EFTA01138022.pdf

From: Neal Berger To: [email protected] Subject: Eagle's View Capital Management, LLC- December 2015 Performance Update... Date: Mon, 18 Jan 2016 16:09:04 +0000 Eagles View Capital Management. LLC December 2015 Performance Update Jan. 18, 2016 Year-end Recap Dear Partners/Friends, Click here to view our most recent monthly investor tearsheet Performance of Eagle's View Capital Partners, L.P. is estimated at flat for December with YTD performance estimated at +5.04% net of all fees and expenses. Performance of Eagle's View Offshore Fund, Ltd. Class G is estimated at +0.50% for December with YTD performance estimated at +3.08% net of all fees and expenses. Performance of Eagle's View Offshore Fund, Ltd. Class B ("High Alpha") is estimated at -0.10% for December with YTD performance estimated at -0.23% net of all fees and expenses. This Share Class seeks to generate substantially higher returns through a more concentrated portfolio of some of our historically higher return opportunities. Investors in this Class should have a willingness to accept increased volatility and risk in exchange for the potential of higher returns. For the full year 2015, we believe Eagle's View performed within the boundaries of expectations, although, toward the lower end of our anticipated and desired profile. Relatively speaking, we did well, however, we are not a Firm that emphasizes relative performance both on the upside or on the downside. Our goal is to generate a truly non- correlated source of alpha over a reasonable horizon, therefore, performance relative to other mainstream and alternative investments is not overly relevant as far as we are concerned. We believe our return profile is driven more by the opportunity set of inefficiencies we seek to capitalize upon and the manner in which they manifest. Considered over a reasonable horizon, we believe our returns should exhibit an idiosyncratic profile. EFTA01138022 We view 2015 as a major transitional year for global markets, monetary policy, and market dislocation. We witnessed a substantial number of surprising shocks to markets including but not limited to, the Swiss Central Bank unexpectedly scrapping the peg versus the USD early in 2015, the European bond rout over a 2 week time frame in late April sending the German 10-year Bund from 0.05% to 0.74% (capping the biggest weekly rise in yield since 1999 when Germany joined the Euro Zone), the highly forgettable Greek crisis of June, 2015, Yuan devaluation and substantial turbulence within the Chinese markets possibly exacerbated by the lack of confidence in Chinese central bankers to manage their economy and markets properly, entering commodity prices coupled with massive short-term counter-trend moves such as the 29% rally over a 3+ day period in Crude Oil, the 35% rally in gold mining stocks toward the end of the Summer, substantial central bank confusion and mixed signals including the very disappointing Dec. 3th Draghi move which caused certain hedge funds (particularly within Macro and CTA) to experience their largest losing day ever, and of course, culminating with the first Fed rate hike in 10 years, a highly controversial move in certain circles. As we suggested in our letter of Dec. 13th entitled, "Welcome to the Jungle" (Click here to view), severe market dislocation has continued, and in fact, has picked up steam at an unprecedented rate thus far during January. Negative swap spreads and negative nominal interest rates in certain countries, a severe divergence between market expectations of future interest rate policy versus chatter coming out of the Fed, messy Chinese markets, crashing commodity prices, increased illiquidity in markets due to regulatory changes from Basel III and Dodd-Frank have all led to quite a chaotic start to the year. Clearly, readers do not need us to recap the events of this year within this email as it is apparent to all of us. So, why are we mentioning this? In short, the market environment continues to create increased inefficiencies irrespective of the ultimate direction of the markets. We believe and expect our strategies will be able to capitalize upon these opportunities. That said, during periods of severe dislocation, forced asset flows, liquidations, etc., existing positions our Managers hold may become increasingly inefficient and thus cause short-term losses. Based upon current Manager estimates, we are down modestly for January thus far, however, nothing alarming or outside the boundaries of our normal return history. Sometimes, we find we may have to lose a little as markets become increasingly chaotic in order to make a lot (hopefully) as the dust settles. 2015 is in the record books and it will go down as a respectable, although, modest year for Eagle's View. All attention is now focused toward 2016. We believe the current market conditions are quite favorable to create the increased opportunity set our Managers need to capitalize upon. We come at the market from a position of strength and without fear of the chaos and turbulence. In fact, we welcome it. We recognize this may cause increased volatility of our own returns, however, we also believe that these are the conditions necessary to allow for enhanced returns. We are highly diversified across numerous strategies that we believe have positive expectancy. We have little/no correlation to the direction of markets and we are invested in liquid strategies. We feel very good about our current positioning and we're pleased that we have the experience to have prepared ourselves for markets like this despite not having witnessed this type of volatility in quite some time. As mentioned within our Nov. commentary, we favor quantitatively driven strategies such as various forms of statistical arbitrage, volatility arbitrage, algorithmic pattern recognition, and of course, strategies that 'live above the fray' such as electricity arbitrage, shipping derivatives, etc. EFTA01138023 Of course, we could fill our portfolio with Cat Bonds, Life Settlements, Platform Lending, and other asset backed lending strategies to show a lack of correlation and smooth returns. That said, we believe those strategies have embedded risks that we are simply not willing to take despite their apparent smooth return monthly profiles which we do not believe capture the true risks inherent in those strategies. As such, we've avoided them despite their 'marketability' during these turbulent times. Eagle's View has always attempted to be well prepared for market dislocation and potential illiquidity of certain markets. We have generally avoided most credit strategies, 'risk-on' exposure (our flagship Fund has an insignificant 0.08 beta to the S&P), and, our risk management approach has always accounted for the fact that we will see more challenging markets than those we've experienced since the central bank supported environment post-2008. We've simply seen the movie too many times to believe that goldilocks markets last forever. We've always felt one of our 'value adds' to investors is the ability to generate consistent returns even during periods of stress. Eagle's View has never sought to outperform equities or be the highest performer. Rather, we've sought to provide investors with a low-stress, wealth preservation vehicle that can withstand challenging market environments and provide a truly unique source of alpha. We believe and expect this will continue to hold true. We do not believe that we, nor anyone else has any 'edge' in making predictions regarding the direction of markets. Rather, we are simply in the money making business. We are not interested in being right about the economy or patting ourselves on the back for predicting the timing of the next Fed tightening, or lack thereof. We are interested in putting up smooth and steady returns for our investors in a low stress manner. We'd like to take this year-end letter to say thank you to our investors for your continued confidence in our approach and offering. Rest assured, we work hard every day to protect and grow your capital in a responsible manner and we do not take the confidence you have placed in us lightly. We are accepting new investment within our Fund of Funds products as well as within our Advisory business. Please contact me with further interest in our products/services. Disclaimer: Past performance is not indicative of future results. This newsletter is provided for informational uses only and should not be used or considered an offer to sell, buy or subscribe for securities, or other financial instruments. Prospective investors may not construe the contents of this newsletter or any prior or subsequent communication from us, as legal, tax or investment advice. Each prospective investor should consult his/her personal Counsel, Accountant, and other Advisors as to the legal, tax, economic and other consequences of hedge fund investing and the suitability of such investing for him/her. Further, the contents of this newsletter should not be relied upon in substitution of the exercise of independent judgment. The information contained herein has been obtained from sources generally deemed by us to be reliable, however, all or portions of such information may be uniquely within the knowledge of parties which are unaffiliated with us or our affiliates and, therefore, may not be amenable to independent investigation or confirmation. In such cases, we have not undertaken to independently investigate or confirm the accuracy or adequacy of such information, but we have no reason to believe that such information was not accurate and adequate, to the best of our knowledge, when given. The index comparisons herein are provided for informational purposes only and should not be used as the basis for making an investment decision. There are significant differences between client accounts and the indices referenced including, but not EFTA01138024  limited to, risk profile, liquidity, volatility and asset composition. Funds included in the HFRI Monthly Indices must report monthly returns; report net of all fees retums; report assets in US Dollars, and have at least $50 million under management or have been actively trading for at least twelve (12) months. Fund of Funds invest with multiple managers through funds or managed accounts. The strategy designs a diversified portfolio of managers with the objective of significantly lowering the risk (volatility) of investing with an individual manager. The Fund of Funds manager has discretion in choosing which strategies to invest in for the portfolio. A manager may allocate funds to numerous managers within a single strategy, or with numerous managers in multiple strategies. The minimum investment in a Fund of Funds may be lower than an investment in an individual hedge fund or managed account. The investor has the advantage of diversification among managers and styles with significantly less capital than investing with separate managers. PLEASE NOTE: The HFRI Fund of Funds Index is not included in the HFRI Fund Weighted Composite Index. It is important to note that investing in hedge funds involves risks. Please request and read the Private Placement Memorandum for a complete description of the risks of hedge fund investing. Hedge fund investing may involve, in addition to others, the following risks: the vehicles often engage in leveraging and other speculative investments which may increase the risk of investment loss; they can be highly illiquid; hedge funds are not required to provide periodic pricing or valuation information to investors; they may involve complex tax structures and thus delays in distributing important tax information may occur; hedge funds are not subject to the same regulatory requirements as mutual funds and they often charge high fees. Opinions contained in this Newsletter reflect the judgment as of the day and time of the publication and are subject to change without notice. Eagle's View Capital Management, LLC provides investment advisory services to clients other than the Funds, and results between clients may differ materially. Eagle's View Capital Management, LLC believes that such differences are attributable to different investment objectives and strategies between clients. Past performance is not a guarantee of future results. If you are not the intended recipient or have received this communication in error please notify the sender immediately and destroy this communication. Any unauthorized copying, disclosure or distribution of the material in this communication is strictly forbidden. Kindest regards, Neal Berger President 1 axles view ( coital Management LLC Forward email This email was sent to [email protected] by Rapid removal with SafeUnsubscriberm About our service provider. Eagles View Capital Management LLC I 135 East 57th St. 23rd Floor I New York I NY 10022 EFTA01138025