Fund Presentation · JDP’s Survivor & Thriverinvestment criteria: 1. Business model that is...

Fund PresentationJune 2020

Jeremy Deal, Portfolio Manager

Business Experience JDP private equity, Secure Wireless Inc. (sold to Nortek, NASDAQ: NTK), Energy Eye Inc. (sold to SomfySA, EPA:SO), Honeywell International (NYSE: HON)

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15 East 67th Street | New York | NY | 10065 jdpcap.com Vijzelstraat 68 | 1017 HL | Amsterdam

Mark Chapman, Director, JDP Offshore Ltd

Business ExperienceAzur Consulting, Aquamarine Fund Zurich (COO/Director), Deloitte BVI (Managing Partner) Deloitte Cayman Islands (Senior Manager)

Seth Lowry, Senior Analyst

Business ExperienceTech Coast Angels, Citigroup Equity Research (Transportation), Merrill Lynch Investment Banking (Energy and Power), Merrill Lynch (Global Securities Research)

JDP Capital Management Team

JDP Summary

Global equity fund, US-centric

Concentrated value strategy with a special-situations overlay

5+ year time horizon per investment

US Limited Partnership, Offshore feeder (Credit Suisse Nominee Platform approved)

No leverage

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Founder’s objectives

• Maintain and grow an attractive track record

• Operate with a high degree of integrity and expect the same from our portfolio companies

• Embrace mistakes and continuously improve the process

• Protect JDP’s culture, goals and advantages by limiting the pool to like-minded investors

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JDP’s evolution

2009 – 2011Fundless private equity sponsor focused on divestitures of distressed public companies

2011 - 2015Launches a hedge fund to invest in attractively priced micro caps, price-based investment criteria only

2015 - 2017Investment universe expanded to larger companies with long-term compounder qualities

2017 - presentAdopts the Survivor & Thriver overlay criteria for all investments

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Investment Strategy

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What we look for

Companies with significant unrecognized earning potential

Sector leaders that are much smaller than their addressable market globally

Underwrite for a rolling 100% unleveraged return target every 3 to 5 years (15% to 25% annualized)

Best ideas only: 8 to 12 holdings

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JDP’s Survivor & Thriver investment criteria:

1. Business model that is adaptable and relevant in tomorrow’s economy

2. Durable pricing power protected by a growing competitive advantage

3. Capital allocation and balance sheet strategy that supports the company’s moat

4. Significant alignment of interest between management and equity owners

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Survivor and Thriver companies: A rare combination

Surviving is not enough: Most companies that can survive a long time cannot thrive because they lack innovation

Thriving is not enough: Most new high-growth companies cannot survive a long time due to competition, lack of scale, reliance on outside financing to fund growth, lack of elite leadership and ability to attract top talent, etc.

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Survivor and Thriver companies combine long-term staying power with consistent outsized growth

Margin of safety

Focused on protecting against permanent business impairment, not price volatility

Flexible cost structure to quickly accommodate economic ups and downs

Ability to fund growth plans with internal cash flow (self-financing businesses)

Conservative balance sheet

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Buying on a value-basis

Comparison of price today vs. our estimate of future cash flow

Zoom-out estimate of future business performance

Misunderstood non-traditional KPIs expected to drive higher margins

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Special Situations basket

Highly opportunistic equity or debt bets with 5x to 10x upside

Distressed situations where a positive outcome is largely in our favor

Examples: recapitalizations, legal settlements, asset sales, liquidations, merger-arbitrage

1% to 3% positions, maximum basket size 10% AUM

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Decision to sell

Valuation driven, not volatility driven

Material mistake in our thesis or valuation assumptions

Eroding competitive advantage

Discovery of a much better idea

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Past and recent portfolio examples (2011 – 2020)

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Structure, Terms, Contacts

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Fund structure and fees

US Limited Partnership with offshore feeder (Credit Suisse nominee platform fund)

Monthly subscription, annual redemption

Initial minimum $250,000 (US fund), $500,000 (Offshore), $25,000 thereafter

Fees: 1% fixed, 20% performance above a 6% hurdle

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Investor base

High net worth families who invest directly with JDP (US and Europe)

Business-owner mindset towards stocks

Average investor has 5% to 10% of net worth in JDP

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Contacts

Fund Administrator – US

Yulish & AssociatesJoshua Sack2 Turquoise WaySan Francisco CA 94131(415) 641-4246

Fund Administrator – Offshore

Perennial Fund ServicesAJ Haas11620 Wilshire Blvd, #400Los Angeles CA 92225(310) 445-2581

Tax/Audit

Spicer Jeffries LLPBob Yurglich5251 S. Quebec St., Suite 200Greenwood Village CO 80111(303) 753-1959

Legal – US

Ragghianti Freitas LLPJack Martel1101 Fifth Avenue, Suite 100San Rafael, CA 94901(415) 453-9433

Legal – Offshore

Harneys Westwood & Riegels LLPPhilip GrahamTortola, BVI+1 284.494.2233

Trading

Jones TradingScott Cooper220 E 42nd StreetNew York, NY 10017(212) 267-0777

Bank and Cash Controls

City National BankRon Garcia100 Montgomery St.San Francisco CA 94104(415) 576-2407

Compliance

Gordian ComplianceJustin Schleifer150 Spear St., No. 825San Francisco CA 94105(415) 762-2845

Prime Broker

Interactive Brokers LLCBen Nguyen8 Greenwich Office ParkGreenwich CT 06831(203) 618-5971

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Jeremy DealManaging [email protected]


Fund Presentation · JDP’s Survivor & Thriverinvestment criteria: 1. Business model that is...

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