Peter Rabover, CFA

Portfolio Manager
Artko Capital LP

April 19, 2018

Dear Partner,

For the first calendar quarter of 2018, a partnership interest in Artko Capital LP returned 5.5% net of fees.
At the same time, an investment in the most comparable market indexes—Russell 2000, Russell Microcap,
and the S&P 500—lost 0.1%, gained 0.7%, and lost 0.8%, respectively. For the trailing 12 months, an
interest in Artko Capital LP returned 21.2% net of fees, while investments in the most comparable
aforementioned market indexes were up 11.8%, 13.5%, and 14.0%, respectively. Our monthly results and
related footnotes are available in the table at the end of this letter. Our results this quarter came from
positive contributions from US Geothermal, Gaia Inc., Skyline Corporation and The Joint Corp., while
pullbacks in Hudson Technologies, Destination XL, Premier Exhibitions Inc., and Leaf Group detracted from
the overall performance.
Inception Inception
2Q17 3Q17 4Q17 1Q18 1 year
7/1/2015 Annualized
Artko LP Net 8.3% 1.9% 4.1% 5.5% 21.2% 62.4% 19.3%
Russell 2000 Index 2.5% 5.7% 3.3% -0.1% 11.8% 26.8% 9.0%
Russell MicroCap Index 3.8% 6.7% 1.8% 0.7% 13.5% 22.7% 7.7%
S&P 500 Index 3.1% 4.5% 6.6% -0.8% 14.0% 35.6% 11.7%

On Suffering Through Long-Term Investing

“I think most people would be better off with more pain in their lives, honestly. I think that, if nothing else,
they would appreciate the pain-free times more. But I think also there's this self-induced aspect of, you've
struggled, you've overcome, you've gotten through, then you're confident and you both enjoy the rest of
your life more, but also you feel like you can do things and you take on challenges that you wouldn't
otherwise try, and you get to points that you wouldn't otherwise reach.” – Julian Jameson, “The Barkley
Marathons: The Trail That Eats Its Young”

One of our core underlying beliefs in creating this partnership almost three years ago was that of the few
pockets of market inefficiencies that remain available to exploit by active investors, in addition to the
illiquidity premium of microcap publicly traded companies, are opportunities in “time arbitrage.” While
that phrase might sound like fancy investment jargon, it’s simply the ability to take advantage of the
market’s intense short-term outlook bias also known as “present bias” or the tendency, when making a
decision, to undervalue the future in relation to the present, and be able to invest for the long term and
make investment decisions the results of which are measured in years instead of quarters and months.
Easier said than done of course. Over the last few years, the market has been fueled by easy money and
low volatility, which has created complacency among public market investors. These investors are not
accustomed to feeling pain driven by uncertainty in both fundamental results and stock prices, where
even the smallest deviations from the assigned narrative are considered investment thesis killers.

As you may be aware, the partnership’s portfolio manager is an avid long-distance trail runner who
occasionally participates in trail races from 50 to 100 miles long. For runners, like our portfolio manager,
who are slower than a herd of turtles running through spilled peanut butter, these types of races can take
12 to 36 hours to complete and require a long-term oriented mindset that in addition to being comfortable
with significant uncertainty must also be comfortable with extensive suffering to reach a goal. And make

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no mistake about it; these are not 5k sprint races where the suffering ends quickly. There are emotionally
intense ups and downs, constant adjustments of original goals, relentless self-doubt, and overwhelming
loneliness while climbing up a giant hill in the middle of the woods at 3 a.m. We like to think about our
investment process in a similar fashion. No pain, no gain. When we look for potential investments, we are
not looking for short-term, low double-digit upside investments but for triple-digit upsides over a span of
multiple years. With those types of goals, the journeys in each of our investments require us not only to
have vision beyond next quarter’s results but to also be prepared for periods of intense suffering and
continuous self-re-assessment of whether it is temporary or a significant injury to our portfolio that
requires us to pull out of “the race.”

Where we really like focus our investment process is on the ability to identify real risk, or injury, of
permanent capital impairment of our investments versus just additional uncertainty about future results,
or temporary suffering, on our way to higher long-term returns. Is the stock down significantly this quarter
because the new value of underlying assets can no longer offer us a margin of safety protecting our capital
and we should take our losses and exit the position? Or is it because the market fears the uncertainty of
near term results and thus is giving us the opportunity to add to our position at cheaper prices? Our
investing experience has shown that the market mistakenly assigns near term certainty, such as quarterly
channel checks; obsessive parsing of management commentary at a recent conference; or the results of
the next killer data driven model, as a valuable “edge”, while discounting the hard-to-forecast value of
future results at extreme rates. It is with this belief in mind that we try to construct a Core Portfolio full
of high future uncertainty/low probability of permanent capital impairment investments and are willing
to suffer through periods of drawdowns to achieve superior long-term returns.

This quarter’s quip into our investing mindset is no coincidence. As we discuss below, our results this
quarter were driven by our original July 2015 Core Portfolio investments in US Geothermal and Gaia,
whose stock prices have certainly caused us some suffering along the way to positive results, as well as
our continued challenges in our high uncertainty position in Hudson Technologies.

Portfolio Updates

• US Geothermal (HTM) – In 4Q17, our 10% Core Portfolio position in US Geothermal was down 20% to
a price of $3.45, almost back to the ~$3.00 levels where we initially purchased it 2.5 years prior. It
seemed that the market, frustrated with lack of progress on attaining Power Purchase Agreements
(PPAs) on two major growth projects in 2017, has thrown in the towel. As mentioned in our last letter,
we believed the company’s $60mm 2017 year-end market value was underpinned by several key
components:
o Three fully developed 42-megawatt (MW) geothermal projects that were to continue
generating $9mm-$11mm a year in Free Cash Flow for the next 25+ years;
o 35MW of new capital equipment in storage;
o The development of its 70MW of probable geothermal resource projects.
We were buyers of the shares at year-end prices and were pleasantly surprised by a January 2018
offer of $5.45 per share—almost a 60% premium from year end—by Ormat Technologies. With the
deal likely to close this quarter, this seemingly finishes the chapter on this investment. While we
believe that the true value of US Geothermal is above $7.50 and are still hopeful for a competing offer
to emerge, we recognize that the path to $7.50 is fraught with high uncertainty regarding the
completion of projects, the availability of high-cost capital, and management’s ability to execute on
its pipeline without a new CEO. In the end, reflecting on our earlier musings on high uncertainty/low

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 downside risk investments, US Geothermal ended up being a great example of an investment worth
suffering through to get to an 80% total return.

• Gaia Inc. (GAIA) – Our investment in Gaia Inc., a provider of streaming yoga and documentary content,
returned over 25% this past quarter, as the company continued to execute on its strategy of growing
its subscriber and revenue base by 80% a year to reach over 1 million subscribers by 2019. The
company reached a base of 400,000 subscribers earlier this year, up from about 100,000 when we
first invested in mid-2015 and has continued to drive its customer acquisition costs (CACs) lower each
quarter. While the story is not without its concerns, such as a lower than we would like implied
retention ratio, we’ve been impressed by the consistent delivery of “as promised” results and
professionalism by the CEO Jirka Rysavy and the rest of the management team that is a rare sight in
today’s public markets world of “hype and under deliver” CEOs.

While the stock has returned close to 175% for us since the launching of the partnership, it too has
not been without its “suffering” bumps in the road. The real issue for us today, however, is what to
do with an investment in a very large portfolio position that has outgrown its “value” status with an
original hard margin of safety and has entered the “momentum” category. As the stock reached over
$17.00 per share during the quarter and almost 14% of overall value in the partnership’s portfolio, we
have reduced our stake by 25%, as part of our portfolio risk management protocols. Our original thesis
was underpinned by a hard, asset-based, margin of safety with the corporate headquarters building
and cash value that today, post a secondary equity raise, stands at about a $90mm-$100mm. That
leaves $175mm of enterprise value for what we see is $50-$55mm in revenues in 2018 or
approximately a 3.5X enterprise value to revenue multiple. On the surface, that number appears not
to be very cheap for a company generating consistent losses and burning through massive amounts
of cash.

However, digging into the valuation further, we are mindful of a number of potential scenario
outcomes with various probabilities. On the “more likely than not” probability upside scenario, we
see a company that could be exiting 2019, or less than two years from now, with 1.2 million
subscribers; generating $140mm in annualized revenues with close to 90% gross profit margins; and
$25mm-$30mm in corporate costs. This would leave the company with $80mm-$110mm to decide
between continuing to rapidly grow its customer base at almost triple digits or grow at a more
manageable 20-25% and begin to generate $45mm-$50mm in high double-digit growth annualized
Free Cash Flow toward 2020 and beyond. At a somewhat conservative 15x/6.7% Free Cash Flow
multiple/yield valuation targets, this would imply an almost $40 per share stock price, or over a 150%
potential return from today’s price levels, though we believe the true price is probably closer to $60.

On the other hand, a possible but low probability downside scenario is one where management faces
an inability to grow net subscribers beyond ~20% a year, with unsustainably expensive CACs and a
higher disconnect rate. This would leave the potential for GAIA to exit 2019 with “only” 600,000
subscribers/$75mm annualized revenue run rate and a low cash balance. It is in this scenario where
we want to ask ourselves what would the company be worth then? The good news in this scenario, is
that unlike at a 100,000 subscriber number in 2015, a 600,000 one (or even a 400,000 one today)
shows that Gaia’s content channels and 8,000 title library, as kooky and weird as some of them may
be, are a proven concept and should have significant strategic value to someone who would not have
to shoulder $25mm-$30mm in corporate costs in a potential acquisition. One need not look far to
see an ongoing global arms race for content and subscribers in today’s post-cable, “app-stacking”

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 world by major media, communication and e-commerce conglomerates. A managed sale by a CEO
with a proven history of successful exits, to anyone from Amazon, Comcast or Verizon, at low single-
digit revenue multiples would imply a downside stock price of around $12.50 or 20% from today’s
price. To be clear, we envision this as a very low probability scenario in our assessment of potential
for permanent capital impairment, however, the purpose of this exercise is to show that a move from
a hard margin of safety backed by real assets to a softer one backed by the company’s new strategic
value, need not be complicated. Despite the high uncertainty of the outcomes, at a 1-to-7 risk-reward
ratio, we continue to feel comfortable keeping our position in GAIA at our highest, 10% of the
portfolio, conviction weight going forward.

• Hudson Technologies (HDSN) – Our investment in Hudson Technologies, a market leader in

distribution of refrigerant gases, was down 19% this quarter, in addition to a down 20% quarter in
4Q17. While we are still up significantly from our original entry in July 2016, the round trip in this
position has certainly been frustrating. Our investment thesis in this company is grounded in the belief
that the EPA-mandated phase-out of virgin production of highly pollutive R-22 refrigerant gasses,
known as hydrochlorofluorocarbons (HCFCs), would lead to eventual increases in price of R-22 and
allow Hudson, which controls a large part of the higher margin R-22 reclamation market, to benefit
significantly. Looking out a few years further, as the installed base of R-22 gas compatible refrigeration
and air conditioning units is reduced and the market transitions to the next phase of refrigerant gasses
(hydrofluorocarbons, or HFCs), Hudson is already well positioned as a leading distributor of virgin and
reclaimed HFCs—a much bigger market than the one for HCFCs. To that end, in 2017, Hudson acquired
the refrigerant gas distribution unit from Airgas, which strengthened the company’s distribution
channels and reclamation capacity in HCFCs and HFCs, and significantly increased its market share and
long-term pricing power. The good news is that our conviction in our original thesis remains as strong
as it was in 2016, and we have not seen any significant developments that would cause us to change
our minds.

Of course, nothing is ever that easy, and this investment is certainly not a straight line shot to the
finish line. The market for R-22 gases is opaque and fraught with misinformation on the supply and
demand trends, which led the R-22 user market to stockpile the gas in late 2016 and early 2017. This
drove prices from under $10 per pound in 2016 to over $20 per pound by mid-2017. This has certainly
led to some demand destruction and lower quality product substitutions, driving R-22 demand lower
and unsold inventory in the channels higher, causing the prices of the gas to drop to below $15 per
pound in late 2017 and early 2018. Distributors that lost money in 2017 ordered less inventory so far
in early 2018. If this sounds like a pattern for supply, demand, and pricing behavior of a typical
commodity market, that’s because it is. However, unlike other commodities, such as oil or copper,
there will be no new supply of R-22 coming online as of 2020, while the demand by the current
installed unit base should persist for many years to come. This is of course where the short-term
uncertainty factor is incredibly high, as the challenges in identifying near-term supply and pricing
patterns create a ripe opportunity for market participants to exhibit the aforementioned present bias.
In addition to the inherent operating leverage of Hudson’s business model, where growth in the
bottom line is very sensitive to the company’s ability to drive volume- and price-based gross profit
dollars off a fixed cost administrative base, with the purchase of Airgas the company has taken on
significant debt, adding financial leverage uncertainty to the mix. In general, we are allergic to
companies with high debt loads and try to avoid initial investments in companies with weak balance
sheets. However, we don’t necessarily view taking on new debt for high Return on Invested Capital
(ROIC) projects or acquisitions as an absolute negative. In fact, one of the reasons we like to invest in

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 high-quality companies with clean balance sheets is because unlike companies already laden with
debt, this gives unleveraged companies relatively more room to maneuver in making strategic
investment decisions and makes them more attractive acquisition candidates by private equity market
participants.

Today’s stock price of ~$4.50, with the company guiding to over $0.50 per share in 2018 cash earnings,
implies that the market simply does not believe that R-22 prices are coming back, this year or ever.
The market may be correct in the short term. In fact, things may actually get worse before they get
better. But not bankruptcy or permanent capital impairment worse. The company acquired a
significant amount of inventory with its purchase of Airgas, the release of which should generate
significant operating cash flow by year-end 2018 and will allow Hudson to pay down a big part of the
acquisition debt. While the short-term uncertainty has the potential to keep the stock price down for
2018—and maybe even 2019 to prolong our proverbial suffering—our long-term price target remains
over $15.00 with a potential to return over 200%. We believe the company should be able to earn
over $1.00 per share in a normalized R-22 price and volume environment once the supply uncertainty
shakes itself out, and we will continue to be buyers of the stock at these price levels.

• Skyline Corporation (SKY) – In late 2017, we took an initial 2% portfolio position in Skyline Corporation,
a $100mm market cap company, which was the No. 4 player in the manufactured home industry. At
the time, we considered that the market was underestimating the potential future industry revenue
growth as well as Skyline’s cash flow generation ability. We felt we were getting a good deal by buying
the stock, around $12.50 per share, at less than 10x our estimated 2018 earnings. We’ve followed the
manufactured home industry for a long time and thought the timing, on the heels of a major 2017
hurricane season and subsequent increased demand from the Federal Emergency Management
Agency (FEMA), was a good time to enter the industry, as we also bought a 1% portfolio position in
call options on the stock of the No. 3 player, Cavco Industries. While timing position entries can be
considered a fool’s errand, in retrospect this worked out well for us on both investments. (We’ve
cashed out on our Cavco calls since then.)

As we mentioned in our previous letter, in January 2018 Champion Enterprises, the privately held No.
2 player in the industry (No. 1 being Warren Buffett’s Clayton Homes, so we’re in good company)
made a reverse merger offer for Skyline. In simpler terms, the larger, privately held company wanted
to go public by combining with an already public, but much smaller competitor. The deal
announcement certainly had a positive effect on our 1Q18 results as the stock appreciated 70% to
$22.00 during the quarter. Since then we’ve had an opportunity to study the combined potential
financials of the new company, Skyline Champion, and get more comfortable with the current industry
dynamics. We felt that despite the significant run up in the stock, at under $22.00 per share, there is
still a lot of potential shareholder value left on the table.

We decided to move the stock from our Enhanced Portfolio, where our positions tend to be smaller
due to their perceived riskiness and smaller margin of safety, and made it a full 8% position in our
Core Portfolio, where our investments tend to be of higher quality and have a smaller perceived
downside. We believe the stock of the combined company, that already has an implied enterprise
value of over $1 billion, should trade over $40 per share in the near future once the deal closes in the
next few weeks. The combination of stock specific drivers, such as inclusion in passive indexes and
increased Wall Street coverage, and fundamental drivers discussed below, should provide significant
upside to the partnership.

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 One of the more interesting aspects of the present bias on Wall Street is the consistent
underestimation of operating leverage, both on the way down and up, inherent in business models of
companies growing off a fixed-cost administrative base. We believe the new combined company is in
a sweet spot to take advantage of a growing revenue base and, a post-combination cost-cutting
round, smaller administrative base. While Clayton Homes certainly enjoys a competitive advantage in
having access to Berkshire’s cheap capital to offer financing options to its customers, we believe
Government Sponsored Enterprises’ (GSEs) release of their “Underserved Markets Plan”, that
describes specifically their three-year plan to meet the “Duty to Serve” obligations under previously
passed legislation, will be a significant tailwind to the rest of the industry. The creation and expansion
of a secondary chattel loan market will have a significant positive effect on the demand for affordable
manufactured housing, as more favorable finance options are made available. The manufactured
housing market is in the nascent stages of a resurgence coming out of a secular low and, with a
significantly better product suite line-up and potential availability of more consumer financing, should
continue along its double-digit revenue growth trajectory for the next few years. We do not believe
it’s a far stretch for the new combined company to earn over $2.50 in earnings per share and $200mm
in EBITDA by 2020. The manufactured home industry has low capital expenditure requirements, and
with the new lower corporate tax rates, we expect very high conversion of Free Cash Flow from
operating profits. It’s no coincidence that Cavco Industries is currently trading at 18x and 16x on Wall
Street’s 2019 and 2020 EBITDA estimates, as the market expects significant cash flow conversion and
growth in Return On Invested Capital (ROIC) from this company. At the same time, Skyline Champion,
with a better growth and margin profile, is trading at less than half this valuation on our estimates.
We believe that once the deal is closed and the company has a better profile with additional Wall
Street coverage and visibility, the valuation gap should contract quickly. Finally, as part of the deal
close, we expect a $1.00-$2.00 special dividend from old Skyline as it pays out its cash balances to
existing shareholders on its last day as a stand-alone company. We’re certainly excited about this
unique under-covered opportunity and look forward to updating you on this investment’s progress in
the future.

• Our other significant portfolio contributors last quarter were a 37% increase in The Joint Corp. (JYNT)
as well as our timely intra quarter add to our position in the warrants of Hostess Brands (TWNKW)
and Village Supermarkets (VLGEA). On the other hand, a more than 30% drop in the stocks of Leaf
Group (LFGR) and Premier Exhibitions (PRXIQ); and a 20% drop in our small position in Destination XL
(DXLG) detracted from the overall portfolio performance.

Market Outlook and Commentary

In 1Q18, the market finally began to shrug off the complacency of the last few years and began paying
attention to economic and political factors that could begin to derail one of the longest economic
expansions in history. Retail sales have fallen for three straight months, construction spending
decelerated at the start of the year, and auto sales have largely plateaued. Inflation is back on the menu,
and the latest U.S. job growth reading was sluggish at best. Add a dash of the threat of trade war, uncertain
2018 elections, and rising interest rates and the macroeconomic picture looks very muddy. While we are
not expecting a near-term recession, a pickup in market volatility was long overdue. We continue to be
concerned that the stock market is over-valued in the face rising interest rates and may run out of steam
way before the recessionary indicators begin to show up, not unlike the beginning of the 2000-2003 stock
market and economic down cycle.

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We remain 100% hedged via put spreads on the Russell 2000 index and continuously re-evaluate our
hedging program relative to gains on our hedges; stock market volatility; and macroeconomic and market
specific factors. While the hedging program is not a permanent staple of our long-term strategy, we
believe that we are still in a period when we can experience significant market and macro-economic
shocks versus relatively smaller potential gains left in this cycle. With the close of US Geothermal (HTM)
deal in 2Q18, we should be close to 15% in cash. We still see some pockets of opportunities in the micro-
and nano-cap space but we are also being more cautious about taking on new positions in the portfolio
at these market levels.

Partnership Updates

We welcomed two new partners to the partnership this quarter, bringing our total to 27 at the end of
April. We enjoyed having you at our annual event in San Francisco in February and look forward to hosting
many more in the future. We’ve successfully completed our 2017 audit and are grateful to the hard work
from our partners at HC Global Fund Services and M.D. Hall & Company. We’ve also partnered with our
friends at Canalyst to assist us in a steady flow of forecasting models to streamline our research process.
Finally, as we will reach the end of the 3rd year of the partnership in July 2018, we will be ending the
Founders Share class fee structure in the next few months.

Next Fund Opening

Our next partnership openings will be May. 1, 2018, and June 1, 2018. Please reach out for updated
offering documents and presentations at info@artkocapital.com or 415.531.2699

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 Appendix: Performance Statistics Table

Russell MicroCap
Artko LP Net Russell 2000 Index S&P 500 Index
Index

Jul-15 1.7% -1.2% -3.2% 2.1%

Aug-15 -3.7% -6.3% -5.4% -6.0%
Sep-15 1.4% -4.9% -5.8% -2.5%
Oct-15 1.5% 5.6% 5.4% 8.4%
Nov-15 3.3% 3.3% 3.8% 0.3%
Dec-15 0.0% -5.0% -5.2% -1.6%
Jan-16 -5.4% -8.8% -10.4% -5.0%
Feb-16 0.8% 0.0% -1.5% -0.1%
Mar-16 7.5% 8.0% 7.1% 6.8%
Apr-16 1.1% 1.6% 3.2% 0.4%
May-16 2.7% 2.3% 1.3% 1.8%
Jun-16 1.8% -0.1% -0.6% 0.3%
Jul-16 10.0% 6.0% 5.2% 3.7%
Aug-16 0.4% 1.6% 2.6% 0.1%
Sep-16 0.1% 1.1% 2.9% 0.0%
Oct-16 -1.3% -4.8% -5.7% -1.8%
Nov-16 11.0% 11.2% 11.6% 3.7%
Dec-16 1.4% 2.8% 4.6% 2.0%
Jan-17 -2.3% 1.5% 0.4% 1.9%
Feb-17 2.2% 1.9% 1.0% 4.0%
Mar-17 -3.5% 0.1% 0.9% 0.1%
Apr-17 2.7% 1.1% 1.0% 1.0%
May-17 0.1% 2.1% 2.4% 1.4%
Jun-17 5.4% 3.5% 5.2% 0.6%
Jul-17 2.7% 0.7% -0.6% 2.1%
Aug-17 -1.7% -0.5% -1.4% 0.3%
Sep-17 0.9% 6.2% 8.2% 2.1%
Oct-17 0.9% 0.9% -0.2% 2.3%
Nov-17 0.9% 2.9% 2.5% 3.1%
Dec-17 2.3% -0.4% -0.5% 1.1%
Jan-18 4.8% 2.5% 2.4% 5.7%
Feb-18 -2.2% -3.9% -3.2% -3.7%
Mar-18 2.9% 1.3% 1.5% -2.5%

Russell MicroCap
Artko LP Net Russell 2000 Index S&P 500 Index
Index
YTD 5.5% -0.1% 0.7% -0.8%

1 Year 21.2% 11.8% 13.5% 14.0%

Inception 7/1/2015 62.4% 26.8% 22.7% 35.6%

Inception Annualized 19.3% 9.0% 7.7% 11.7%

Monthly Average 1.5% 1.0% 0.9% 1.0%

Monthly St Deviation 3.4% 4.0% 4.4% 3.0%

Correlation w Net 1.00 0.76 0.70 0.60

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 Legal Disclosure

The Partnership’s performance is based on operations during a period of general market growth and
extraordinary market volatility during part of the period, and is not necessarily indicative of results the
Partnership may achieve in the future. In addition, the results are based on the periods as a whole, but
results for individual months or quarters within each period have been more favorable or less favorable
than the average, as the case may be. The foregoing data have been prepared by the General Partner and
have not been compiled, reviewed or audited by an independent accountant and non-year end results
are subject to adjustment.

The results portrayed are for an investor since inception in the Partnership and the results reflect the
reinvestment of dividends and other earnings and the deduction of costs, the management fees charged
to the Partnership and a pro forma reduction of the General Partner’s special profit allocation, if
applicable. The General Partner believes that the comparison of Partnership performance to any single
market index is inappropriate. The Partnership’s portfolio may contain options and other derivative
securities, fixed income investments, may include short sales of securities and margin trading and is not
as diversified as the indices, shown. The Standard & Poor's 500 Index contains 500 industrial,
transportation, utility and financial companies and is generally representative of the large capitalization
US stock market. The Russell 2000 Index is comprised of the smallest 2000 companies in the Russell 3000
Index and is generally representative of the small capitalization U.S. stock market. The Russell Microcap
Index is comprised of the smallest 1,000 securities in the Russell 2000 Index plus the next 1,000 securities
(traded on national exchanges). The Russell Microcap is generally representative of the microcap segment
of the U.S. stock market. All of the indices are unmanaged, market weighted and reflect the reinvestment
of dividends. Due to the differences among the Partnership’s portfolio and the performance of the equity
market indices shown above, however, the General Partner cautions potential investors that no such
index is directly comparable to the investment strategy of the Partnership.

While the General Partner believes that to date the Partnership has been managed with an investment
philosophy and methodology similar to that described in the Partnership’s Offering Circular and to that
which will be used to manage the Partnership in the future, future investments will be made under
different economic conditions and in different securities. Further, the performance discussed herein does
not reflect the General Partner’s performance in all different economic cycles. It should not be assumed
that investors will experience returns in the future, if any, comparable to those discussed above. The
information given above is historic and should not be taken as any indication of future performance. It
should not be assumed that recommendations made in the future will be profitable, or will equal, the
performance of the securities discussed in this material. Upon request, the General Partner will provide
to you a list of all the recommendations made by it within the past year.

This document is not intended as and does not constitute an offer to sell any securities to any person or
a solicitation of any person of any offer to purchase any securities. Such an offer or solicitation can only
be made by the confidential Offering Circular of the Partnership. This information omits most of the
information material to a decision whether to invest in the Partnership. No person should rely on any
information in this document, but should rely exclusively on the Offering Circular in considering whether
to invest in the Partnership.

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