We apply a private equity
mindset to the public markets

Opportunities Fund LP


The Opportunities Fund applies a private equity
mindset to public company investing

We invest in a concentrated portfolio of carefully-selected businesses, run by management teams we know and trust, and usually with the intent to hold for several years. Occasionally, in the public markets, there are opportunities to buy fractional ownership in businesses at prices below what a rational seller would part with for the entire company. The Fund targets a 10-15% IRR over time and seeks to preserve capital by avoiding companies that trade at expensive valuations, have significant leverage and/or operate in industries subject to rapid change.

Investment Strategy


We maintain a disciplined approach by classifying
each investment according to our “Playbook”

Investors are often asked to describe their investment strategy. To our knowledge, it has never been answered with the explanation that the investor likes to overpay for shrinking, low-quality businesses run by subpar management teams (although this is quite often what happens). Instead of conventional classification, we describe our investment strategy using the analogy of a sport’s Playbook. A team with only one play can often be stopped, but a championship team will have perfected a few plays to ensure success regardless of game conditions and the opposition’s tactics. In our Opportunities Fund, we classify each investment according to four plays:

Playbook


Risk Management


Risk is the chance
of permanently losing money

Flexible Fixed Income Fund LP


The objective of the Fund is to preserve capital
through all market environments

The objective of the Fund is to preserve capital for investors through all market environments and achieve 5-7% stable net returns with lower price volatility compared to equity markets. The Fund has been established for investors who desire fixed income returns yet are unconvinced that traditional bond portfolios or mainstream balanced funds will sufficiently protect capital through a rising interest rate environment. The Fund is unique in its focus on the high yield bond market, utilization of low levels of leverage, and controlling risk through hedging individual bond holdings by shorting the equity of the same company.

Investment Strategy


We have four defensive plays in our
Flexible Fixed Income Playbook

Equity and fixed income markets are often disconnected from each other, particularly within the context of the same company. The reason for this is because stocks and bonds are usually considered different areas of investment expertise. For example, fixed income and equity trading desks are normally separated at investment banks and most buy-side investment firms are either debt or equity-focused. At Ewing Morris & Co, we have the unique advantage of having both equity and fixed income expertise. This allows us to be capital structure agnostic when it comes to analyzing businesses and investment opportunities. It also gives us the ability to identify and exploit the discrepancies in value that arise from the lack of communication between the equity and debt markets. Furthermore, our team is able to leverage company-specific insights from our equity Opportunities Fund in order to make decisions about the same company’s fixed income (debt) securities. Similar to our equity strategy, when it comes to executing our investment strategies we like to use the analogy of a sports Playbook.

Playbook


Risk Management


The first and most important source of risk is at the security level. The research process attempts to identify and avoid situations with a material risk of permanent capital loss. Risk is then managed via position sizes. Portfolio level risk is a function of the underlying debt investments which are diversified by maturity, credit rating, business drivers, industries and investment “play.” Further, the philosophy on risk has the following main focal points:

Dark Horse LP


The Dark Horse is a
concentrated, long / short strategy
with typically low net exposure.

The Dark Horse LP is an investment limited partnership intended for high net worth, institutional and accredited investors. “Dark Horse” is an old handicapping term referring to a horse that is overlooked, unappreciated and mistakenly cast off as another long shot. The true Dark Horse sports long odds while possessing many of the skills and attributes of the favorite. It is the best value in the race. It is the type of wager that those who “know their stuff” and do their research seek.

The Dark Horse is the underdog that should not be such and is exactly the sort of investment that we seek for our partners.

Investment Strategy


Risk Management


We aim to avoid liquidity, concentration and market risk by adhering to strict risk controls and discovering esoteric company specific opportunities to exploit with long & short positions.