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  • Otter Creek Advisors, LLC October 30, 2018 | 3rd Quarter Review

  •  Overview

     Executive Summary

     Attribution

     Investment Process

     Framing the Macro and Market Environment

     Current Themes

     Portfolio Composition

    Table of Contents

    1

  • • Otter Creek Advisors

    • Fundamentally focused investors

    • Value orientated

    • 100% employee owned

    • Launched the Otter Creek Long/Short Opportunity Fund December 30, 2013

    • Fund assets are $160.7 million as of September 30th, 2018

    Firm Overview

    Past performance does not guarantee future results  2

  • Performance Returns      As  of September 30, 2018   Portfolio Statistics      As  of September 30, 2018  

    Since  Inception 1

    Since  Inception 3

       Institutional Class (OTTRX) 13.58% 2.73% Weekly Standard Deviation    Investor Class (OTCRX) 12.38% 2.50%    S&P 500 Index 74.47% 12.46%    Morningstar L/S Equity Category 16.10% 3.20%

    Total Expense Ratio 4 Weekly Correlation (since inception)      As  of September 30, 2018       r2   

       Institutional Class (OTTRX)    OTTRX vs. S&P 500 Index    Investor Class (OTCRX)

    4 1 Cumulative  return s ince  Fund inception date  of December 30, 2013 2 Annual ized return for one  year and three  years 3 Annual ized return s ince  Fund inception date  of December 30, 2013

    1 Year 2 3 Year 2 OTTRX S&P 500 ‐2.83% ‐0.12% 6.2% 11.8% ‐3.03% ‐0.35% 17.95% 17.33% 5.69% 5.42%

    The  Fund's  investment advisor has  contractual ly agreed to reduce  i ts  fees  and/or  absorb expenses  of the  fund unti l  at least February 28, 2019.  The  expense  ratios  are   based on estimated amounts  and may not reflect the  actual  expense  ratios .

    Gross Net     r     2.34% 2.31% ‐0.05 0.00 2.60% 2.57%

    STRATEGY

     Generate absolute risk-adjusted returns with a focus on long-term capital appreciation with below average volatility by investing in opportunities both long and short which are driven by intensive fundamental analysis

     Attempt to achieve capital preservation during periods of dislocation

    Executive Summary

    Performance data quoted is past performance. Past performance does not guarantee future results. The investment and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month‐end may be obtained by calling (855) 681‐5261. Performance data quoted does not reflect the 1% redemption fee on shares held for 60 days or less. If reflected, total returns would be reduced.

    3

  • Attribution: Long and Short

    Otter Creek Advisors focuses on generating absolute returns in both our long and short portfolio for the Fund

    Past performance does not guarantee future results  4

    1 For the period from January 1, 2018 through September 30, 2018 4 For the period from January 1, 2015 through December 31, 2015 2 For the period from January 1, 2017 through December 31, 2017 5 For the period from January 1, 2014 through December 31, 2014 3 For the period from January 1, 2016 through December 31, 2016 Source: Company Reports

    7.5%

    -8.5%

    -0.6% -2.2%

    -10.0%

    -8.0%

    -6.0%

    -4.0%

    -2.0%

    0.0%

    2.0%

    4.0%

    6.0%

    8.0%

    10.0%

    20181

    Long Short Cash Net

    19.3%

    -17.9%

    -1.6% -3.6%

    -20%

    -15%

    -10%

    -5%

    0%

    5%

    10%

    15%

    20%

    25%

    20172

    Long Short Cash Net

    12.5%

    -0.7% -1.7%

    9.8%

    -4.0%

    -2.0%

    0.0%

    2.0%

    4.0%

    6.0%

    8.0%

    10.0%

    12.0%

    14.0%

    20145

    Long Short Cash Net

    5.5% 5.8%

    -1.9%

    9.5%

    -4%

    -2%

    0%

    2%

    4%

    6%

    8%

    10%

    12%

    20154

    Long Short Cash Net

    11.7%

    -8.7%

    -1.8%

    0.1%

    -10%

    -5%

    0%

    5%

    10%

    15%

    20163

    Long Short Cash Net

  • Past performance does not guarantee future results 

    Fund Attribution 2018 3rd Quarter

    5

    Long Short Net Information Technology 2.5% ‐0.2% 2.3% Consumer Discretionary 0.7% ‐2.6% ‐1.9% Health Care 1.5% ‐0.2% 1.2% Industrials 0.8% ‐1.7% ‐0.9% Financials ‐1.2% 0.3% ‐0.9% Real Estate ‐0.2% ‐0.1% ‐0.3% Consumer Staples 0.3% ‐0.1% 0.2% Materials ‐0.2% 0.0% ‐0.2% Utilities 0.1% 0.0% 0.1% Other 0.0% ‐0.1% ‐0.1% Energy 0.0% 0.0% 0.0% Gross Return 4.4% ‐4.7% ‐0.5%

    Net Expenses ‐0.2% Net Return ‐0.7%

    Quarter‐to‐Date Sector Attribution

  • Fund Contributors and Detractors 2018 3rd Quarter

    Fund holdings and allocations are subject to change at any time and should not be considered a recommendation to buy or sell any securities 

    Notable Changes  Trimmed gains in Leidos Holdings to maintain approximate position size

     Modestly added to Zimmer Holdings during the quarter

     Covered a portion of our short equity and added puts in Proto Labs

     Covered a portion of our short equity and added puts in NVIDIA

     Added to our put position in Snap-on

     Added puts in Ollies

    Past performance does not guarantee future results 

    6

     Top 5 Contributors  Long/Short

    Security  Return (Q3)

    Portfolio  Contribution  Top 5 Detractors  Long/Short

    Security  Return (Q3)

    Portfolio  Contribution

    Leidos Holdings Inc Long 17.7% 1.1% Proto Labs Inc Short 36.0% ‐0.8%

    Zimmer Biomet Holdings Inc Long 18.2% 0.8% NVIDIA Corporation Short 18.7% ‐0.7%

    Trimble Inc Long 32.3% 0.7% Snap‐on Inc Short 14.8% ‐0.7%

    FLIR Systems Inc Long 18.6% 0.7% Ollies Bargain Outlet Holdings Inc Short 32.6% ‐0.6%

    Aramark Corp Long 16.3% 0.6% E‐Trade Financial Corp Long ‐14.3% ‐0.6%

  • The Otter Creek Investment Process Fundamentally Driven

    INVESTABLE UNIVERSE Wilshire 5000 & American Depositary Receipts

    Any listed security in capital structure Most attractive risk/reward in capital structure

    INVESTMENT PROCESS Narrow investment universe by:

    • Develop a macroeconomic thesis • Frame bond and equity market valuations • Identify thematic ideas • Identify secular trends

    CONCENTRATED PORTFOLIO Typically 30‐35 longs and 30‐35 shorts

    Equity put exposure ranges from 1% ‐ 5% of capital

    IDEA GENERATION Industry conferences Financial screens Network base

    SHORT • Aggressive accounting • Deteriorating balance sheet metrics • Low quality earnings • High financial leverage • High level of insider selling

    COMPANY CHARACTERISTICS LONG • Operating margins > 10% • Return on Equity > 15% • #1 or #2 market share position • Low‐to‐moderate financial leverage • Consistent and growing dividends

    7

  • Past performance does not guarantee future results 

    Fund Attribution October 1st through October 26th

    8

    Top Contributors  Ellie Mae (ELLI)

     Snap-on (SNA)

     NVIDIA Corp (NVDA)

     SVB Financial Group (SIVB)

     BlackRock (BLK)

     Proto Labs (PRLB)

    Source: Company Reports Sector and Top Contributors are for the period 10/01/2018 to 10/26/2018

    Long Short Net Information Technology ‐1.8% 4.5% 2.6% Financials ‐1.9% 3.5% 1.5% Industrials ‐1.6% 2.6% 1.0% Materials ‐0.9% 0.0% ‐0.9% Utilities ‐0.4% 0.0% ‐0.4% Consumer Discretionary ‐1.3% 1.6% 0.3% Other 0.0% 0.1% 0.1% Consumer Staples ‐0.3% 0.2% ‐0.1% Energy ‐0.1% 0.0% ‐0.1% Health Care ‐1.0% 0.9% ‐0.1% Real Estate 0.0% ‐0.1% ‐0.1% Gross Return ‐9.0% 14.0% 3.7%

    Net Expenses 0.1% Net Return 3.9%

    Month‐to‐Date Sector Attribution

  • 9

    Macro & U.S. Divergence

    A negative estimate revision cycle is underway

    Source: Hedgeeye as of 09/30/2018

    Source: Lohman Econometrics, Bloomberg

    Consecutive Quarters of Accelerating YoY U.S. Real GDP Growth

  • 10 Source: Bloomberg , Morgan Stanley Research

    U.S. Micro

    45

    50

    55

    60

    65

    70

    Sep-13

    D ec-13

    M ar-14

    Jun-14

    Sep-14

    D ec-14

    M ar-15

    Jun-15

    Sep-15

    D ec-15

    M ar-16

    Jun-16

    Sep-16

    D ec-16

    M ar-17

    Jun-17

    Sep-17

    D ec-17

    M ar-18

    Jun-18

    Sep-18

    Manufacturing ISM & New Orders

    ISM ISM New Orders

    Source: Bloomberg as of 09/30/2018

    Source: BLS, Smith Travel Research Source: Haver Analytics, Gluskin Sheff

    Increasing evidence growth peaked 1H18 Growth in

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