Hedge Fund Awards 2014

2014 International Hedge Fund Awards in a way that does not compromise the liquidity of the portfolio. Exposure sizes ensure that the whole portfolio can be liquidated within a maximum of three (3) trading days. Superior access to information from the ground generates ideas and allows us to enter into thematic trades with attractive risk/ return characteristics, beating benchmark returns. In 2013 we managed to do this in two ways: a) by successfully by entering the Greek market at a very early stage. Our feedback was such that indicated a major dislocation between market percep- tion and reality. B) by successfully going short the Turkish market given that its macro fundamentals seemed to be ignored by the general market. In early February 2013 our extensive network in the Greek real econ- omy gave us an early indication that the touristic season in Greece (tourism accounts for ca 18% of GDP) would be particularly strong. We then decided to follow the theme and position our Greek portfolio accordingly. This was done via initiating significant exposures in Ae- gean Airlines (AEGN GA), the most suitable listed proxy for tourism in Greece (trading at a huge discount to international peers) and the Greek GDP Linker. The GDP-linked warrant is a PSI sweetener to investors, offering a coupon if specific GDP thresholds are achieved. When in May 2013 the first data on tourist arrivals came out beat- ing expectations, the theme played out sweetly offering returns in excess of 70% for our two portfolio positions. These were trimmed/ closed by the end of Q3 for a hefty profit. In a similar manner we have positioned the portfolio to benefit from rising macro and political risk in Turkey and a positive eco- nomic outlook in Romania, themes that all played out within the course of the year. These “thematic trades” were the major driving force behind the Violet Emerging Market’s Fund significant outper- formance in 2013. The award is recognition of your and your team’s success. Ηow have you adopted to changing economic conditions ? AppleTree Capital launched its first fund in May 2010, with the European financial crisis peaking. The first two years were pretty challenging not only in terms of the equity markets in our invest- able universe but also in terms of perception. Appetite for invest- ments in Greece and Southeast Europe had plunged, as risk aver- sion hit highs and systemic risks came back to focus. During that time, when neither the returns nor our geographical focus could make a compelling investment case, we decided to continue and even accelerate our schedule of roadshows. As Greece was becoming a hot topic we arranged meetings, of- fering an independent, educated view from the ground to a wide variety of investors, giving focus on economic and political devel- opments. In July 2012, during our roadshows, we pinpointed that Greece was in a turning point and that the fund would start slowly building positions in bonds and equities in the country. Our constant presence and effort to be a reliable source of infor- mation during these tough two years, and the confirmation of our conviction regarding a Greek asset rally, increased our goodwill with a significant number of institutional investors. We have man- aged to turn our physical presence in Greece from a source of per- ceived disadvantage to an advantage. AppleTree Capital became the local “eye” for a significant number of institutional investors who wanted a local, independent and accurate view on political, economic and social aspects during the recession. Our strong 2013 performance and the AI award gives us the strength to continue. Both achievements confirm that if one per- sists when times in equity markets are tough with no loss of enthu- siasm, results will come. We are a small team at AppleTree Capital but we all share the same code of ethics and vision: Alignment of interest, Transparency and Commitment with our investors. We believe that 2013 was a turning point. Greece and Emerging Europe now become increasingly appealing. The economic land- scape is changing for the better and very interesting opportuni- ties arise. For 2014 we believe that even though risks persist, the region will continue to offer investment opportunities. AppleTree Capital has a first mover’s advantage given its multi-year expertise and through its fund it provides an easy, liquid and transparent way to take advantage of these opportunities. We feel its time to put our hard-earned goodwill to work and do our best to couple it with a strong 2014 performance. What have been your greatest success / achievement in 2013 ? 2013 was a very good year for AppleTree as we managed to identify very early the potential of the Greek market, a conviction that reward- ed us with very strong results. Hence, the Violet Emerging Markets Fund managed to clock a return of +29% in US$ terms for our inves- tors, beating our benchmark MSCI EMEA index by a strong 37%. Since July 2012, when the fund started building positions in the Greek market despite the gloomy consensus, the outperformance is even wider. Since then, Violet has yielded 58% vs an almost flat MSCI EMEA. 12 www.acquisition-intl.com