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TRANSCRIPT
June 2018
Prosperously navigating
unexpected events
with great skill and agility
2
AGENDA
3
Who We Are
Investment Methodology
Performance
Top 10 Strategic Tech Trends for 2018-2020
Current Opportunity and Investment pipeline - GAMING
Summary
WHO WE ARE
4
BLACK SWAN
DEXTERITAS
(“BSD”)
TECHNOLOGY EXPERTISE
• Unique insight
from entrepreneurs leading
international tech development
based on needs creation
• Advisory Committee of tech leaders
who determine the global adoption
and success of new technologies
• Representation in all BSD-invested
tech sectors and sub-sectors, for
unrivalled expertise
• Portfolio Manager with 30 years of
portfolio management experience
across various asset classes at
asset management companies (LGT,
TAL, CIBC Asset Management), and
a pension (British Petroleum)
• Exceptional research team with a
wide breadth of knowledge in
research, finance, and engineering
• Intense due diligence process for our
stock selection process
• Unique risk management overlay
to minimize drawdowns and volatility
PORTFOLIO MANAGEMENT
EXPERIENCE
5
INVESTMENT METHODOLOGY
SECTOR ASSESSMENT
• Life Cycle: Sectors in introduction and growth stages with
high Total Addressable Market (TAM)
• Competition: High barrier of entry with differentiated products
and services within the sector
COMPANY ANALYSIS
• Business Model: Public ccompanies with high recurring revenue,
easily able to leverage network effects, strong negotiating power
with suppliers and customers, and strong corporate governance
• Size: Target small (500M+) to large cap public companies with
established track record of executing the business.
• Growth: Public companies with high and/or consistent revenue
growth
• Valuation: Determine if opportunities exist based on our fair
value expectation of stocks versus current stock prices
PORTFOLIO CONSTRUCTION
• Weightings: Determine % of portfolio allocated to holdings
based on risk-reward expectations
• Diversification: Well-diversified across 35 to 40 holdings to
maximize risk-adjusted returns
• Hedging: Utilize derivatives and fixed income products to
minimize drawdowns and generate alpha
IDEATION
• BSD Investment Advisory Committee: seek out global
growth themes and trends to overweight and underweight
various subsectors
• Experienced investment team sourcing trade ideas and
discussing vital macro economical forces in play
• Draw on sector experiences from members of the committee and
discuss emerging technology from the private and public space
• Deep dive into industry verticals to identify beneficiaries in other
primary, secondary, and tertiary markets
PORTFOLIO CONSTRUCTION
IDEATION
SECTOR
ASSESSMENT
COMPANYANALYSIS
PUBLIC COMPANIES
PERFORMANCE
PERFORMANCE METRICS* FUND RETURNS
FUND BENCHMARK **
Return Since Inception
YTD Return
60 Day Return
20 Day Return
Daily Standard Dev.
Sharpe Ratio
Sortino Ratio
Correlation
57.11%
1.28%
-1.28%
-0.23%
0.72%
0.87
1.20
—
63.89%
1.41%
-3.34%
-3.09%
0.95%
0.74
1.03
0.96
* Management fees and expenses may be associated with investments. Investment 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.
October 31, 2013 to April 30, 2018
6
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD Benchmark YTD
-2.08% 3.63% -2.07% -4.39% 2.38% 2.80% 2.21% 3.53% -1.64% 4.95% 2.89% -1.51% 10.69% 8.40%2014
2013
GLOBAL TECH FUND MONTHLY PERFORMANCE SINCE INCEPTION
BSD has outperformed our portfolio benchmark with lower risks through active diversification across various subsectors
1.32% 0.35% 2.82% 4.55% 9.60%
0.53% 5.39% -0.16% 2.98% 0.90% -0.91% 0.43% -6.67% -1.48% 9.68% 0.63% -0.76% 10.16% -0.10%2015
-7.41% -2.78% 5.31% -0.02% 2.33% -0.29% 3.66% 0.65% 1.63% 0.38% -3.75% -0.71% -1.63% 13.95%2016
-42%
-3%
36%
75%
BSD Global Technology Hedge Fund
Blend of 50% Nasdaq Composite Index and 50% Russell 2000 Index
4.97% 2.14% 2.99% 2.08% 3.85% -2.55% 2.68% 2.12% 0.51% 3.41% 0.11% -0.20% 24.49% 20.55%2017
2.89% 0.63% -0.62% -1.57% 4.11%2018 5.44% 7.11%
7
HOW BSD COMPARES TO OTHER HEDGE FUNDS
HEDGE FUND STRATEGIES* 2014 RETURN 2015 RETURN 2016 RETURN 2017 RETURN
PERFORMANCE
BSD Global Technology Hedge Fund
Absolute Return
Multi-Region
Equal Weighted Strategies
Relative Value Arbitrage
Macro/CTA
Fixed Income - Credit
Global Hedge Fund
Equity Hedge
North America
Emerging Markets Composite
Market Directional
Event Driven
10.69%
0.67%
1.71%
-0.56%
-3.06%
5.09%
-1.86%
-0.60%
1.37%
-4.13%
-8.03%
5.13%
-4.06%
Our outperformance relative to other funds are indicative of our core competency in
generating outsized returns and navigating a challenging market environment
* Hedge fund index data is provided by Hedge Fund Research Index (HFRI) as of January 2018.
10.16%
2.86%
-1.19%
-1.54%
-3.10%
-1.96%
-4.38%
-3.64%
-2.33%
-9.35%
-5.26%
-8.58%
-6.94%
-1.63%
0.31%
1.95%
3.78%
1.03%
-2.93%
4.97%
2.50%
5.49%
4.14%
6.77%
9.86%
10.50%
24.99%
3.91%
6.58%
6.10%
4.28%
7.43%
4.55%
8.04%
12.78%
6.25%
8.99%
4.68%
7.22%
TOP 10 STRATEGIC TECH TRENDS FOR 2018-2020
8
CURRENT OPPORTUNITIES AND INVESTMENT PIPLINE
• DIGITALIZATION & ELECTRIFICATION
The automotive revenue pool will grow and diversify with new services potentially becoming a ~USD 1.5
Trillion market in 2030
• 5G DEPLOYMENT
The 5G market will grow to $1.23 Trillion by 2026, according to a new report by Ericsson announced at the
Mobile World Congress
• DIGITAL TWINS
The digital twin market is expected to grow at a CAGR of 37.87%, to reach USD 15.66 Billion by 2023
• AUTOMATION & ROBOTIZATION
After growing at a compound rate of 17 per cent a year, the robot market will be worth $135 Billion by 2019,
according to IDC
• OLED – Organic Light Emitting Diode
The OLED market is expected to be valued at USD 48.81 Billion by 2023, growing at a CAGR of
15.2% between 2017 and 2023
• GAMING
Gaming market to grow at a CAGR of +11.0% toward 2021 to reach $180.1 Billion
• HYPERCONVERGED INFRASTRUCTURE
The hyper-converged infrastructure market is expected to reach USD 12.6 Billion by 2022, at a
CAGR of 43.59% between 2016 and 2022
9
CURRENT OPPORTUNITIES AND INVESTMENT PIPLINE
10
• Modern personal computers owe many advancements and innovations to the
game industry: sound cards, graphics cards and 3D graphic accelerators, faster
CPUs, and dedicated co-processors like PhysX are a few of the more notable
improvements.
• As of 2017, games industry generated $121.7 Billion in revenues worldwide,
and were the third-largest segment in the U.S. entertainment market, behind
broadcast and cable TV.
• Gaming market to grow at a CAGR of +11.0% toward 2021 to reach $180.1
Billion
• Global Esports economy will reach $905.6 Million in 2018 as brand investment
grows by 48%
• The global Esports audience will reach 380 Million this year, made up of 165
million Esports Enthusiasts and 215 Million Occasional Viewers
• On its current trajectory, the Esports industry will reach $1.4 Billion by 2020
GAMING
GAMING
Publishers
Distributors
Hardware
Users
Esports
11Source: Newzoo
2017 Total
$122B+14.3%
YoY
VIDEO GAMING ECOSYSTEM
12
GAMING
Chinese Tencent
is the clear leader in the space
Source: Newzoo
Bn
Bn
Bn
Bn
Bn
$1.91
$1.94
$2.09
$2.21
$2.27
$2.40
$3.60
$5.10
$5.30
$5.60
$6.50
$7.10
$8.00
$10.50
$18.10
Bn
Bn
Bn
Bn
Bn
Bn
Bn
Bn
Bn
Bn
2017 TOP 15 COMPANIES BY GAME REVENUE
PUBLISHERS
13
TOP 10 BEST-SELLING GAMES YEAR-TO-DATE
GAMING
1
Far Cry 5
Ubisoft
2
Monster Hunter: World
Capcom
3
Dragon Ball: FighterZ
Bandai Namco
4
Call of Duty: WWII
Activision
5
Grand Theft Auto V
TakeTwo Interactive
6
NBA 2K18
TakeTwo Interactive
7
PUBG
Bluehole
8
Sea Of Thieves
Microsoft
9
MLB 18: The Show
Sony
10
Mario Kart 8
Nintendo
Source: Forbes
PUBLISHERS
SupercellKey games: Clash Royale, Brawl Stars,
Clash of Clans, HayDay, Boom Beach
Structure: Majority owned by Chinese
tech firm Tencent
NianticKey games: Pokemon GO, Ingress
Structure: Independent (Investment from
Google, Nintendo, The Pokémon
Company and other investors)
TencentKey games: Honour of Kings, WeFire,
Clash Royale
Structure: Publicly listed
NetEaseKey games: Fantasy Westward Journey,
Onmyoji, Ghost
Structure: Publicly listed
Machine ZoneKey games: Game of War, Mobile Strike,
Final Fantasy: A New Empire
Structure: Privately held
14
TOP MOBILE GAME PUBLISHERS
GAMING
NetmarbleKey games: Lineage 2: Revolution,
Marvel Contest of Champions
Structure: Privately held
King Digital EntertainmentKey games: Candy Crush Saga, Bubble
Witch Saga 3, Hearthstone: Heroes of
Warcraft (Blizzard)
Structure: Acquired by Activision Blizzard
EA MobileKey games: Star Wars: Galaxy of
Heroes, Madden NFL Mobile, FIFA
Mobile Soccer
Structure: Public
MixiKey games: Monster Strike
Structure: Public
GungHo Online EntertainmentKey games: Puzzle & Dragons, Super
Senso
Structure: Public
PUBLISHERS
15
2012-2021 GLOBAL GAMING MARKET
GAMING
$26.12 $29.07 $30.53 $31.65 $31.95 $32.86 $33.10 $33.42 $34.84 $34.22
$31.77 $29.84 $30.53 $29.79 $31.95 $32.86 $34.48 $36.46 $38.16 $39.62
$12.71 $17.60
$24.59 $31.65
$42.60
$55.98
$70.33
$82.03
$94.56 $106.26
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
PC Games
Console Games
Mobile Games
$70.60Bn$76.50Bn
$84.80Bn$93.10Bn
$106.50Bn
$121.70Bn
$137.90Bn
$151.90Bn
$165.90Bn
$180.10Bn
CAGR
2012-2021
Total
+11.0%
Mobile
+26.8%
Console
+11.0%
PC
+11.0%
Source: Newzoo
DISTRIBUTERS
TOP 10 COUNTRIES BY GAMING REVENUE
GAMING
16
China
$32,536 M
12 USA
$25,426 M3 Japan
$14,048 M
United Kingdom
$4,238 M
4 Germany
$4,430 M
5
6
Republic of Korea
$4,203 M
7
France
$2,977 M
8
Canada
$1,968 M
9
Spain
$1,918 M
10Italy
$1,881 M
China generates one quarter of gaming revenue worldwide
Source: Newzoo
DISTRIBUTERS
17
TOP VIDEO GAMES DIGITAL DISTRIBUTERS
GAMING
Source: Newzoo
DISTRIBUTERS
Steam
Structure: Owned by Valve
Corporation (Private)
Xbox LiveStructure: Owned by Microsoft
(Publicly listed)
PlayStation StoreStructure: Owned by Sony
(Publicly listed)
OriginStructure: Owned by Electronic
Arts (Publicly listed)
UplayStructure: Owned by Ubisoft
(Publicly listed)
Amazon.comStructure: Publicly listed
GOG.comStructure: Owned by CD Projekt
(Private)
GamersGateStructure: Privately held
Green Man GamingStructure: Privately held
Battle.netStructure: Owned by Activision
Blizzard (Publicly listed)
GameStopStructure: Publicly listed
18
GAMING HARDWARWE
HOW IS PLAYING
Mobile
PC
Console
Sony Play Station 2 is the best selling console ever – 138M units sold
iPhoneXAsus ROG
Game Smartphone
Xiaomi Black Shark
Game SmartphoneRazer
Game Smartphone
Sony PS4 Microsoft XBox One X Nintendo Switch
Dell AlienwareCyberPowerPC
Gamer XtremeHP Omen X Corsair One Pro
19
2008-2017 UNIT SALES OF GAME CONSOLES
GAMING
Source: Newzoo
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Nintendo
Microsoft
Sony
HARDWARWE
24.51M 23.18M 23.19M 22.28M 19.88M 19.12M 20.84M 21.53M 20.15M 20.47M
11.16M10.36M
13.53M 13.95M
10.69M9.32M
10.51M 9.56M8.76M 8.27M
53.56M48.33M 37.81M
32.81M
23.83M
20.18M 13.9M 10.86M8.75M
18.14M
20
GPU & GAMING ACCESSORIES
GAMING HARDWARWE
Discrete
GPUs
Nvidia and AMD control nearly 100% of discrete GPU market
Smartphones are also using GPUs, mostly Adreno GPUs from Qualcomm, PowerVR G
PUs from Imagination Technologies and Mali GPUs from ARM
Gaming accessories are representing
$5B-$10B Market
Top 5 Best Gaming Gear BrandsRazer (Private)
SteelSeries (Private)
Logitech
Microsoft
Corsair (Private)
21
2014-2021 NUMBER OF ACTIVE VIDEO GAMERS WORLDWIDE
GAMING
2014 2015 2016 2017 2018 2019 2020 2021
1,815M1,958M
2,080M2,210M
2,341M2,471M
2,600M2,725M
Source: Newzoo
USERS
22
WHO IS PLAYING
GAMING
Source: Statista
Male
55%
Female
45%
Under 18 years old
18 to 35 years old
36 to 39 years old
50 years and older
29%
28%
20%
23%
USERS
23
MAY 2018 MOST WATCHED GAMES ON TWITCH BY ESPORTS HOURS
GAMING
Source: Newzoo
ESPORTS
Esports hours consists of content from professionally organized esports competitions and does not include individual (pro-player) streams. This content combined with
consumer content makes up the total hours watched.
RANK TITLE TOTAL HOURS ESPORTS HOURS
1Dota 2
Valve Corporation (Private)38.8M 17.9M
2League of Legends
Riot Games (Private)81.2M 17.2M
3Counter-Strike: Global Offensive
Valve Corporation (Private)26.1M 15.6M
4Overwatch
Activision Blizzard30.9M 13.2M
5Hearthstone
Activision Blizzard33.5M 5.0M
6Tom Clancy's Rainbow Six: Siege
Ubisoft9.2M 2.3M
7PLAYERUNKNOWN'S BATTLEGROUNDS
Bluehole (Private)43.8M 1.7M
8StarCraft II
Activision Blizzard4.4M 1.5M
9Street Fighter V
Capcom2.4M 1.2M
10World of Warcraft
Activision Blizzard13.1M 1.1M
24
MAY 2018 MOST WATCHED GAMES ON TWITCH BY TOTAL HOURS
GAMING
Source: Newzoo
ESPORTS
Esports hours consists of content from professionally organized esports competitions and does not include individual (pro-player) streams. This content combined with
consumer content makes up the total hours watched.
RANK TITLE TOTAL HOURS ESPORTS HOURS
1Fortnite
Epic Games (Private)142.3M 0.4M
2League of Legends
Riot Games (Private)81.2M 17.2M
3PLAYERUNKNOWN'S BATTLEGROUNDS
Bluehole (Private)43.4M 1.2M
4Dota 2
Valve Corporation (Private)38.8M 17.9M
5Hearthstone
Activision Blizzard33.5M 5.0M
6Overwatch
Activision Blizzard30.9M 13.2M
7Counter-Strike: Global Offensive
Valve Corporation (Private)26.1M 15.6M
8World of Warcraft
Activision Blizzard13.1M 1.1M
9Grand Theft Auto V
Take-Two Interactive11.4M 0.0M
10Detroit: Become Human
Quantic Dream SA (Private)9.2M 0.0M
25
2016-2021 ESPORTS GLOBAL REVENUE GROWTH
GAMING
2016 2017 2018 2019 2020 2021
$1650M
$493M
$655M
$906M
$1154M
$1471M
Revenue
Growth
+33.0%YoY
Expected
Revenue
Growth
+38.2%YoY
Expected
Revenue
Growth
+27.4%CAGR
2016-2021
Source: Newzoo
ESPORTS
26
2018 ESPORTS GLOBAL REVENUE EXPECTATIONS
GAMING
2018 Total
$906M+38.2%
YoY
18%
6%
38%
32%
In 2018
China and North America
expected to generate
$509M 56%
of the global
esports revenue
Source: Newzoo
ESPORTS
27
2018 ESPORTS EXPECTED GLOBAL REVENUE STREAMS
GAMING
Source: Newzoo
Game publisher
Fees
$116.30
+11.0 YoY
Merchandise
& tickets
$95.50
+16.2 YoY
Advertising
$173.80
+23.8 YoY
2018 Total
$906M+38.2%
YoYMedia rights
$160.70
+72.1 YoY
Sponsorship
$359.40
+53.2 YoY13%
11%
40%
18%
19%
ESPORTS
Video game
streaming platforms:
Fb.gg
28
TOP ESPORTS ORGANAIZERS
GAMING
573MTotal organizer
hours
11%
9% 28%
23%
Riot and ESL combined, are responsible
for more than half of these organizer hours.
Source: Newzoo
ESPORTS
Riot Games
ESL
Dreamhack
Valve
Starladder
9%
MLG
5%
Beyondthesamit
5%
Other
10%
League of Legends, developed and
published by Riot Games, is easily the
most popular and lucrative eSports
game out there.
At the 2017 Season World
Championship, the final competition of
the 2017 League of Legends
competitive season, 24 teams received
invitations to play for a prize pool of
$4,596,591 (the initial prize pool was
$2,250,000, while the rest was fan
contributions). Samsung Galaxy, a
South Korean team and member of
KeSPA, took first place in the
competition and walked away with
$1,723,721. SK Telecom T1 finished
second and won $620,539, while Royal
Never Give Up and Team WE finished
in third and fourth to take home
$321,761 apiece.
29
ESPORTS GLOBAL AUDIENCE GROWTH
GAMING
Source: Newzoo
2016 2017 2018 2019 2020 2021
Esports enthusiasts
Occasional viewers
$160M
$121M
$192M
$143M
$215M
$165M
$246M
$189M
$281M
$216M
$307M
$250M
Total
Audience
+19.3%YoY
Expected
Revenue
Growth
+14.4%CAGR
2016-2021
Total
Audience
+13.8%YoY
In 2018 Asia-Pacific will account for 52% of Esport Enthusiasts
ESPORTS
30
SUMMARY
• We bring unique, proven strengths
• Principal with 30 years of portfolio management experience
• Dynamic stock selection methodology
• Disciplined risk management process
• Our expertise in technology is unparalleled
• Team consisting of seasoned entrepreneurs that have co-founded billion dollar companies
• Global networks of advisors and analysts examining tech vendors and tech end-users
• Significant out-performance in risk-adjusted returns
• The BSD Global Tech Hedge Fund returned 65.23% since inception versus our
benchmark** return of 75.95%
• Exhibited ~73% of the benchmark volatility as of May 31, 2018
• Hedging strategy acts as an “insurance policy” in anticipation of adverse market events,
by limiting drawdowns and often generating alpha
* Management fees and expenses may be associated with investments. Investment 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.