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PETER LUPOFF: I'm Peter Lupoff.  I'm the founder and co-portfolio manager of Tiburon Capital Management.  Tiburon Capital Management is a sub-adviser to the Van Eck Multi-Manager Alternatives Fund. At Tiburon Capital, I'm the co-portfolio manager and the chief investment officer, and today I’m going to discuss the history of our firm, our comparative advantages, and what we think makes us distinctive.  


I started my career with famed value investor Marty Whitman of Third Avenue Fund.  From Marty I learned deep value, which drives our value sensibility and methodology.  Prior to forming Tiburon, I also ran the event-driven strategy for Israel Englander's Millennium.  From [Israel Englander], I learned risk-management and trading to defend NAV and attempt to protect client capital. < /p>

 

I would like to think that we're products of our experiences. At Tiburon Capital Management, we seek to protect client capital by defending NAV through trading and proper hedges while utilizing deep-value sensibility.   < /p>

 

We believe we're differentiated as an event-driven manager in that we are agnostically long/short across different capital structures.  We're agnostic whether we are long or short bonds, equities, options, derivatives, and so on.  This agnosticism gives us a very rich landscape to invest in while also avoiding the moral hazard that many managers have: being narrowly involved in directionally long, fixed income, or equities.


The investment strategy, event-driven, includes special situations. These are hard catalysts – what we call re-valuation catalysts such as asset sales, divestitures, lawsuits that could be won or lost, product launches or failures, defaults, and restructurings. In those situations, we invest long or short.  We also invest long or short in stressed or distressed situations. Stressed situations are those companies that have near-term defaults or covenant violations and distressed situations are companies in bankruptcy.  


 

Finally, we invest in capital structure arbitrage. Capital structure arbitrage is really about the underlying indentures and bonds – there are rights and remedies in bonds that we could be long or heightened and that may give us an advantage versus bonds in the same company's capital structure. We could also be short where those indentures have lighter rights and remedies.  When the events that we are seeking occur, the bonds tend to diverge.


 

Finally, we invest in capital structure arbitrage. Capital structure arbitrage is really about the underlying indentures and bonds – there are rights and remedies in bonds that we could be long or heightened and that may give us an advantage versus bonds in the same company's capital structure. We could also be short where those indentures have lighter rights and remedies.  When the events that we are seeking occur, the bonds tend to diverge.


 

Tiburon has a proprietary investment methodology called "BRACE." It is one of our comparative advantages. BRACE is an acronym, and each of the five elements of BRACE must be touched upon before any investment prospect winds up in the portfolio.  


 

"B" is bottom-up evaluation of the company's capital structure relative to itself and its peers.  "R" is a re-valuation catalyst – a hard event that we believe will move that security over long or short which will change its fair value.  “A” is an actor’s assessment, which is really the behavioral aspect of BRACE.  With actor’s assessment, we challenge ourselves to identify parties that are financially interested that can influence outcomes.  Behaviorally, we believe financially-interested parties' behaviors can be predicted and those predicted behaviors can influence outcomes. The actor’s assessment helps us determine sizing as well as conviction level of the catalyst.  “C” refers to capital structure. Even if we're looking at a company and believe its equity is where we'll invest, we will review the indentures of its bonds, the covenants in its loan packages, and understand the relative rights, remedies, and value within its cap structure. It reinforces the probability that we will be invested at the best risk-adjusted place in that company's capitalization.   "E," the final element of BRACE, is external.  All the other elements are inward-focused, looking at the company.  Since the financial crisis of 2008, the world has a heightened interconnectivity. Being sensitive to externalities helps us make broad investment decisions generally, and more narrowly shapes sizing and direction in the portfolio. Finally, it helps us determine proper hedges we hope will moderate downside volatility.  BRACE is one of the distinguishing features of Tiburon Capital Management.  


 

Thank you for your time and attention.  We believe there's a lot of opportunity in event-driven investing.  Thank you for your interest in the Van Eck Multi-Manager Alternatives Fund.


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IMPORTANT DISCLOSURE


The views and opinions expressed are those of the speaker and are current as of the video's posting date. Video commentaries are general in nature and should not be construed as investment advice. Opinions are subject to change with market conditions.   Any discussion of specific securities mentioned in the video commentaries is neither an offer to sell nor a solicitation to buy these securities. All indices mentioned are measures of common market sectors and performance. It is not possible to invest directly in an index.  All performance information is historical and is not a guarantee of future results. For more information about Van Eck Funds, Market Vectors ETFs or fund performance, visit vaneck.com.


 

The speaker is a sub-adviser to an actively managed mutual fund offered by Van Eck Global, the Van Eck Multi-Manager Alternatives Fund.  


 

You can lose money by investing in the Fund. Any investment in the Fund should be part of an overall investment program rather than a complete program. Because the Fund implements a fund-of-funds strategy, an investor in the Fund will bear the operating expenses of the “Underlying Funds” in which the Fund invests. The total expenses borne by an investor in the Fund will be higher than if the investor invested directly in the Underlying Funds, and the returns may therefore be lower. The Fund, the Sub-Advisers and the Underlying Funds may use aggressive investment strategies, including absolute return strategies, which are riskier than those used by typical mutual funds. If the Fund and Sub-Advisers are unsuccessful in applying these investment strategies, the Fund and you may lose more money than if you had invested in another fund that did not invest aggressively. The Fund is subject to risks associated with the Sub-Advisers making trading decisions independently, investing in other investment companies, using a particular style or set of styles, basing investment decisions on historical relationships and correlations, trading frequently, using leverage, making short sales, being non-diversified and investing in securities with low correlation to the market. The use of leverage may magnify losses. The Fund is also subject to risks associated with investments in foreign markets, emerging market securities, small cap companies, debt securities, derivatives, commodity-linked instruments, illiquid securities, asset-backed securities and CMOs. Please see the prospectus and summary prospectus for information on these as well as other risk considerations.


 


Investing involves risk, including possible loss of principal. An investor should consider investment objectives, risks, charges and expenses of the investment company carefully before investing. Please read the Fund's prospectus and summary prospectus carefully before investing. < /strong>


 

 

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