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I
NVESTMENT
T
HEME
: U.S. H
OUSING
 
May 2012
 
Investing in an Unbalanced World 
| 2
•
Incoming data continues to reinforce our view that after 7 years of turmoil, the US Housing marketappears to be stabilizing
•
Given the magnitude of the real estate bubble, the subsequent decline and the resulting destabilizationof the global financial system, it is no surprise that investments related to housing remain out-of-favorand therefore highly dislocated from current fundamentals
•
Bienville believes attractive risk-adjusted returns are available to those with the requisite skills toposition for both the stabilization and eventual recovery of the US housing market
•
In order to monetize our theme, Bienville is taking a debt and equity approach:
1.
The “debt” portion of our allocation is focused on Non-Agency Residential Mortgage-BackedSecurities (RMBS), particularly the Alt-A and subprime sectors where high “loss-adjusted”yields can be earned (even when modeling draconian home price assumptions). Strategiesemployed are relatively liquid, yet offer investors equity-like returns while owning bonds
2.
The “equity” portion of our allocation will be predominantly focused on raw land, partially-developed land and beachfront property trading at distressed prices along the Gulf Coast ofAlabama, Florida and Mississippi. Our particular focus will be on Baldwin County, AL wheredue to an apparent “liquidity vacuum,” prices have reverted to levels last seen in the mid-1990s (down 60-90% from 2006), despite continued economic and population growth. Webelieve the targeted properties will be highly desirable once the development cycle turns,rewarding liquid and patient investors
•
Bienville believes this two-legged approach will result in a powerful combination: net positive carry,plus considerable optionality to a normalization and eventual recovery in the US Housing market
S
UMMARY
 
 
US H
OUSING
U
PDATE
 
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