GOTHAM PRIVATE FUNDS

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GOTHAM PRIVATE FUNDS
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September2014
IMPORTANT INFORMATION
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This has been prepared for informational purposes only. The information herein is correct to the best of the knowledge of Gotham Asset Management, LLC and
its affiliates (“Gotham”) as of the date indicated unless otherwise noted and is subject to change without notice. This information is confidential and for the use
of the intended recipients only. It may not be reproduced, redistributed or copied in whole or in part for any purpose without prior written consent. This is not
intended for distribution to, or use by any party in any jurisdiction where such distribution or use would be contrary to local law or regulation. The distribution of
this document in Canada is restricted to recipients who are eligible "permitted clients" in the provinces of British Columbia, Alberta, Ontario, or Quebec for
purposes of NI 31-103. It may not be reproduced, redistributed or copied in whole or in part for any purpose without prior written consent.
This document may contain certain information that constitutes “forward-looking statements,” which can be identified by the use of forward-looking
terminology such as “may,” “expect,” “will,” “hope,” “forecast,” intend,” target,” “believe,” and/or comparable terminology (or the negatives thereof). No
assurance, representation, or warranty is made by any person that any of Gotham aims, assumptions, expectations, objectives, and/or goals will be achieved.
Nothing contained in this document may be relied upon as a guarantee, promise, assurance, or representation as to the future.
Any offering in a private fund is made only pursuant to the applicable confidential offering memorandum, which must be read in its entirety. Past performance
is no guarantee of future results.
The AUM presented in this document is net assets under management. Regulatory AUM, as reported in Gotham’s Form ADV, includes the gross asset value
and reflects the effects of leverage and gross short positions.
Foreside Funds Distributors LLC (“Foreside”) is the placement agent for Gotham’s private funds. Gotham is not affiliated with Foreside.
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T190.1409
P AG E 2
INTRODUCTION
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► Gotham Asset Management is a value-oriented equity investment firm managing long/short and
long-only investment strategies on behalf of institutional investors including endowments, foundations
and family offices.
► Gotham Asset Management is the successor to Gotham Capital, an investment firm founded by
Joel Greenblatt in 1985
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► The Firm manages $7.8B in assets, approximately $3.4B in institutional strategies and $4.4B in four
long/short mutual funds (Gothamfunds.com) and is supported by 40 professionals*
*As of September 1, 2014. AUM is unaudited and estimated and includes investments by Gotham, its affiliates, and their principals and employees.
P AG E 3
CO-CIOS
Robert Goldstein
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Joel Greenblatt
Mr. Goldstein serves as Managing Principal and Co-Chief
Investment Officer of Gotham Asset Management, the
successor to Gotham Capital, which he joined in 1989. Mr.
Goldstein also founded and served as Managing Partner
(1989-1997) of Metropolis Partners, a value and special
situation investment partnership managing capital on
behalf of institutions and wealthy individuals. Mr. Goldstein
briefly served on the Executive Committee of the Board of
Directors of Old Guard Group, Inc., a publicly-traded
insurance company, prior to its being acquired by the
Westfield Companies in 2000. He holds a BA (1988), magna
cum laude, from Tufts University.
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Mr. Greenblatt serves as Managing Principal and Co-Chief
Investment Officer of Gotham Asset Management, the
successor to Gotham Capital, an investment firm he
founded in 1985. Since 1996, he has been a professor on
the adjunct faculty of Columbia Business School where he
teaches "Value and Special Situation Investing." Mr.
Greenblatt serves on the Investment Board for the
University of Pennsylvania, and is a director of Pzena
Investment Management, Inc., a global investment
management firm. Mr. Greenblatt is the author of You Can
Be A Stock Market Genius (Simon & Schuster, 1997), The
Little Book that Beats the Market (Wiley, 2005), The Little
Book that Still Beats the Market (Wiley, 2010), and The Big
Secret for the Small Investor (Random House, 2011). He is
the Former Chairman of the Board (1994-1995) of Alliant
Techsystems, a NYSE-listed aerospace and defense
contractor. He holds a BS (1979), summa cum laude, and
an MBA (1980) from the Wharton School of the University of
Pennsylvania.
P AG E 4
GOTHAM ASSET MANAGEMENT TEAM
Bernard Seibert, CFO
Operations, Accounting
& Trade Execution
6 professionals
Patrick Ede,
Director of Investment
Technology
Adam Barth,
Director of Research
David Barrett,
Director of Business
Development/IR
Louis LaRocca,
General Counsel/CCO
Investment
Technology
Research
Business
Development/IR
Legal &
Compliance
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6 professionals
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10 professionals
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9 professionals
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2 professionals
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Robert Goldstein
Co-CIO
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Joel Greenblatt
Co-CIO
As of September 1, 2014.
P AG E 5
GOTHAM’S HISTORY
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1985 Mr. Greenblatt founds Gotham Capital, a value and special situation investment partnership
1989 Mr. Goldstein joins Gotham Capital
1995 Gotham Capital returns outside partners’ capital and continues to manage internal capital
2003 Gotham Capital begins research on the application of its investment principles to diversified
stock portfolios. This effort leads to the development of highly-diversified long-only and
long/short investment strategies
2006 Gotham Capital builds an equity research team covering 3000 U.S. and 1300 international
companies and expands its investment technology group
2008 The Firm launches Gotham Short Strategies
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2009 The Firm launches Gotham Hedged Value Strategies, Gotham Neutral Strategies and Gotham
Balanced Value Strategies
2010 The Firm launches Gotham Diversified Hedge Strategies
2012 The Firm launches its first long/short mutual fund, Gotham Absolute Return Fund (GARIX)
2013 The Firm launches two more long/short mutual funds, Gotham Enhanced Return Fund
(GENIX)and Gotham Neutral Fund (GONIX). Gotham also launches two institutional strategies,
Gotham Enhanced Long and Gotham Targeted Neutral
P AG E 6
THE INVESTMENT PROCESS:
FUNDAMENTAL RESEARCH & ANALYSIS
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Our team of research professionals, led by Co-CIOs Joel Greenblatt and Rob Goldstein
and Director of Research Adam Barth, follows a daily research process.
Updates the analysis for
earning releases, Form10-Ks,
Form10-Qs, interim corporate
filings and other news.
Maintains analysis in a
centralized research
database enabling the firm
to compare all companies
and identify the best longs
and shorts on a daily basis.
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Researches and analyzes an
investment universe of 3,000
U.S. companies according to
a proprietary methodology
that emphasizes fundamentals
such as recurring earnings,
capital efficiency and
valuation.
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THE INVESTMENT PROCESS:
DISCIPLINED PORTFOLIO CONSTRUCTION
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We invest in our long and short portfolios based on our valuations and adjust positions daily
to take advantage of changing stock prices and fundamental information.
Generally, the cheaper a
company appears, the
larger allocation it receives
on the long side.
On the short side, the more
expensive a company
appears relative to our
assessment of value, the
larger short allocation it
receives.
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We manage short-term
portfolio risk, however, we do
not plan to change this
strategy or adopt other
methodologies when short
term stock prices do not
reflect the values that we see.
As a result, we generally
have over 300 positions
(weighted by valuation, not
equally weighted) on both
the long and the short side.
In Gotham Hedged Value
Strategies115/65 for
example, the maximum size
for our largest long position
is generally under 1.0% of
equity and the maximum
position size for our largest
short is generally under
0.65% of equity.
P AG E 8
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RISK MANAGEMENT
Risks are managed
daily through a
disciplined process
developed by our
team of over 20
research
professionals.
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Monitoring position
diversification/
liquidity
Setting maximum
limits for sector
concentration
Maintaining overall
gross and net exposures
within set ranges
P AG E 9
2 POTENTIAL SOURCES OF RETURN
GOTHAM HEDGED VALUE 115/65 EXAMPLE:
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Gotham offers multiple long/short strategies with different leverage and market cap
exposures. For all of our long/short strategies we hope to (1) achieve attractive returns
from our long selections over time and (2) also add value from our long/short spread.
Example: Gotham
Hedged Value Strategies
115/65
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Source 1: Highly Correlated to the
Market
$100 Investment =
$115 Long &
$65 Short
Long Component
Investment in our long
portfolio of $50
+
Source 2: Uncorrelated and Often
Negatively Correlated to the Market
Long/Short Component
(“Spread”)
Additional $65 investment
in our long portfolio paired
with $65 of short
investments
P AG E 1 0
HOW WE GENERATE ALPHA
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► Our longs have traded at low prices relative to free cash flow and have generated high returns on capital. On
average, companies with these attributes tend to outperform in both up and down markets.
Our shorts have traded at high prices relative to free cash flow and have generated low returns on capital. On
average, companies with these attributes tend to underperform significantly and provided substantial protection
to long/short portfolios, particularly in down markets.
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Average Proprietary Free Cash Flow Yield Estimate (%)*
Average Proprietary Return on Capital Estimate (%)*
12
60
10
8
40
30
11.3
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6
50
4
20
2
10
55.0
12.6
0.4
0
Long Portfolio
Long Portfolio
0
Short Portfolio
Short Portfolio
Long Portfolio
Long Portfolio
Short Portfolio
Short Portfolio
*Average free cash flow yield and return on capital estimates are based on Gotham’s proprietary methodology. Estimates provided above are based on
GHVS 115/65 data. Data as of September 18, 2012.
Past performance is no guarantee of future results. Please see important disclosures on slide 2.
P AG E 1 1
PORTFOLIO REACTION TO DIFFERENT
MARKET SCENARIOS
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► We hope to add value from our long component and from our long/short spread
component. In addition, we have designed the Funds to hopefully mitigate risk in down
markets.
► In poor market environments, we hope and expect that our long/short spreads will be robust
since most of our shorts are high priced, with many eating through cash or achieving poor
returns on capital. This, we hope, will add to overall returns in down markets, thus helping to
counteract our long portfolio returns exactly when we may need it most.
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► In normal market environments, we believe our long investments in high cash flow
generating companies will often outperform the index. Hopefully, if we invest effectively, our
long selections will outperform those stocks that we have sold short and our spread will add to
the returns we hope to achieve from our net long exposure.
► In strong positive environments, although our spread may contribute less, we hope our long
positions will significantly outperform the market.
P AG E 1 2
GENERAL TERMS
$10 million
Liquidity Terms
Monthly with 15 days notice
Prime Brokers
Fund Structure
Administrator
Fees
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Minimum Investment
Master-Feeder (onshore and offshore feeders)
SS&C Technologies, Inc.
Fees vary by fund. Please refer to the Firm’s product matrix for additional information.
Dave Barrett
212-319-1776
[email protected]
Joel McAndrew
212-600-2976
[email protected]
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For Further Information Contact
Goldman Sachs, Pershing, Morgan Stanley
Lauren Godlasky
646-432-3789
[email protected]
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