AGRICULTURE STRATEGY
May 2009
PORTFOLIO MANAGERS: Jim Cunningham & Ejnar Knudsen STRATEGY AUM: $33 Million SUBSCRIPTIONS: Monthly OPEN/CLOSED STATUS: OpenSTRATEGY INCEPTION DATE: 3/2009 FIRM AUM: $2.4 Billion REDEMPTIONS: Quarterly MINIMUM INVESTMENT: $3 Million30 Hotaling Place, Suite 300
San Francisco, CA 94111
Tel (415) 321-4600
Fax (415) 321-4620
www.passportcapital.com
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FIRM OVERVIEW
Passport Capital, LLC is a San Francisco based investment firm founded by John H. Burbank III in 2000. Passport’s investment process uses a combination of macroeconomic analysesto develop major themes and rigorous fundamental research on individual companies to create global portfolios. The firm’s investment team focuses on the following areas: Agriculture,Basic Materials, Capital Markets, Consumer, Energy, Healthcare, India, Internet/Technology and Middle East & North Africa. As appropriate, the firm makes available to its limitedpartners co-investment opportunities.
INVESTMENT STRATEGY
The agriculture strategy is a long biased strategy investing in targeted sectors within the global food and agriculture industry ranging from “dirt to dinner table”, including agriculturalinputs, proteins, producers, manufacturers, distributors and retailers. World population growth, coupled with increasing demand and a tight supply of food, has led us to seek out thefranchises and bottlenecks within the industry. Namely, we look to identify companies with pricing power and those which benefit from supply chain bottlenecks at compelling valuations.The strategy also seeks to identify industries that are approaching their cyclical inflection points, such as proteins (supply destruction for the past several years has positioned the sector for tight supply/demand economics that could yield significant profits) and carbohydrates (worldwide sugar supply is tight, beverage companies have introduced retro drinks using canesugar, and there continues to be growing renewable fuel demand). Our global perspective and integrated approach gives us a unique advantage investing in the worldwide agricultureindustry.
EXPOSURES JAN 09 FEB 09 MAR 09 APR 09 MAY 09 JUN 09 JUL 09 AUG 09 SEP 09 OCT 09 NOV 09 DEC 09 AVG RANGE
Long 48% 67% 71% 62% 48-71%Short -34% -74% -78% -62% (34-78%)Gross 82% 142% 149% 124% 82-149%Net 14% -7% -8% 0% -8-14%
PERFORMANCE YTD SINCE FUND INCEP*
Net 4.2% 2. 7% 5.9% 13.2%
S&P 500 8.8% 9.6% 5.6% 25.8%MSCI AC World 8.2% 11.9% 10.0% 33.2%MV AGRI (MOO) 6.7% 8.5% 20.2% 39.2%
EXPOSURES MANAGERS’ BACKGROUNDSECTOR
LONG
SHORT
NET
GROSS
Commodities 11% 0% 11% 11% Ag Equipment 2% -6% -4% 7%Fertilizer 8% -1% 7% 8%Seed/Crop Protection 3% -2% 2% 5%Forest/Timber/Paper 0% 0% 0% 0% Agribusiness 4% 0% 4% 4% Ag Processor 7% -2% 5% 9%Protein Prod./Proc. 16% -6% 10% 21%Food & Beverage 5% -13% -9% 18%Food Retail/Service 8% -15% -7% 23%Transports 0% -2% -2% 2%Other 8% -22% -14% 31%Diversified Index/Fund 0% -10% -10% 10%
TOTAL 71% -78% -7% 149%
TOP 5 LONGS
Jim Cunningham, CFA, Portfolio Manager
Manages the investment management and research process for basic materials, agriculture and commodity investments
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1997-2003 Portfolio Manager for Renberg Capital Management. Co-managed $500 mm in assets.
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1996-1997 Vice President of Business Development for Crossroads Software
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1994-1996 Senior Director of Worldwide Industry Strategy Group for Oracle Corp
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1993-1994 Consultant for Booz Allen & Hamilton in San Francisco
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1985-1990 Manager in Information Services Group for Morgan Stanley in New York and Hong Kong
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1992 MA in Food Research received from Stanford University
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1992 MBA received from the Stanford Graduate School of Business
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1985 BS received in Financial Economics from Lehigh University
Ejnar Knudsen, CFA, Portfolio Manager
Co-manages the investment management and research process for food, agriculture and commodity investments
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1998-Present Portfolio Manager for Craton Capital, an investment partnership focused on the agriculture industry
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2001-2007 Executive Vice President of Western Milling, a feed milling co. with over $700 million in sales
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1991-2001 Vice President for Rabobank in New York; managed a loan portfolio, venture capital investments andcorporate advisory services in food, agriculture and commodities
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1991 BS received from Cornell University
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Serves in various capacities at the board and/or advisory level of six agricultural organizations: AdecoAgro,Cornell’s College of Agriculture and Life Sciences, California Grain and Feed Association, Limoneira, WesternMilling and Cillion
COMPANY TICKER SECTOR EXPOSURE
JBS SA
JBSS3 Protein Prod.
10%
TERMS
Imperial Sugar Co
IPSU Ag Processor
7%
INVESTOR TYPE
STANDARD*
COMMITTED*
Kroger Co
KRFood Retail
5%Management Fee: 2% 1.25%Coffee Futures Sep 09
KCU09Commodities
5% Incentive Fee: 20% 15%MagIndustries
MAA Fertilizer
4%Lock-Up:
None
3 YearsRedemption: Quarterly Quarterly
KEY PORTFOLIO DATA
4% fee yr.1; 3% fee yr. 2; 2% fee yr. 3Notice: 60 days 60 days
NO.OF POSITIONS
AVG.WEIGHTEDMKT.CAP
Co-Investment Opportunity: No YesPublic Long28 $21.6BPublic Short48 $7.1B
SERVICE PROVIDERS
Private0 - Structure: Master/Feeder Prime Broker: Goldman SachsVehicles: BVI Offshore/Delaware LP Administrator: Citco Fund Services
*
Both Standard and Committed share classes have theability to “opt-out” of all private equity investments.US Legal Counsel: Paul, Hastings, Janofsky & Walker LLP Auditor: Ernst & Young
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