EFTA00803459.pdf

HONEYCOMB ASSET MANAGEMENT January 15, 2019 Dear Rich, Below please find Honeycomb's 4O 2018, Full Year 2018, and Inception To Date Fund performance. Performance — Gross and Netl Inception To Date 4O 2018 Full Year 2018 (July'16-Dec'18) Honeycomb Class A (gross) -8.3% 6.5% 39.9% Honeycomb Class A (net) -6.8% 5.2% 31.4% Honeycomb Class B (gross) -8.2% 7.0% 41.5% Honeycomb Class B (net) -6.7% 5.6% 32.6% Internal capital anchored our June 2016 soft launch which also ricluded select friends and family capital. The Fund's June 2016 net performance was -3.4% and -3.3% for classes A and B. respectively. Past performance is not ridicative or a guarantee of future results. 4Q 2018 Performance Review Exposures for 4O averaged approximately 144% gross and 54% net, which compares to 184% gross and 65% net for 3Q. For comparison, gross and net exposures since inception have averaged approximately 191% and 57%, respectively. At Honeycomb, we often talk about being flexible in our mindset and open to utilizing the different playbooks accumulated over time through bull and bear markets. For example, in 2008 as the markets became more volatile, I reduced exposure to protect positive performance and manage risk. Ten years later, we took elements of that 2008 playbook and proactively reduced both gross and net exposures as the 500 dropped almost 15% in 4Q. Drawdowns will inevitably occur. We seek to mitigate their impact so our partners can benefit from compounding returns. While preservation of capital was an important objective in the fourth quarter, we remain a fundamentally-based manager always on the hunt for new investment opportunities. Our overall net long exposure did result in 4O losses, but our risk management-based mindset preserved overall positive performance for the fund in 2018, in a year that was challenging across most asset classes. Based on our research, we disagreed with the market seeming to price in deteriorating business conditions for many of the names in our long book. As a result, we occasionally bought market dips when risk/reward looked most beneficial to us. As expected, our short book delivered positive MEI and offset some of the losses on the long side. In addition, we benefited significantly from the hard work our analysts did in recommending new ideas in an effort to offset losses from existing names where we had negative alpha. It is velocity of idea flow that helps Honeycomb generate alpha in changing market conditions. Honeycomb's culture of collaboration encourages us to examine our performance, make improvements as a team, and look for learning opportunities in successes and failures. 645 Mating ANNinue. 1 Floor. New York. NY 10022 Calk - Not for Disinbuton EFTA00803459  HONEYCOMB ASSET MANAGEMENT Gross Long and Short Security Selection Contribution — 4O2018 and Full Year 2018* 4Q 2018 Full Year 2018 10% 8.9% 8.7% -7.8% 4.9% -16.7% 3.7% 0% Long Short Total Long Short Total 'The security elrbution above deers from the 2018 perfermance table as it does not wisider management fee. inn:trove a/motion. lanyards or Fund expenses. Past performances not indicative or a guarantee of Inhere results. For the year, we finished with roughly equal positive contributions from the long and short book. Software and large cap internet provided positive performance that was offset by steep losses in Chinese intemet and technology, an idiosyncratic data privacy scandal, and social gaming. On the short side, we generated gains from our research that highlighted secular headwinds impacting beer and soda beverage companies as well as the hyper competitive food delivery business. Investment Themes for 2019 — 5G Wireless We believe 50 will become a "megatrend- that will create a global capex cycle independent of GDP growth. While this cycle will not be as revolutionary as the transition from analog to digital, we think the evolution to SG will create new industries to serve consumers and businesses and create investable opportunities across industries. Over the next decade, Wi-Fi and super high-speed networks will be an increasingly important part of daily life. Consumers will have subscriptions to autonomous vehicles, drone delivery of goods, reimagined kitchen appliances and virtual reality shopping (just envision the benefits of seeing on an augmented reality headset what a sofa looks like in your home before you buy it!). One of the more interesting implications of 5O is the software layer being added to devices sold by telecom equipment providers. This new software layer will be required to optimize the efficiency of next-gen 50 networks and the sales of such technology solutions could generate significant new revenue streams with higher margins. This will come not just from the greater incremental cost of the equipment itself, but also from software maintenance revenue that we believe will be valued at a higher multiple than traditional telecom equipment sales. The potential impact of this new business mix led us to build a new position in Nokia which will deploy increasingly more software on top of radio and optical equipment for 50 networks. Our research leads us to believe this will be a more investable area as we get closer to 2H19 but our work is being done now to prepare for it. After years of stagnant growth, we also believe that telecoms are inexpensive on a global basis because valuations are not accurately pricing in potential new revenue streams resulting from 5O. With its super- fast connectivity, 50 will set the stage for innovation. New use cases will continue to develop in fields such as healthcare, smart vehicles, robotics, machine learning and long-haul transport. The importance of communications in our everyday lives will also be enhanced as more and more devices are connected to 2 Ccrifderbai Not foe 0$:int:Lion EFTA00803460  HONEYCOMB ASSET MANAGEMENT the Internet and the 'Internet of Things' becomes more commonplace. The new devices, equipment and use cases that emerge will require more and more data which we believe could meaningfully and positively impact telecom companies across the globe. Telecom is an area of increased focus and a core expertise for Honeycomb, where upon gaining conviction we could deploy significant capital. Co-Investment Update Tencent Music Entertainment was publicly listed in December in a difficult environment. While the market conditions for Chinese companies are currently challenging, we believe TME remains a terrific long-term investment opportunity despite its current low valuation compared to our entry point. TME is the market share leader in streaming music in China, capturing the secular growth of the music market in China and benefitting from the transition to paid subscriptions. We also believe TME's ownership of the large social network platform called WeSing is underappreciated by the market and is a differentiator for the company. WeSing takes the popular past time of Karaoke from offline parlors to an online experience. We expect 2019 to be a breakout year for Tencent Music and look forward to its bright future. Business Update 2018 was an important and successful year for growing our partnership with high quality and strategic investors, expanding the team, and launching new products. I am pleased to report we have thrived and built a strong business that isn't satisfied with its legacy track record and doesn't rest on any laurels. Our business reputation is solid and we continue to grow. We are in a busy recruiting season and seeing some of the best talent eager for an opportunity to become part of our current team of 11 employees. Our total firm assets are over $750M, excluding co-investment distributions of +590M in exits of successful private investments. We continue to be very measured in our pace of AUM growth and despite this challenging fundraising environment over the past 2.5 years for the industry, we have seen 30 consecutive months of capital inflows. We have repeatedly shared that Honeycomb intends to be a boutique firm and our team is proud that we continue to execute on this vision. Closing Remarks This summer will mark our 3'd anniversary. Our firm was launched during the Brexit vote and this past quarter provided the challenging environment that is helpful to reinforce our culture of taking nothing for granted. Great firms are often built during difficult times while easy times can distort luck for talent. We are grateful for the opportunity to work for you. Our scalable and repeatable process to invest in the future and short the past makes Honeycomb an exciting place to work. Thank you for your partnership and I hope you have a very happy and healthy 2019! Best Regards, 3 Cad-denim, Not foe Omintvon EFTA00803461  HONEYCOMB ASSET MANAGEMENT PARTNERSHIP CONTACT INFORMATION: Dominique Ahumada Head of Capital Partnerships & Talent (646)883-1128 Ccrobionlial - Na for Distributim EFTA00803462  HONEYCOMB ASSET MANAGEMENT grxInotes & Important Legal Disclosure Honeycomb Master Fund LP (the 'Master Fund') includes all or substantially as investible assets from as feeder Mids. Honeycomb Partners LP ('Domestic Fun!). Honeycomb intermediate Fund LP and Honeycomb Offshore Fund Ltd. (collectively. the 'Funds'). However. investors are expected to invest at the feeder fund not at the Master Fund level. The reflected returns assume a representative investor invested in the Domestic Fund in each of (1) the Class A interests that are subject to a management fee of 2% and incentive allocation 01 20% and (II) the Class B Interests that are subject to a management fee of 1.5% and an incentive alocation of 20%. 'Net' reflects the performance of the Domestic Find net of management lee. expenses and incentive allocation, 'Gross' reflects the performance of the Domestic Fund net of management lee and expenses. but gross of incentive allocation. Returns assume the reinvestment of all dividends. interest. Income and profits. The management fee and expense tires used for performance calculations are pro-rated for the performance period, and incentive allocation calailabions reneci an investment since the Domestic Funds Ally 1.2016 institutional launch date. The reflected rainsassume participation by the Class A and B representatwe investor in new issue' investments and no participation in side pockets. Individual results will vary (potentially considerably) depending on. among other things. investing al the offshore feeder fund rather than the Domestic Fund level, new issue eligibility. side pocket participation, the tiri ng of contributions/subscription and wandrawalsfredemptions. different fee arrangements and any accisnLiated loss carry-forwards. This performance information is estimated and Honeycomb Asset Management LP (the -Investment Manage() makes no representations as to the accuracy or completeness thereof. an such information should not be relied upon for investment related or other purposes. The performance inficanniat is based on unaudited information as of the date hereof and e subject to change as actual performance for the relevant period is finalized. Past performance is not indicative of future results. This investor letter is confidential, is intended only for the person to whom it has been provided and under no circumstances may a copy be shown, copied. transmitted. or otherwise given to any person other than the authorized recipient without the prior written consent of the Investment Manager. Except as otherwee specifically set forth herein, the information in this letter is as 01 the dale hereof. Notwithstanding anything to the contrary heron. each recipient to this document (and each emp4oyee, representative, or recipient) may disclose to any and all persons, without limitation of any kind, the lax treatment and tax structure 01 the Funds any of the/ transactions, and all materials of any kind (including opinions or other lax analyses) relating to such tax treatment and tax structure, it being understood that lax treatment' and 'tax structure' do not Include the name or identifying information of a Fund or a transaction. The distribution of the information contained herein may be restricted in certain jurisdictions. accordingly. it is the responsibility of any prospective investor to satisfy itself as to compliance with relevant laws and regulations. The recipient and its professional advisors, by accepting delivery of this docanent. agree to keep confidential all matters herein and to return this document promptly upon the request of the Investment Manager. The information contained herein is preliminary and is provided for discussion proses only. This information e any a summary of key information. it is not complete and does not contain certain material information about the Funds. including important conflict 0l litres's disclosures and risk factors associated with an investment in the Funds and is subject to change without notice. TM document has been suppled for discussion purposes only, and therefore no representation or warranty is made. whether expressed or titled, by the Funds or the Investment Manager or any 01 their partners. employees, members, or agents as to the accuracy or completeness of the information provided herein. This document may be amended at any time. There is no express or implied obligation to update you of any changes to the information set forth herein. The information contained herein should not be relied upon as the basis of any investment decision or for any other purpose. TM document is not intended to be. nor should it be construed or used as an offer to set or a solicitation of any offer to buy, interests or shares in the Funds. No offer or solicitation may be made prior to the delivery of a definithe offering rnenorandLen (the 'Memorandum') Much MI contain additional information about the Finds. including disclosures relating to risk factors and conficts 01 interest. The information contained herein does not consider the particular investment objectives or financial circumstances of any specific person who may receive it and is qualified in its entirety by the Memoranclion. In the event of any disorepancies between the information contained herein and the Memorandum, the Memorandum will control. The information herein is n0t intended to provide, and should not De relied upon for, accounting, and legal or tax advice or investment recommendations. Each recipient of this document should make an independent investigation as to al matters concerning an investment in the Faids or otherwise described herein. including consulting with its own tax, legal, accounting or other advisors about the matters concerning an investment in the Funds or otherwise discussed herein. In making an investment decision. investors must rely upon their own examnabon 01 the Funds and the terms of the offering. inclining the merits and risks involved. An investment in the Funds may not be &Watts for al investors. An investment in the Funds will be suitable only for certain financially sophisticated investors who meet certain eligibility requirements, have no need for immediate bauidity in their investment, and can bear the risk of an investment in the Funds for an extended period of time. Investing in financial markets involves a substantial degree of risk. There can be no assurance that the investment objectives described herein will be achieved. Investment looses may occur, and investors could lose some or all their investment. No guarantee or representation is made that the Finds' investment program. including. without Mutation. its investment objeattes. diversification Urategies. or risk monitoring goals, will be successful, and investment results may vary substantially over ans. Nothing herein is intended to imply that the Finds investment methodology may be considered "conservative". 'safe', 'risk tree' or 'risk averse'. Economic, market and other conditions could also cause the Funds to alter their investment objectives, guidelines and restrictions. Certain information contained in the document (including, n particular, the discussion of investment themes contained herein) constitutes lavaud.looking statements'. which can be identified using forward-looking terminology such as 'may'. 'Will; "shouir. 'expect'. 'anticipate". 'target, "project. 'estimate", "intend'. 'continue' or 'believe' or the negatives thereof or other variations thereon or comparable temsiology. Due to various risks and uncertainties and assumptions made by the Investment Manager. actual events or results or the actual performance of the Funds may differ materially from those reflected or contemplated in such forward-looking statements. The esbmates, investment strategies, investment themes, and views expressed in this document are based upon past or current market conditions and/or data and information provided by unaffiliated third parties (which has not been independently verified) and is subject to change without notice. In addition, many ol the views expressed herein are stkpctIve andror reflect the Investment Manager's estimates or keecasts on future performance and market events. Such statements should not be aiderstood to be predictions or guarantees of any particular outcome, or of the Investment Manager's commitment to invest in any pa/beam industry, sector. region, or cottony. In particular. you should be snare that any new technologies or products discussed herein are unproven, may never develop as the Investment Manager anticipates, could be superseded by other technologies, and are subject to significant investment risks. Past performance is not indcative nor a guarantee of line reams. Each issuer discussed as a longlshon contnbutor or detractor from performance was one of the top 10 liongfshort contributors or detractors from performance for the quarter and was selected based on being a representative driver of performance for the quarter. Honeycomb Offshore Fund Ltd. (the 'Offshore Fund') has not been approved for distribution in or from Switzerland by the Swiss Financial Market Supervisory Authority. Asa result. the Offshore Fund's shares may ally be offered or distributed to qualdled Investors within the meaning of Swiss law. The Representatwe 01 the Offshore Fund in Sw0zertand is Bastions Partners Office SA with registered office at Route de Chore 61A. 1208 Geneva. Switzerland. The Paying Agent in Switzerland is Banque Heritage SA. with registered office al Route de Chene 61, 1208 Geneva, Switzerland. The place of performance and judsdicticri for shares of the Offshore Fund 6siributed in or from Switzerland are at the registered office of the RepeeSentatrve. 5 Conrcential - Not For Distribution EFTA00803463