September 2018 - WordPress.com · • As of 2017, games industry generated $121.7 Billion in...

September 2018

Prosperously navigating

unexpected events

with great skill and agility

2

AGENDA

3

Who We Are

Investment Methodology

Performance

Current Opportunity and Investment pipeline – GAMING & ESPORTS

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 S&P 500

Return Since Inception

YTD Return

60 Day Return

20 Day Return

Daily Standard Dev.

Sharpe Ratio

Sortino Ratio

Correlation

64.68%

6.17%

-0.97%

1.62%

0.71%

0.86

1.19

-

72.53%

7.95%

4.65%

2.61%

0.78%

0.89

1.25

0.97

* 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.

October 1, 2013 to August 31, 2018

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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD S&P 500 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% 11.43%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% 0.47%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% 9.50%2016

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% 19.42%2017

2.89% 0.63% -0.62% -1.57% 4.11% -1.63% 0.63% 1.72% 2018 6.17% 7.95%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

10/1/2013 10/1/2014 10/1/2015 10/1/2016 10/1/2017

BSD gross vs BSD net vs Benchmark since inception

BSD S&P 500

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

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CURRENT OPPORTUNITIES AND INVESTMENT PIPLINE

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• 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

10Source: Newzoo

2017 Total

$122B+14.3%

YoY

VIDEO GAMING ECOSYSTEM

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GAMING

Chinese Tencent

is the clear leader in the space

Source: Newzoo

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

Bn

Bn

Bn

2017 TOP 15 COMPANIES BY GAME REVENUE

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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

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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

14

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

15

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.

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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

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AUGUST 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)129.2M 0.0M

2League of Legends

Riot Games (Private)80.1M 19.5M

3Dota 2

Valve Corporation (Private)69.5M 47.3M

4World of Warcraft

Activision Blizzard55.4M 0.1M

5Hearthstone


6PLAYERUNKNOWN'S BATTLEGROUNDS

Bluehole (Private)34.9M 1.8M

7Overwatch


8Counter-Strike: Global Offensive


9Grand Theft Auto V

Take-Two Interactive11.4M 0.0M

10Tom Clancy's Rainbow Six: Siege

Ubisoft13.7M 2.3M

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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


2League of Legends

Riot Games (Private)80.1M 19.5M

3Counter-Strike: Global Offensive


4Hearthstone


5Street Fighter V

Capcom5.2M 3.0M

6Overwatch


7Heroes of the Storm


8Tom Clancy's Rainbow Six: Siege

Ubisoft4.4M 1.5M

9StarCraft II


10Call of Duty: WWII


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ESPORTS LEAGUES

GAMING ESPORTS

Organized by the Electronic Sports League and E-Sports Entertainment Association, CS:GO Pro League (also called ESL Pro

League) is the premier worldwide league for the game and features multiple month pro league seasons in Europe and North America,

with 12 teams participating in each region.

A professional esports league which broadcasts its events on North American television channel TBS, with Counter-Strike: Global

Offensive as its primary featured esport. The ELEAGUE features sixteen of the best CS:GO teams picked from around the world

competing in two 10-week league seasons annually, with a regular season, play-offs and championship finals.

The annual World Championship Dota 2 esports tournament run by Valve Corporation since 2011 and officially the largest and

highest-paying esports tournament in the world based on audience (400,000 million) and record-breaking prize-pools (US$24 million).

Electronic Major League Soccer (eMLS): The official e-League for FIFA 18 run by Major League Soccer, North America’s major

professional soccer league. The eMLS is in partnership with EA Sports, the developer and publisher of the FIFA video game series

and will feature high-level FIFA 18 competitions.

The HWC is the largest esports event held for competitive Halo since 2014. Sponsored by current Halo developer 343 Industries, the

2018 season is produced by the Electronic Gaming League and Major League Gaming.

The EU and NA League of Legends Championship Series are the premier national LoL tournaments in their respective regions, acting

as the path for European and North American to earn their way to the World Championships.

The premier esports league for Overwatch run by Blizzard Entertainment, the creators and publishers of the game. It is arguably the

most popular new esports league of 2018, with millions of viewers tuning in across Twitch.tv and MLG.tv.

The first and only professional esports league advertised, managed and endorsed by the NBA in partnership with 2K Games. Set to

launch in mid-2018 after a series of virtual try-outs, 17 of the NBA’s 30 teams are confirmed to be a part of the inaugural 2018 2K

League season.

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ESPORTS LEAGUES

GAMING ESPORTS

High School Esports Competitions to Begin in U.S. This Year

In October, PlayVS will launch its inaugural season, bringing organized esports to more than 18 states and

approximately 5 million students across 5,000 high schools. Competitions will focus on three genres: multiplayer

online battle arena (MOBA) games, fighting games, and sports games.

PlayVS partnering with the National Federation of State High School Associations (NFHS) and the NFHS

Network. The NFHS organizes education-based athletic activities around the country, while the NFHS Network is

the national leader in streaming high school sports online.

Nearly 200 colleges in the U.S. and Canada are now actively recruiting and offering

scholarships to players.

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ESPORTS LEAGUES

GAMING ESPORTS

ESPN signed a deal with Activision for TV rights to the Overwatch League

The league's "Grand Finals", which will be telecast on ESPN, marks the first time live competitive gaming will air

on the network in prime time, and will be the first broadcast of an e-sports championship on ABC

Earlier this year, Activision announced a two-year deal to broadcast the first two seasons of the league on Twitch.

Goldman Sachs predicted that esports will have 276 million viewers worldwide by

2022, on a par with the NFL.

Total revenue could reach $3 billion by then, up from $655 million last year.

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VIDEO GAMES MAY BE PART OF THE 2024 OLIMPICS

GAMING ESPORTS

The International Olympic Committee is considering adding e-sports to the

2024 Olympic Games

Tony Estanguet, co-president of the Paris bid committee, has confirmed that he will speak with the International

Olympic Committee and eSports representatives about the full-fledged inclusion of competitive video gaming

when the Games come to France in seven years’ time.

E-sports will also be included in the 2022 Asian Games in Hangzhou, China.

Yes, video games may soon be an Olympic.

23

FORTNITE BATTLE ROYALE PHENOMENON

GAMING ESPORTS

The most Watched Games on

Twitch & YouTube149.3M hours in July and 129.2M hours in August,

but only 0.2M esport hours and 0.0M esport hours

respectively

New Fortnite Release Downloads

Shatter Record for Internet TrafficTo put this into perspective, this level of traffic

would be like downloading the average mobile

game 2.8 million times per minute

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FORTNITE BATTLE ROYALE PHENOMENON

GAMING ESPORTS

Fortnite Creators Put Up $100 Million for Tournament Prize PoolEpic Games, the maker of Fortnite, has announced plans to provide $100 million for a prize pool in the title’s first

year of competitive play.

“We’re getting behind competitive play in a big way, but our approach will be

different – we plan to be more inclusive, and focused on the joy of playing and

watching the game,” Epic Games said in a blog post

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PUBLIC COMPANIES INVOLVED

GAMING ESPORTS

Pure Players Big Companies exposed

Activision Tencent

EA Sony

Capcom Alibaba

Ubisoft Facebook

Take Two Interactive Google

Nexon Disney

NetEase Microsoft

Nintendo Amazon

HUYA

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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 60.87% since inception versus S&P 500 index

return of 61.54%

• Exhibited only 58% of the S&P 500 index volatility in 2017

• 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.

September 2018 - WordPress.com · • As of 2017, games industry generated $121.7 Billion in...

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Transcript of September 2018 - WordPress.com · • As of 2017, games industry generated $121.7 Billion in...