Investment Advisor

Gator Capital

Gator Capital

Founded 2008

Large Cap

Exceptions
Sell Discipline
Allocation Discipline
Research
Approach
Summary

The Gator Blue Chip Portfolio invests in 30 companies with market capitalization above $3 billion (large cap). Shares of stock represent fractions of their underlying business, so the model approaches investing in stocks as if buying a business. The best businesses to own are companies with strong competitive advantages, attractive business models, and management teams that think like shareholders.

The model buys companies with strong business franchises that are trading below what they are worth given their current earnings and future earnings potential. The model considers values a private equity or strategic buyer would pay. The model also looks for a catalyst to unlock the value. A catalyst could be a new CEO, a divestiture or a change in the growth rate.

Fundamental research is conducted on each of the prospective investments to determine earnings. Earnings releases and earnings conference call transcripts are used as well as recent investment presentations and other investor’s thoughts about the company. Furthermore, calls are scheduled with company management to clarify any questions. Finally, an investment thesis is created as an internal report and comparisons are made between the prospective investment against all existing holdings.

The model will own 30 companies at a time. New positions are typically given 3.5% weight. Postitions are rebalanced if it becomes too large. Positions that get small tend to have underperformed, so unless it is determined that the original investment thesis is still valid, the model will not add to smaller positions.

The sell discipline is to exit positions if the strategic positioning of the company has materially changed. The strategic change could be due to an acquisition or a CEO change. New holdings are constantly evaluated in the portfolio, so existing positions must constantly "compete" for investment capital against potential positions.

None.

Approach Fundamental , Value
Asset class Equity
Cap Bias Large caps
Geography US

Replicability

100.0%

Replicable

Top 5 Holdings View all

9.5%

5.1%

5.0%

4.7%

LINTA
WFC
V
AMT
EBAY

Model commentary

Publicly Traded PE Firms: Business Franchises Not as Volatile as Their Stock Prices

13 October 2011

The current sell-off in the stock market is presenting a second opportunity to buy the publicly traded private equity firms.
Citigroup's collateral damage from Bank of America 29 September 2011
Value investors tend to both buy too early and … 6 September 2011
The fight to buy Southern Union (ETP, SUG, WMB) 7 July 2011
5 things I'm looking for in a oil stock inves… 30 June 2011

Performance detail

Manager
S&P 500

30D 90D 365D SI

Performance

Inception August 10, 2010

as of May 21, 2012	Manager	S&P 500	Average Subscriber
Past 30 days	-4.9%	-4.5%	-4.5%
Past 90 days	-2.3%	-3.4%	-
Past 365 days	0.2%	-1.3%	-
Since Inception (Annualized)	10.9%	9.4%	-
2012 (YTD)	6.1%	4.6%	-
2011	1.8%	0.0%	-

Risk Metrics

Last 365 Days

as of May 21, 2012	Manager	S&P 500
Best 30 days	15.4%	13.6%
Worst 30 days	-17.6%	-16.7%
Volatility	25.5%	23.2%
Sharpe Ratio	0.00	-0.06
Sortino Ratio	0.00	-0.08
Maximum Drawdown	-19.6%	-18.8%
Value-at-risk (95%, 1 week)	-5.9%	-5.4%

	vs. S&P 500
Information Ratio	0.30
Alpha	1.9%
Beta	1.08
R-Squared	0.97

Latest transactions view all

Average trades per month 0.2

Executed	Symbol	Security	Replicable	Type	Price
07/15/11	C	CITIGROUP INC		Buy	$40.15
07/15/11	BBT	BB&T CORPORATION		Sell	$25.41
12/17/10	BEN	Franklin Resources Inc		Buy	$114.26
12/13/10	BEN	Franklin Resources Inc		Buy	$117.46
12/13/10	ESI	ITT EDUCATIONAL SERVICES INC		Sell	$62.14

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$5,000 subscription min
1.1% fee

Important Information

1. Past performance is no guarantee of future results.

2. Performance of the model manager's account is calculated by Covestor on a daily time-weighted basis, including cash, dividends and earnings distributions, and broker commissions. Manager returns include trades that fail Covestor's trading rules, do not reflect any Covestor suitability or risk score restrictions and are exclusive of Covestor fees. More

3. Average subscription returns ("Avg Sub" or "Avg Client") are calculated by Covestor and are composed of the average, daily, time weighted returns of all active subscriptions to the underlying model. These daily average returns are then linked together for the timeframe requested. In addition, these returns include cash, dividends and earnings distributions, brokerage commissions, Covestor advisory fees, and reflect individual client suitability and risk score restrictions. More

4. All graph data is as of the end of day for the referenced period, unless otherwise specified. The subscription minimum is the minimum subscription required to follow a particular model. The minimum amount is determined by Covestor, based on the characteristics of the underlying model. It should not be considered as specific investment advice for your investment situation.

5. Benchmark returns have been calculated by Covestor using a time-weighted calculation of daily index valuations and do not include cash, dividends and earnings distributions, or transaction costs. More

6. Leverage indicates the level of margin utilized and is calculated by dividing gross exposure by portfolio net liquidation value.

7. All Model Manager information including personal data, profiles, strategies, monthly investment reports, and historical results outside of Covestor has been provided by the Model Manager. Covestor makes no representation or warranty of its accuracy, completeness or relevance and it does not represent the opinions of Covestor. Transaction history is available upon request. Model classifications (Approach, Asset Class) are provided by Covestor, and are intended to serve as a general guide.

8. Top Replicable Holdings: These securities are currently held in the model manager's brokerage account. Those marked as "Replicable Holdings" currently pass Covestor's trading rules, subject to individual client constraints. Eligibility for replication may change over time. Actual client subscription holdings may vary.

9. Latest Transactions: These transactions were executed in the model manager's brokerage account. Those marked as "Replicable" () passed Covestor's trading rules and were eligible for replication at the time of execution, subject to individual client constraints. Eligibility for replication may change over time. Actual client subscription trade activity may vary.

10. S&P 500 Index is an unmanaged index compiled by Standard & Poor´s Corp. Index returns do not reflect any management fees, transaction costs or expenses. Individuals cannot invest directly in an Index. S&P 500 index data: S&P 500 Copyright © 2012.

11. Dow Jones index data: CME Group Index Services, LLC 2012

Background provided by the manager
Gator Capital Form ADV II

Gator Capital