloomberg.

No recommendation is made, positive or otherwise, regarding individual securities mentioned. The specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients, and the reader should not assume that investments in the securities identified were or will be profitable.

Top & Bottom Contributors (as of March 31, 2021)


Top Contributors1Q Average Weighting

1Q Total Return

1Q Portfolio Contribution

Affiliated Managers Group, Inc. 5.14 46.55 1.85

Lyft, Inc. 5.13 28.60 1.42

Twitter, Inc. 4.58 17.51 0.73

Bottom Contributors1Q Average Weighting

1Q Total Return

1Q Portfolio Contribution

SVMK Inc. 3.85 -28.30 -1.20

Splunk Inc. 5.09 -20.25 -1.01

Ascendis Pharma A/S - ADR 3.28 -22.72 -0.86

Portfolio weightings, return, and contribution figures provided by Bloomberg and are based on a Spyglass Representative Portfolio.The attribution is from a Spyglass Representative Portfolio and represents the portfolio attribution for the quarter.No recommendation is made, positively or otherwise, regarding individual securities mentioned. Past performance does not guarantee future results. The holdingsidentified do not represent all the securities purchased, sold or recommended for advisory clients. To obtain (i) the methodology used to calculate the contribution ofeach security holding, and (ii) a list showing every holding’s contribution to the overall account’s performance during the above-referenced timeframe.

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Portfolio Positioning (as of March 31, 2021)


Significant Trims

Lyft, Inc. 1.80%

Chipotle Mexican Grill, Inc. 0.95%

Pacira BioSciences, Inc. 0.60%

Significant Additions

Splunk Inc. 1.85%

Beyond Meat, Inc. 1.25%

SVMK Inc. 0.75%

New Buys

Stitch Fix, Inc. 3.00%

Vroom, Inc. 2.50%

Sells

Roku, Inc. 3.34%

Redfin Corp. 3.13%

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Business Overview


New Positions: Vroom, Inc. (VRM)

• Vroom is an online retailer of used vehicles

→ Vroom is headquartered in New York, owns a physical retail location and vehicle reconditioning center(VRC) in Houston, and contracts with third parties on 18 additional VRCs throughout the U.S.

→ Vroom is run by former Priceline.com executives, Bob Mylod, Paul Hennessy, and John Caine

• The used vehicle market in the U.S. is massive and fragmented

→ 40 million used vehicles are traded annually

→ Vroom retailed 42,000 vehicles in 2020 (0.1% share)

→ The top 100 dealers collectively hold 9% market share

• Vroom has built a capital-light footprint

→ Logistics: primarily contracted via third parties today but slowly building out in-house capabilities

→ Reconditioning: 1 owned, 18 partner facilities

→ Customer support & sales: primarily outsourced to a third party

→ Customer financing: partnered with 12 banks

• Vroom is currently unprofitable, but the unit economics are strong and quickly improving

→ Vroom generates $1,800 in gross profit per unit ($900 from vehicle, $900 from financing andwarranties)

→ Gross profit per unit is expected to improve to $3,000 over time as Vroom builds out its logisticsnetworks and automates more of the customer buying process

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Why Now?

6/8/2020: IPO at $22per share

9/10/2020: follow-on equity offering at $54.50 per share

Jan./Feb. 2021: Spyglass due diligence

2/26/2021: Vroom investment case presented to the Spyglass team

3/5/2021: Vroom investment made at $32 per share

1

2

3

4

5

Source: Bloomberg.



Spyglass successfully leveraged prior research on the used vehicle retail industry to quickly get up to speed on the Vroom story

1

2

4

3

5

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Vroom Meets Spyglass’s Seven Core Investment Criteria• Leadership position in secular growth industry

→ Vroom is the #2 market share player in the online retail used vehicle market

• Results oriented, entrepreneurial management team with long-term focus and proven track record→ Bob Mylod (Chairman), Paul Hennessy (CEO) and John Caine (Chief Product Officer) have 40+ years of combined

experience at Priceline.com→ Priceline compounded its share price at a +39% CAGR between 2000 and 2016

• Sustainable competitive advantage→ Vroom is one of the two scaled, national players in the online used vehicle market (along with Carvana Co.)→ Scale matters in this market where the growth flywheel is underpinned by depth and breadth of vehicle inventory and

density of logistics network

• Above average long-term revenue growth→ The used vehicle market, which generated $841 billion in sales in 2019, is <1% penetrated by e-commerce→ Vroom could grow its units by 10x and still only represent 1% of the total used car market

• Above average long-term earnings growth→ Earnings are expected to grow faster than revenue as the unit economics improve with added scale and efficiencies

• Financially sound→ $1.1 billion of cash on the balance sheet as of 12/31/20→ $329 million of vehicle floorplan debt as of 12/31/20, which is secured by $424 million of inventory→ The Spyglass model suggests Vroom has sufficient liquidity to reach cash flow break-even at some point in 2025

• Attractive valuation→ Vroom trades at 0.3x EV/sales (ex-cash), 3.2x EV/EBITDA (ex-cash) and 4.7x P/E on Spyglass 2026 estimates→ Vroom shares are pricing in a >35% IRR and >4x ROI at current prices

19Spyglass Capital Management LLC


Business Overview


New Positions: Stitch Fix, Inc. (SFIX)

• Stitch Fix offers a differentiated “online department store” experience

→ Founded in 2011 by Katrina Lake with an immense focus on data-science that isfoundational to how the Company operates

→ Personalization, apparel focus, and recommendation engine differentiate Stitch Fixfrom legacy department stores and e-commerce competition

→ Traditional “fix” business: client fills out a questionnaire and pays a $20 styling fee;Stitch Fix sends five clothing items to client; client pays for what they want to keep;less than 10% of Americans have tried a similar service

• Stitch Fix uses proprietary algorithms to recommend apparel to its clients, moreefficiently connecting supply and demand within the apparel industry

→ Data repository improves over time, each incremental new user improves experiencefor existing users

→ Inventory turns are 2x faster than department store peers

• The opportunity for direct-buy is much larger than the traditional “fix” business

→ Between 2011 and 2019, Stitch Fix sold approximately $5 billion in clothing, 100%sight unseen, becoming the only company to profitably scale in this business.

→ Summer of 2021: expansion of direct-buy will allow new clients access to thisrecommendation engine for direct purchases; in 2020, over 200 million Americansmade direct purchases online.

• The U.S. and U.K. apparel market is expected to grow to $472 billion with $220 billioncoming from online sales by 2025

→ Stitch Fix’s best-in-class recommendation engine will enable share gains in thismassive market (less than 1% penetrated today)

Why Now?

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07/22/2020: Stitch Fix investment idea presented to Spyglass team

Q3 2020: Spyglass meets with Stitch Fix investor relations and members of the management team

10/22/2020: Follow-up work presented to Spyglass team

11/19/2020-12/6/2020: Due diligence continued with emphasis on senior management and long-term strategy

12/7/2020: Stitch Fix reported FY Q1 2021 earnings and appointed Dan Jedda from Amazon as CFO

Jan. 2021: Spyglass team meets with multiple C-Level executives

Q1 2020: Spyglass builds position

1

2

3

4

5

Source: Capital IQ.



Stitch Fix joined the Spyglass universe in 2018, and Spyglass used recent volatility to build an initial position in Stitch Fix shares

6

7

1

42

735

6

Source: Bloomberg.

Stitch Fix Meets Spyglass’s Seven Core Investment Criteria• Leadership position in secular growth industry

→ Unparalleled recommendation engine: Keep rate per fix > 2.5x items→ Unprecedented use of AI and machine learnings in the retail sector→ Online apparel sales expected to grow at 12% through 2025

• Results oriented, entrepreneurial management team with long-term focus and proven track record→ Founder/CEO: Katrina Lake, youngest female CEO to take a company public at time of IPO→ President: Elizabeth Spaulding, Former Head and Founder of Digital Practice at Bain & Company (21 years at Bain)→ Chief Financial Officer: Dan Jedda, Former CFO and VP of Amazon Digital (17 years at Amazon)→ Chief Product Officer: Sharon Chiarella, Former VP of Community Shopping at Amazon (14 years at Amazon)

• Sustainable competitive advantage→ Stitch Fix’s recommendation engine better serves the individual desires of the client while turning inventory at twice the

speed of traditional department stores, leading to a superior experience for suppliers→ Data repository improves over time, each incremental new user improves experience for existing users→ Direct-buy return rate is half of the e-commerce industry average

• Above average long-term revenue growth→ Less than 1% penetrated in current markets (U.S. and U.K.)→ Direct-buy rolling out to new users provides opportunity for accelerated client growth→ New inventory models will allow for improved conversion rates and incremental revenue growth

• Above average long-term earnings growth→ Gross margins will increase over time as direct-buy takes share of revenue and newer business units scale (Men’s, Kid’s, U.K.)→ Variable SG&A costs per order will decrease as direct-buy takes share of revenue

• Financially sound→ Cash flow positive since 2014, $369 million in cash and equivalents, no debt as of January 30, 2021

• Attractive valuation→ Spyglass’s base case model generates an internal rate of return > 25% and 3.0x return on investment



Disclosures


PERSONAL & CONFIDENTIAL. FOR INSTITUTIONAL CUSTOMERS OR INVESTORS ONLY. Theinformation contained in this message may be privileged and confidential and protected fromdisclosure. If the reader of this message is not the intended recipient, or an employee or agentresponsible for delivering this message to the intended recipient, you are hereby notified thatany dissemination, distribution or copying of this communication is strictly prohibited. If youhave received this communication in error, please notify us immediately by replying to themessage and deleting it from your computer.

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PERSONAL & CONFIDENTIAL. FOR INSTITUTIONAL CUSTOMERS OR INVESTORS ONLY. The information contained in this presentation may beprivileged and confidential and protected from disclosure. If the reader of this presentation is not the intended recipient, or an employee or agentresponsible for delivering this message to the intended recipient, you are hereby notified that any dissemination, distribution or copying of thiscommunication is strictly prohibited. If you have received this communication in error, please notify us immediately.

Equity investing involves risk. Principal loss is possible. Past performance does not guarantee future results. There is no guarantee the recommended strategywill be successful. The Spyglass Investment Strategy (the “Strategy”) is non-diversified, meaning it may focus its assets in fewer individual holdings than amore diversified strategy. Therefore, the Strategy is more exposed to volatility than a more diversified strategy. Medium- and small-capitalizationcompanies tend to have less liquidity and greater price volatility than large-capitalization companies. The Russell Midcap Growth Index and the Russell2500 Growth TR Index measure the performance of these and their respective component companies with higher price/book ratios and higher forecastedgrowth values.

Performance of the Russell Midcap Growth Index and the Russell 2500 Growth TR Index is included for informational purposes to show the general trend inthe midcap equity market for the periods indicated and is not intended to imply that the portfolio is similar to the indices either in composition or element ofrisk. The volatility of indices may be materially different from the performance of the Strategy. The Russell Midcap Growth Index and Russell 2500Growth TR Index are unmanaged stock market indices that measure the performance of their respective component companies. Investors cannot investdirectly in an index. Index performance does not reflect trading commissions and costs. Due to these differences, comparison to an index should not berelied upon as an accurate measure of comparison.

The S&P 500 (TR) Index is widely regarded as the best single gauge of large-cap U.S. equities. The S&P 500 (TR) Index measures the performance of thelarge-cap segment of the market. Frequently considered to be a proxy of the U.S. equity market, the S&P 500 (TR) Index is composed of 500 constituentcompanies. An investment cannot be made directly in an index. Due to these differences, comparison to an index should not be relied upon as an accuratemeasure of comparison. The benchmarks referenced are included for informational purposes to show the general trend in the markets for the periodsindicated and are not intended to imply that the portfolio was similar to the market indices either in composition or element of risk. There are significantdifferences between client accounts and the indices herein including, but not limited to, risk profile, liquidity, volatility, and asset composition.

The performance is over a short time period and therefore does not reflect performance in different economic or market cycles. It is historic and should notbe taken as any indication of future performance. Securities identified and described above may not be representative of the entire portfolio. It should notbe assumed that recommendations in the future will be profitable or will equal the performance of the securities in this list. The information contained in thisreport is for informational purposes only and should not be deemed investment advice. The performance data quoted represents past performance. Pastperformance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, whenredeemed, may be worth more or less than their original cost, and current performance may be higher or lower than the performance quoted. Forperformance data current to the most recent month end, please contact us.

Disclosures (continued)


The information contained herein is presented for informational purposes to highlight certain portfolio characteristics as of the date presented. Thisdocument does not constitute advice or a recommendation or offer to sell or a solicitation to deal in any security or financial product. Recipients should notrely on this material in making any future investment decision, prospective investors are encouraged to contact Spyglass Capital Management, LLC(“Spyglass”) and always consult with their professional advisor of their choosing. Certain information has been obtained from third-party sources whichSpyglass believes to be accurate as of the date presented.

Strategy holdings and sector allocations are subject to change at any time and should not be considered a recommendation to buy or sell any security.Portfolio sector weightings are determined by the Bloomberg Industry Classification Standard (BICS) Industry SubGroup.

Important General Information:

Historical Perspective: Simultaneous with the commencement of the Spyglass Growth Fund (“Fund”) investment operations, Spyglass Partners Fund LP, alimited partnership managed by the Spyglass (the "Predecessor Partnership"), converted into the Institutional Shares class of the Fund by contributing all,or nearly all, of its assets to the Fund in exchange for Institutional Shares of the Fund. The Predecessor Partnership was formed on October 1, 2015 toserve as a pooled investment vehicle for accredited investors, and since inception the Predecessor Partnership has maintained investment policies,objectives, guidelines, and restrictions that were, in all material respects, equivalent to those of the Fund. From the date of inception through the time of theconversion, the Predecessor Partnership will have been managed by the Advisor and the same portfolio manager as the Fund. The Fund's performanceprior to inception is that of the Predecessor Partnership and includes the expenses of the Predecessor Partnership. The performance includes gains or lossesplus income and the reinvestment of all dividends and interest. All returns reflect the deduction of all actual fees and expenses, paid by the PredecessorPartnership, without provision for state or local taxes. If the Predecessor Partnership's performance was adjusted to reflect the projected first yearexpenses of the Institutional Shares of the Fund, the performance for all periods would have been higher than that stated. The Predecessor Partnership wasnot registered under the 1940 Act, and was not subject to certain investment limitations, diversification requirements, and other restrictions imposed by the1940 Act and the Internal Revenue Code of 1986, as amended (the "Code"), which, if applicable, may have adversely affected its performance. On agoing forward basis for periods beginning January 1, 2018, the Fund's performance will be calculated using the standard formula set forth in rulespromulgated by the SEC, which could differ in certain respects from the methods used to compute total returns for the Predecessor Partnership.

Confidentiality. This document is confidential. It is being provided to you on the condition that it not be forwarded, copied or otherwise distributed withoutthe prior written consent of Spyglass.

No Offer or Solicitation. The information herein is for informational purposes only and is not an offer to sell or the solicitation of any offer to buy securities.The document provides general background information on Spyglass and the fund and portfolios that it manages. Any offer will be made only through theprospectus and statement of additional information or investment management agreement (collectively “offering materials”) which generally is availableonly to institutional accredited investors. All the information provided herein is subject to and qualified in its entirety by reference to the terms andconditions described in the offering materials. You should also review Spyglass’s Form ADV, which is available on request and located at www.SEC.gov.Before investing, you should carefully and thoroughly review the offering materials with your financial, legal and tax advisors to determine whether aninvestment is suitable for you.



http://www.sec.gov/

No Duty to Update. Neither Spyglass nor any of its affiliates assumes any duty to update any information herein for subsequent changes of any kind.Depending on conditions and trends in securities markets and the economy generally, Spyglass may pursue any objectives, employ any techniques orpurchase any type of security that it considers appropriate and in the best interests of its investors, subject to the limitations defined in the offeringmaterials.

Forward Looking Statements. This document may contain forward-looking statements based on Spyglass’s expectations and projections about the methodsand strategies by which it expects to invest. Those statements are sometimes indicated by words such as “expects,” “believes,” “will” and similar expressions.Such statements are not guaranties of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict.Therefore, actual returns could differ materially and adversely from those expressed or implied in any forward-looking statements as a result of variousfactors.

Disclosures Regarding Performance Calculations. The net performance results reflect the reinvestment of dividends and other earnings and the deduction of aproforma management fee charged to the investor (see Fee Schedule on page 18). The Strategy’s performance results are based on the calculationsprepared, in part, by independent fund administration organizations or published custody statements for separately managed accounts adjusted formanagement fees. Certain performance results themselves were prepared by Spyglass and have not been reviewed by any third party. Future investmentswill be made under different economic conditions and in different securities. The performance discussed herein reflects investment of limited funds for alimited period of time and does not reflect Spyglass’s performance in all different economic cycles. It should not be assumed that the Strategy willexperience similar returns in the future, if any, comparable to those published in this or other materials prepared by Spyglass. The information given hereinis historic and should not be taken as any indication of future performance. Spyglass believes that the comparison of the Strategy’s performance to theRussell Midcap Growth Index is currently the most appropriate benchmark. This may change over time. The Spyglass portfolios are more concentrated andare therefore not as diversified as the Russell Midcap Growth Index. The Russell Midcap Growth Index returns reflect the reinvestment of dividends andother earnings as does the Strategy. Due to the differences between the Strategy and the composition of the aforementioned market indices, the RussellMidcap Growth Index published returns are not directly comparable to the returns generated by the Strategy.



GIPS Compliance and Verification Status. Spyglass Capital Management, LLC (Spyglass) claims compliance with the Global Investment PerformanceStandards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. Spyglass has been independently verified solelyfor the periods October 1, 2015 to March 31, 2019. The verification report is available upon request. Verification assesses whether (1) the firm hascomplied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures aredesigned to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific compositepresentation.

Policies for valuing portfolios, calculating performance, preparing compliant presentations and a listing of composite descriptions are available uponrequest.Firm Information. Spyglass is an investment advisor registered with the U.S. Securities and Exchange Commission under the Investment Advisers Act of 1940,as amended.

Composite Description. The Mid-Cap Growth Composite contains all fee-paying, discretionary accounts that are managed according to Spyglass’s singularcore strategy. The Mid-Cap Growth Strategy invests primarily in U.S exchange traded equity securities in the mid-capitalization classification ($12B - $2B)and seeks long-term capital appreciation while incurring a low risk of permanent capital loss. The strategy uses a concentrated and low turnover investmentapproach, and seeks to identify and invest in high-quality growth-oriented companies trading at discounts to Spyglass’s assessment of their intrinsic value.Spyglass has determined the most appropriate benchmark for the composite is the Russell Midcap Growth Index. The Mid-Cap Growth Composite wascreated in 2019; its inception date is October 1, 2015. From October 1, 2015 to December 29, 2017, the composite is composed solely of an equitypartnership fund. Spyglass’ managing member and CIO served as portfolio manager for this fund. From December 29, 2017 to April 30, 2018, thecomposite is composed solely of the successor equity mutual fund subsequent to the tax free exchange of the partnership fund to the equity mutual fund.Subsequent to April 30, 2018, the composite comprehends the mutual fund and all discretionary separately managed accounts resident for the entireperiod of presentation. The strategy and portfolio manager for the entire term of the composite were the same. For periods after January 1, 2019, thecomposite will be composed of the mutual fund and UCITS fund, its predecessor partnership and separate accounts. Currently, the assets in the mutual fundcomprise a significant but not a majority of the composite’s assets.

Fee Schedule. Spyglass' proforma annual asset-based management fee schedule is 1%. Gross performance results do not reflect the deduction of Spyglass'investment advisory fee which lowers a client's total return.

Gross of fees returns are calculated gross of management, fund administration, and custodial fees and net of transaction costs. Net of fees returns arecalculated by deducting the monthly-equivalent amount of Spyglass’ highest applicable annual management fee of 1.00% (“Model Net Fee”), as describedin the firm’s Form ADV, Part 2A from the monthly composite gross return.

Reference Index Disclosure. The Russell Midcap Growth Index measures the performance of the mid-capitalization growth sector of the U.S. equity market. Itis a subset of the Russell Midcap Index. The index is market-value weighted. Index figures reflect the reinvestment of dividends and capital gains. Indexfigures do not reflect deductions for any fees, expenses, or taxes. Investors cannot invest directly in an index.

Other. All returns presented in the table (including the referenced indices) include the reinvestment of dividends, interest income, and capital gains.Valuations are computed and performance is reported in U.S. dollars.



aravis funds | spyglass us growth fund (ucits) - investor … update/q1... · 2021. 4. 22. ·...

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