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First Quarter 2011
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Maverick Fund 3.6% 9.7% 7.9% 7.0% Maverick Levered Maverick Neutral Maverick Neutral Levered Maverick Long Maverick Long Enhanced 10.3 (0.5) (0.9) 3.6 3.6 5.9 4.8 28.7 (3.0) (7.6) 10.6 10.2 13.3 3.9 5.1 7.0 8.0 2.6 2.1 10.6 3.1 3.4 7.9 8.7 3.3 4.2 S&P 500 Index Morgan Stanley World Index 15.6 13.4 April 23, 2011 Dear Investor:
One Year Five Years Ten Years Since Since Ended Ended Ended 3/1/95 3/1/95 3/31/2011 3/31/2011 3/31/2011 Annualized Cumulative
The above results should only be read in conjunction with the Maverick Disclosure Statement found at the end of this letter.
Maverick enjoyed a solid start to the year, generating positive performance in every industry sector, save one, and each region in which we invest in the past quarter. In the first quarter our emerging market investments were more profitable than those in any other region. The majority of our gains in these markets came from short investments. Indeed, our interest in these markets is driven by both the relative inefficiency of these securities as well as the very attractive longer-term backdrop of emerging market economies. Steve Galbraith’s attached piece, Go East Young Man, discusses these issues and Maverick’s effort to make the most of such opportunities. I noted in our last letter that 2010 was marked by an unusual number of fundamental, analytical mistakes, which is quite frustrating as detailed, strategic analysis of individual stocks has arguably been Maverick’s greatest strength over the years. In the same letter I pointed out that “we continually strive to improve our processes and abilities,” and in the past month we have altered the responsibilities of two senior Partners in an attempt to use their talents and abilities more effectively.
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14.0% 22.8 9.3 14.3 13.8 16.1 8.4 6.7 727.3% 2,619.4 318.3 762.6 705.1 1,007.7 264.9 181.9
Maverick Capital 300 Crescent Court 18th Floor Dallas, TX 75201 (214) 880-4000 Phone (214) 880-4020 Fax
As always. we have asked Andrew Warford. Ainslie III Managing Partner ol ly Macroeconomic considerations are playing an ever greater role in today’s markets. I hope you will be quick to call me. Furthermore. to lead an effort to improve collaboration among sector teams and increase the scrutiny of the relative merits of different investments across industry sectors. We believe that these tweaks to our investment effort will improve both our incorporation of macro considerations into our research. . who oversees our technology investments. m ar ke tf 2 Lee S. Sincerely. as well as our bottom-up evaluation of individual opportunities. if you have any questions or advice. and we have asked Steve Galbraith to devote more time to researching and analyzing macro factors and the impact such trends could have on our portfolio.
Unless otherwise indicated. Neutral 8. data contained herein is unaudited. L. Neutral. Ltd. exposure and portfolio information relates to HES unless otherwise indicated. The Funds' portfolio of securities varies significantly from those in the Indices. annualized returns for the Funds other than Long and Long Enhanced from March 1. m ar ke tf Net returns for the Funds (unless noted otherwise) are for March 1. ("USA"). Neutral Levered. 2007. Neutral Levered 12. ("Long") and Maverick Long Enhanced Fund. Long and Long Enhanced are comprised substantially of the same asset allocations as HES.7%. are generally considered appropriate benchmarks for various equity markets. net returns shown for the Funds reflect the deduction of all operational expenses (including brokerage commissions) and for the Funds other than Long and Long Enhanced. The returns of each of the Funds are computed on a time-weighted total return basis and include the reinvestment of all income derived from. Ltd. they have never been limited as to a specific type. ol ly All performance figures shown are calculated by Maverick Capital. Ltd. Levered. LDC. quality or quantity of investment in which they may invest. Neutral Levered. and its performance returns related to periods commencing prior to July 1.5% management fee calculated on invested equity (including the proceeds of actual or deemed borrowings as described in the relevant Offering Memoranda) and. the annualized return for Long for the same period reflecting a 0. Ltd. Ernst & Young LLP has audited Levered’s financial statements and its intermediate investment vehicles from commencement of operations through June 2010. Levered return data assumes estimated interest expense associated with modeled borrowings for the period through June 30. Maverick Capital. 1995.7%. also manages a fund of funds. on results of the HES portfolio for the period through June 30. that future investment performance will conform to past performance. 1998 are modeled by Maverick Capital. ("LDC"). Neutral and Long generally do not incur substantial amounts of margin debt. 1998 and actual interest expense associated with Leverage Feature borrowing (as described in the related Offering Memoranda) for the remainder of the period indicated. Long and Long Enhanced generally do not participate in non-publicly traded or credit investments. For example. In addition to managing the Portfolio Funds. For the returns shown. a 15% performance allocation calculated on net profits (also as described in the Offering Memoranda). LDC. Maverick Fund II. While the "investment mix" of the Funds may change over time. Long and their respective gross monthly and net year-to-date returns from commencement of operations through December 2010. and its actual results for the remainder of the period indicated. and their return data is based on results for corresponding segments of the HES portfolio for the period through December 31. Neutral Levered and Long commenced operations on January 1. Although Long Enhanced commenced operations on July 1. Actual returns will vary from one investor to the next taking into consideration factors described in the respective Funds' Offering Memoranda. Maverick Long Fund. 2011 reflecting a 2% management fee and a 20% performance allocation are: Maverick 12. Performance. Neutral Levered. and it should not be assumed. 2004 and the interest expense on fund borrowings (as described in the related Offering Memoranda) for the remainder of the period indicated. Ltd.25%.D. Ltd. Ltd. USA. 1998. Maverick Neutral Fund. it changed its long/short exposure targets and fee structure as of October 1. In the case of Long. . ("Neutral Levered"). The portfolios of Levered.MAVERICK DISCLOSURE STATEMENT Unless otherwise indicated. unless otherwise indicated. 2007. ("Levered"). and gains from the sale of.2%. adjusted to reflect its revised exposure targets and fee structure. Ernst & Young LLP has audited the financial statements and gross returns of Long Enhanced and its intermediate investment vehicles through June 2010. The S&P 500 Index and the MS World Index (together. Levered commenced operations on July 1. Neutral. and certain separately managed accounts. Accordingly. Neutral Levered return data assumes estimated interest expense on modeled borrowings equal to investor capital for the period through December 31.C. Ernst & Young LLP has audited the financial statements of USA. Neutral. 1995 through March 31. assets in the Funds' underlying portfolios.2%. comparing the results shown to the Indices may be of limited use.5% management fee and a 25% performance allocation charged on net profits in excess of the return of the MS World Index is 12.3%. Investment in the Portfolio Funds (other than USA) is effected through investment in intermediate investment vehicles. 1998 and the actual experience of Levered for the remainder of the period indicated. and there is no performance allocation. for the Funds other than Long and Long Enhanced. performance allocations are only charged on net profits in excess of losses from any prior period. Additionally. ("Neutral"). the "Indices"). Ltd. Except as stated. 1995 through March 31. the "Funds" or the "Portfolio Funds"). a 1. Net returns would be reduced from those shown if an investor selected alternative fee structures offering greater liquidity at higher fee levels. 2004 and the actual results of the respective fund for the remainder of the period indicated. Levered 20. 2005. Maverick returns are those of Hedged Equity Strategy ("HES") which became the total management style of USA and LDC as of March 1.3%. there is the possibility for loss when investing in the Funds. Neutral. Maverick Neutral Levered Fund. Ltd. Ltd. the annualized return for Long Enhanced for the same period reflecting a 1% management fee and a 20% performance fee charged on net profits in excess of a return equal to the average of the Indices (as defined below) is 15. Maverick Stable. unless otherwise indicated the management fee is 1. ("Long Enhanced") (collectively. investment manager of each of Maverick Fund USA. its return data is based on results for corresponding segments of the HES portfolio for the period through September 30. and has examined their gross monthly and net year-to-date returns through that date. 2005. 2011. Performance allocations for certain classes of certain funds may be charged on a reduced basis prior to the recoupment of all prior losses pursuant to terms described in the relevant offering memoranda. Neutral Levered and Long Enhanced incur margin debt in varying amounts as described in their respective Offering Memoranda. Net returns of the funds and HES for other periods and under different fee assumptions are available upon request. Information relating to HES is sometimes referred to as that of Maverick or the Maverick Fund. the management fee is 1% and performance allocations are calculated at a rate of 10% of net profits in excess of a return equal to the average of the S&P 500 and the MS World Indices (as defined below). makes no representation. weighted in accordance with the respective fund's long/short exposure targets. In the case of Long Enhanced.. The S&P 500 Index assumes dividends are reinvested unless otherwise noted. The MS World Index is the MSCI World Daily Total Return Index (USD with dividends reinvested after deduction of applicable withholding taxes). Maverick Fund. Maverick Capital.
At the risk of landing in the fido farm by revealing exactly when her college experience was. the debate is really only now heating up. it is not as if the economic backdrop is without challenges. Far before it was cool to be a Sinophile (or phobe for that matter). Zhou Enlai was famously quoted as saying it was still too soon to judge its impact on society. not because we believe it is a long only. While a blink of the eye in an historical context. one way trip to investment nirvana but rather because the breadth and depth of the investment opportunity in China is unlike anything any of us has seen in our lifetimes. ol ly . go West and grow up with the country.Maverick Go East Young Man Steve Galbraith Washington is not a place to live. From a more current view though. likely laced with enormous winners and losers but with still meaningful reliance on the state for capital allocation.3 billion begins a transition to consumerism? Count Maverick squarely in support of the latter view. The rents are high. the dust is disgusting and the morals are deplorable. expanding consumption (Exhibit 3). inflation expectations as yet unchecked. but China Seems to Offer Promise Some 180 years after the French Revolution. While her memories of pig methane fueled stoves. Go West. potentially excessive levels of fixed investment and a need to increase GDP at a minimum clip of 7% simply to prevent social unrest. With this perspective in mind. On the other hand. with the cost of capital artificially low. Is China simply a sovereign version of Enron or AIG or is the investment opportunity in the region still ahead as a nation of 1. it is pretty clear that Greeley’s advice 150 years later should be turned on its head. young man. let us just say it was in the 1980’s. rusted bicycles and tofu derived mystery “meat” may help explain why less intrepid souls avoided the journey East. From an investment perspective though. it is remarkable the economic progress China has made in those few decades. m ar ke tf Well. Too Early to Tell on the French Revolution. what we see in China is a wonderful investment cocktail characterized first and foremost by tremendous growth potential. I thought it might be helpful to frame the opportunity we see before us. virtually every important macro statistic suggests that China has an enormous economic runway ahead based on: continued capital formation (Exhibit 2). In this context. the food is bad. but also to provide insight into the steps Maverick is taking to execute a strategy against an unprecedented Eastern investment landscape. it is worth noting that China is now simply reclaiming a position it held on the world economic stage a mere 140 years ago (Exhibit 1). From a top down perspective. my wife Lucy attended college in Beijing. reinvestment of surplus liquidity (Exhibit 4) and profound growth in urbanization (Exhibit 5). at least part of Horace Greeley’s world view still rings true today.
1 % 2.6 3.000 2.7 7. UN.000 8.9 18.6 26.6 18.1 3.5 22.4 33.000 10.7 7.6 5.3 22.1 27.4 16.4 15.5 24.0 21.6 33.0 % 29.5 4.4 % 20.000 6.4 20.6 4.4 23.000 0 The Global Consumer: Personal Consumption 2010E US $ Billion US EU-15 Japan Source: Haver.0 7.3 2.3 9.6 China Shifting Mix of Global GDP China India .1 22.7 5.0 6.5 % 22.5 China 25.2 8.0 3.5 4.1 5.9 19.6 25.0 United States 0.0 12. EIU Exhibit 3 12.8 8.6 5.8 India 24.6 3.1 3.9 % 3.5 17.0 2.5 17.000 4.2 7. Morgan Stanley Research 2 ol ly Japan 3.4 17.6 11.7 9.3 % 0.2 0.1 1.9 17. Bloomberg.6 7.Exhibit 1 Western Former Europe Soviet Union 17.3 1500 1600 1700 1820 1870 1913 1950 1973 1998 2008 2015e m ar ke tf Exhibit 2 Market Cap to GDP 120% 110% 100% 90% 80% 70% 60% United States Developed Markets India World Brazil Emerging Markets Source: Morgan Stanley Research Source: Bank of America Merrill Lynch.5 8.3 32.1 4.9 4.9 4.9 4.
market are far lower than most (Exhibit 8). bad balance sheets and bad governance – a perfect trifecta. as of the latest quarter end Maverick had well over $2 billion in gross capital (i. media companies at the epicenter of the Chinese social media boom and industrial companies with deep (sometimes literally) and wide moats around their businesses. 3 ol ly Jan-07 Jan-09 Jan-11 China as a % of Total Foreign Holdings of US Treasuries 2009 . both long and short) invested in Chinese companies with every sector except health care represented.Exhibit 4 30% 25% 20% 15% 10% 5% 0% Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 m ar ke tf Exhibit 5 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Chinese Urbanization Rate 1949 1959 1969 1979 1989 1999 Source: Bank of America Merrill Lynch Source: Bank of America Merrill Lynch Willy Sutton Would Have Loved Shanghai What about China from the bottoms up view? Well.e.S. the spread between the top and bottom performers is meaningfully larger than elsewhere in the world (Exhibit 7) while correlations to the U. financial firms with unique industrial positioning and sustainable solidly double digit ROEs. We own consumer and technology companies that we believe have the ability to grow to multiples of their current size given the nascent market opportunity. What else is intriguing about the individual stock opportunity in China and the East? Well how about a market where: the investable universe (which at Maverick we define as stocks with a market cap of at least $1 billion that trade more than $10 million in average daily volume) has tripled in the past decade and is now roughly equal in size to that of Europe (Exhibit 6). Conversely. on the short side we see bad businesses.
In this sense. the quasi-capitalist economic experiment we are witnessing in China 4 ol ly Asia Investable Universe By Region MSCI World .250 1.500 1.000 750 500 250 North America Europe 2001 2011 m ar ke tf 110% 100% 90% 80% 70% 60% 50% Spread Between Top and Bottom Quintile of Rolling 12 Month Performance by Region North America Europe Asia Median LTM Exhibit 7 Exhibit 8 Average 1 Year Rolling Correlation of S&P 500 vs Regional Indices Weekly Returns – January 1995 to March 2011 100% 80% 60% 40% 20% 0% MSCI Pacific MSCI EAFE MSCI Europe So What Can Go Wrong Other than Everything? Without question the biggest risk to the China story is misallocation of capital (at what would perhaps be an epic level).Exhibit 6 1. I believe capitalism is the worst economic system – except for all others tried. Bastardizing Churchill’s take on democracy.
how are we attacking the Chinese and broader Asian opportunity? Well. provided a break from this mold by being neither an Ivy Leaguer. First. when Chinese managements visit us here in New York we try and ensure that a senior member of the Maverick team is here to engage them. and most importantly. of course. As we saw in the U. Hedge funds do not always elicit warm and fuzzy feelings among corporations. more emphatic proof that Ivy League jockdom was not the only route to a Maverick W-2. clearly. sometimes few things set economic policymakers up better for failure than. but increasingly ol ly has to give any investor at least some pause. so we have taken nothing for granted in building out our relationships and business in the region. Here. policy makers. While odds still strongly favor the continuation of China’s economic ascendency. Specifically. we responded to this widely variant advice in a measured way. our size. While perhaps apocryphal. importance to Street firms and our long history are positives. we get on planes – frequently. The logic behind such a strategy is compelling as that combination tends to produce folks who are at least vaguely intelligent. Along these lines. regulators or policymakers. In other words.m ar ke tf 5 Maverick in Asia – Boots on the Ground So turning to Maverick. Alan). wherever possible. In my mind. having traveled to China regularly for a decade now. we have leveraged our long. most of the exact same things that have always mattered – integrity.S. What gets a Maverick hired today? Well. as the story goes. having political debates in the midst of an economic catastrophe (and subsequent clean up) can be quite messy. companies which used to point to 2050 and beyond in articulating their futures are now seemingly shortening their horizons and speaking to how the current fiscal year looks. In the past year. we sought out and received all kinds of advice for successfully establishing an Asian presence. Chevy entered the Mexican market with its popular Nova brand but was deeply disappointed when sales badly lagged expectations. last month Maverick christened our Hong Kong beachhead by hosting an investment retreat for our sector heads. it is also worth mentioning we are sweating the soft stuff as well. but also possess competitiveness and experience working on a team. In founding Maverick. Ironically. Ultimately we would expect to have every major industrial sector of relevance in the region represented by a Maverick based in Asia. When a local employee later pointed out that no va in Spanish translated into “no go”. six years after we opened our first Asian office. Shifting From Ivy League Athletes to Go Getters Named Ivy Finally. strong and deep relationships with brokerage counterparties to effect introductions. we are adapting our staffing model. nor Jim Thorpe. global sector expertise will rule the investment roost. The words of wisdom ranged from: the need to hire a high profile local to run the effort. Third. so much so that it is beginning to come across – ever so lightly – as hubris. I have begun to notice two subtle. most hedge funds tend to hire Ivy League athletes. the Maverick investment team spent well over 300 man days in China or Hong Kong. for example. success (see Greenspan. First. a story about a General Motors car launch in Mexico provides a cautionary tale for any business entering relatively untested markets. Prior to the decision to expand our Asian efforts in Hong Kong. and Europe. but somewhat disquieting. drive and a history of achievement. but with prosperity. While overly simplified. whenever possible. I suspect the true test of the Chinese economic model will come not with hardship. well. we are building and promoting from within to staff our Asian business. trends. why (choose one) Singapore/Beijing/Shanghai was the only city from which we should lead our Asian effort to – why bother? Not surprisingly. Second. the global financial crisis actually provided the ideal backdrop for the hybrid command/capitalist economy to shine. What is Mandarin for Maverick? While we determined early on a physical presence was a must in Asia. My hiring ten years later provided further. if China was open for business odds are a Maverick was visiting. Lee. . Jealous of our culture and committed to our belief that deep. corporate chiefs and local investors alike have almost universal faith in the government’s ability to navigate a soft landing. the punk sales output became less perplexing. Second.
Ronnie Chan. Click here to read more hedge fund letters at MarketFolly. Chairman of the Hang Lung Group (one of the largest real estate developers in China) appropriately framed the situation when he noted that the Western industrial revolution lasted more than 50 years and levered a population and economic base a fraction the size of what China offers.com 6 ol ly Latvian Portugese internationalism serves as a tie breaker. it is worth noting that we now have as many investment professionals speaking dialects of Chinese as we do speaking Spanish or French (Exhibit 9).Exhibit 9 5 4 3 2 1 0 Number of Investment Team Members That Speak Foreign Languages m ar ke tf Chinese French Spanish Japanese Hebrew Hindi Korean No serious global investor can manage a portfolio today without an educated view on China – both bottoms up and top down. . To this end. Voting with our feet and our capital. we feel blessed by the Chinese curse that we live in interesting investment times. growing up with the world. The expansion of our Asian effort in Hong Kong is our latest step to ensure that Maverick is positioned to have informed views and seize upon what will continue to be an extraordinary investment opportunity for investment managers – both long and short. Maverick is heading East and hopefully. While English may still serve as the universal language of business. On our recent visit. it does not necessarily mean that it is always the language of doing business best. While perhaps an oxymoron.
0% 0.8% 0.1% 0.8% 0.1% 0.1% 0.1% Sector Consumer Financials Healthcare Industrials Media & Telecom Technology Total March 2011 .7% 1.1% 0.2% -1.0% 0.2% -0.1% 0.1% -1.2% -2.0% 0.4% -0.0% 0.1% 0.0% 0.1% -0.7% 1.0% Emerging Markets 0.6% 0.8% Total -0.6% 0.0% Emerging Markets 0.6% Month Ended March 31.4% -0.5% 4.0% 0.Total Portfolio by Asset Class Sector Public Small Cap Private Credit USA Europe 1.2% -0.Long Portfolio Sector Consumer Financials Healthcare Industrials Media & Telecom Technology Total USA -0.0% -0.3% -0.2% -0.4% 0.7% 4.0% 0.9% 1.4% 0.2% .8% 1.0% -0.Short Portfolio Sector Consumer Financials Healthcare Industrials Media & Telecom Technology Total USA First Quarter 2011 .0% 0.1% 0. ol ly USA Europe 0.6% 0.5% 1.0% -0.4% 1.2% -0.1% -0.3% -0.6% Japan Emerging Markets -0.5% 0.1% 1.9% First Quarter 2011 .5% 4.0% 0.7% Total YTD 2011 .4% 8.1% 0.4% Emerging Markets 0.0% 0.0% 0.0% Total -1.6% 0.1% 0.1% 0.2% -1.6% 0.4% Japan 0.0% 0.0% 0.8% 0.8% 1.8% 0.Short Portfolio by Industry Sector Sector Consumer Financials Healthcare Industrials Media & Telecom Technology Total USA -1.0% 0.7% Total -0.1% 0.3% 0.8% 2.0% 0.9% 1.5% -0.2% 0.3% -1.1% 1.6% 0.0% 0.9% 2.3% -1.3% -1.Total Portfolio by Industry Sector Sector Consumer Financials Healthcare Industrials Media & Telecom Technology Total USA Europe 0.0% 0.0% 0.3% 0.Maverick HES Funds March 2011 .3% 0.3% 0.0% 0.8% 1.0% 0.2% -1.0% 0.8% -3.9% -4.4% Japan 0.6% 1.4% YTD 2011 .1% -0.3% -0.1% 0.6% 0.Short Portfolio Sector Consumer Financials Healthcare Industrials Media & Telecom Technology Total USA Europe 0.8% -0.3% First Quarter 2011 .4% -0.2% -0.0% 0.0% 0.8% -0.3% -0.6% YTD 2011 .0% 1.7% 0.0% 2.0% -0.1% 1.0% 2.0% 0.0% 0.4% -0.5% YTD 2011 .0% -0.8% 0.6% 0.8% 1.4% -0.4% -0.5% -1.Short Portfolio by Asset Class Sector Public Small Cap Private Credit USA -5.0% 2.0% 0.1% 0.0% 0.4% 0.4% 0.0% 0.1% 0.2% -0.1% 1.4% 0.9% 1.0% Japan 0.3% 0.7% -1.4% 1.3% Year to Date 2011 YTD 2011 .1% Japan 0.8% -2.7% -1.0% 0.1% Emerging Markets 0.4% 0.3% 0.0% 0.1% 0.6% 0.1% -0.5% 0.0% 0.1% 0.7% Total -0.2% -0.0% 0.2% 0.3% -1.4% -0.1% 0.9% 1.0% 6.0% -0.Total Portfolio Europe 0.2% 0.6% Total -0.9% 0.0% 0.1% Emerging Markets 0.4% -5.0% Total -1. 2011 First Quarter 2011 Japan Emerging Markets -0.4% 0.6% 0.4% -5.7% 0.1% 0.0% 0.7% -0.4% 0.6% 6.1% 0.0% 0.2% Total -0.0% 0.5% USA Europe 0.3% 0.0% -1.4% 8.5% Sector Consumer Financials Healthcare Industrials Media & Telecom Technology Total March 2011 .1% -0.5% 0.1% 0.4% 1.1% 0.7% 1.2% 0.2% -0.0% 0.0% 0.1% 0.7% Europe 0.4% 0.0% 0.1% -0.1% -0.4% 1.2% -1.1% 0.1% -0.5% 0.1% 0.0% Total 8.1% 0.2% 0.5% -0.2% -0.5% 1.1% 0.1% -0.1% 0.5% 0.1% 0.1% -0.1% -0.0% 0.6% -1.9% 0.March 2011 .4% 0.5% Total YTD 2011 .3% 0.4% 0.7% 0.0% 0.8% 2.0% 0.1% 0.1% 0.1% 1.0% Japan 0.1% 0.3% 0.1% 0.1% 0.0% 0.1% -0.1% 0.0% 0.0% 0.1% -0.3% -1.1% 0.0% -0.1% Japan 0.2% 0.1% 1.5% 0.8% 1.6% 0.1% 0.2% 0.3% 0.4% 0.2% -0.0% 1.0% Total 3.0% -0.4% 1.0% 0.6% -1.0% 0.3% 1.3% 0.0% 0.0% 0.7% Total -2.1% -0.6% 0.1% 0.9% 1.2% -0.0% Emerging Markets 1.2% 1.3% -0.5% 6.1% 0.1% Emerging Markets 0.0% 0.Supplement Gross Performance Attribution .0% 0.2% 0.3% 1.0% 0.0% 0.2% -0.0% 0.4% -0.8% 1.0% 0.7% 8.1% 0.4% -0.1% 0.5% 0.9% 2.7% 0.3% -0.2% 0.1% -1.0% 0.2% -2.3% 0.7% -0.0% Total -4.0% -0.7% 1.0% 0.4% 1.0% 0.9% -4.0% -5.0% 0.5% 0.2% -0.Long Portfolio by Asset Class Sector Public Small Cap Private Credit USA Europe 0.4% -1.9% Japan Emerging Markets -0.0% 0.7% Total -2.4% 1.2% 0.Total Portfolio Sector Consumer Financials Healthcare Industrials Media & Telecom Technology Total USA -1.0% -4.1% 0.0% 0.1% -0.2% Total This supplement should be read in conjunction with the attached Maverick Disclosure Statement.1% 1.1% 1.0% -0.6% Japan Emerging Markets -0.0% Europe 0.0% -0.1% 0.0% 2.3% -0.2% -0.Long Portfolio Europe 0.4% 1.1% 0.0% 0.3% 0.2% 0.5% Japan 0.3% 0.9% -0.2% 0.3% 1.1% 0.4% Japan 0.6% 0.Long Portfolio by Industry Sector Sector Consumer Financials Healthcare Industrials Media & Telecom Technology Total USA Europe 0.1% 0.2% 0.3% Emerging Markets 0.2% 0.7% Europe 0.2% m ar ke tf 6.
4% 4.0% Japan Emerging Markets 5.1% 100.9% 6.5% 5.9% 17.9% 1. Owned Long 69 5. 2011 .3% 15.8% 38.3% % of Portfolio Long Short 15.3% -6.1% -6.6% 7.6% 22.6% 11.7% 7.1% 84.5% 1.6% 44.March 2011 .Maverick Core Funds Long Investment Exposure Sector Consumer Financials Healthcare Industrials Media & Telecom Technology Total Net Portfolio Exposure Sector Consumer Financials Healthcare Industrials Media & Telecom Technology Total USA 5.1% 59.6% Sector Consumer Financials Healthcare Industrials Media & Telecom Technology Total Monthly Portfolio Information .5% 38.4% 34.9% 75.5% -1.1% 6.3% 153. Technology Total Assets by Region Region USA Europe Japan Emerging Mkts Total ASC 820 Breakdown 14% 17% 15% 13% 16% 25% 100% 67% 15% 2% 16% 100% Maverick Fund Maverick Fund USA Maverick Levered Gross Assets by Asset Class % of Portfolio Portfolio Liquidation Timeline Market Capitalization % of the Portfolio 1 day 21% 1 week 58% 1 month 91% % of the Portfolio Amount of the portfolio that could be liquidated assuming 20% of the daily trading volume Market Cap definitions: Mega = >$100B.1% -3.8% 166.0% 23.6% -11.5% -1.8 Top 5 Investments Top 10 Investments Top 20 Investments All Investments Assets by Industry Sector Consumer Financials Healthcare Industrials Media & Tel.9% 24.7% 4.5% 100.7% 25.3% 21.4% 12.1% 1.9% 8. Large = $10B-$100B.8% 37.4% 43.8% 22.6% 1.4% 28.9% % of Equity Long Short 12.8% 1.0% 7.Supplement Detailed Portfolio Exposures at April 1.2% Total 27.8% Japan Emerging Markets 4.1% 1.9% -2.5% 247.1% 37.0% Total 9.7% -66.8% 27.9% 13.1 Total 146 5.0% 15.4% Public Private 96% 2% Credit 2% Total 100% Mega 12% Large 40% Medium 46% Small 2% .4% -3.6% 4.2% -94.1% 2.8% -10.9% 38.1% 5.8% 36.9% 38.4% -1. Small = <$1B This supplement should be read in conjunction with the attached Maverick Disclosure Statement.1% 1.8% Sector Consumer Financials Healthcare Industrials Media & Telecom Technology Gross Portfolio Exposure Europe -1.4% 153.4% 29.8% 0.8% 1.2% 94.0% -14.7% Japan Emerging Markets -0.1% 5.5 Short 77 3.5% 4.7% 1.5% 6.6% 22.2% 9.6% -2.8% 40.5% -15.2% -15.1% 35.0% Short Investment Exposure Europe 1.6% 2.1% 5.3% m ar ke tf -0.1% Total -10.0% -13.3% 17.9% Level 2 14.1% 1.9% 1.5% 2.5% 16.5% -10.9% 9.4% 2.0% Total 22.1% 100.9% 11.9% 5.6% 1.4% -13.7% 1.5% -1.2% 13.8% 2.7% 2.6% 27.8% 7.5% 2.7% Level 3 1.3% 23.1% -1. Medium = $1B-$10B.5% 11.2% 49.6% -1.1% 2.8% -23.0% 13.4% Japan Emerging Markets 5.1% 5.1% 15.9% 30.0% 2.Maverick Core Funds Investment Concentration Public Equity Concentration # of Positions Largest Position Average Position Size Median Days Trading Vol.7% 61.9% 8.6% Level 1 84.3% USA Europe 3. ol ly USA Europe -2.4% USA 16.2% 2.3% -1.7% 21.1% -13.6% -13.0% 5.9% -2.9% 38.9% 7.1% -14.8% 82.
March 2011 . Credit Suisse. Morgan Stanley.290 570 650 1. Principal Questions For questions please contact Amy Castillo at 214. ol ly < 5 yrs 9% 13% 7% 1% 1% 2% 33% 5 .880.10 yrs 4% 2% 6% 1% 4% 0% 17% > 10 yrs 10% 0% 13% 21% 4% 2% 50% Total 23% 15% 26% 23% 9% 4% 100% Firm Total Assets by Strategy Firm Total Assets by Investor Type .41 or send an email to email@example.com Number of Yrs Invested Total Firm Total Employees by Function Accounting Human Resources Information Tech Investment IR & Client Service 19 2 19 46 8 $10.com.830 Endowments & Foundations Pensions Individuals & Trusts Mav Partners. State Street This supplement should be read in conjunction with the attached Maverick Disclosure Statement. JP Morgan. Legal/Compliance Support Tax Trading Treasury Total 4 35 6 8 6 153 Additions Departures Pedro Zevallos.4081 or Corrie Mattorano at 214. Employees & Related Fund of Funds Sovereign Wealth Funds and Other Total Key Personnel Changes m ar ke tf Current Prime Brokers Barclays.Supplement Quarterly Organizational Update $ millions Maverick Core Strategy Maverick Long Strategies Maverick Neutral & Neutral Levered Maverick Stable (FOF) $8. Goldman Sachs. Deutsche Bank. UBS.
Net returns for the funds would be reduced from those shown and will vary due to differences in fees. Ltd. quality or quantity of investment in which they may invest. the fair market value of other assets is determined by the investment manager as of the end of each month.. USA. LDC and Levered. Maverick Long Portfolio Exposures and Maverick Long Enhanced Portfolio Exposures indicate the allocation of assets of Long and Long Enhanced. L. ("Long"). Ltd. ASC 820 Breakdown data shows total return swaps (Level 2) as an investment in the underlying asset rather than the market value (unrealized gain) that will be shown in the financial statement presentation. Maverick Neutral Portfolio Exposures indicate the allocation among assets of Neutral and Neutral Levered. weighted in accordance with the respective fund's long/short exposure targets. the proceeds of the Leverage Feature (as described in Levered's Offering Memorandum). Long and Long Enhanced generally do not participate in non-publicly traded or credit investments. Ltd. annual and annualized since inception net returns of the funds under different fee assumptions are available upon request. Maverick Fund. excluding certain positions classified as small cap securities based principally on their trading volumes. that have been reinvested in the Portfolio Funds. Currency Hedge Positions are excluded from presentations of exposure data. The Maverick Hedged Equity Strategy ("HES") became the total management style of USA and LDC as of March 1. new issues eligibility. dividend income and expense.MAVERICK DISCLOSURE STATEMENT All performance figures shown are calculated by Maverick Capital.C. respectively. foreign exchange gains and losses. they have never been limited as to a specific type. ol ly . m ar ke tf Maverick Supplement Unless otherwise indicated. Maverick Long Enhanced Fund. Maverick Long Fund. Maverick Stable Partners. LDC. Return information of the Portfolio Funds is based on current valuations of publicly traded securities and is a preliminary estimate that is a blended return of all investors in the respective fund. that future investment performance will conform to past performance. Information relating to Public Equity Concentration is provided for publicly-traded common stock positions and related derivative instruments of the indicated fund or funds. Neutral. Ltd. and other income and expenses associated with financing. Maverick Core Funds Portfolio Exposures indicate the allocation among assets of USA. excluding the Stable Funds. Information relating to the Assets by Investor Type relates to the duration of investors' and clients' relationships with the Investment Manager and its funds. Ltd. ("LDC"). ("Stable Partners") and Maverick Stable Fund. Actual returns will vary from one investor to the next taking into consideration factors described in the respective funds' Offering Memoranda. Neutral Levered and Long Enhanced incur margin debt in varying amounts as described in their respective Offering Memoranda. Maverick Neutral Fund. investment manager of Maverick Fund USA. Ltd. quarterly. Neutral Levered. Maverick Capital. ("Neutral Levered"). Additionally. and gains from the sale of. Performance attributions are gross of management and performance fees and include realized and unrealized securities gains and losses. timing of capital flows and other factors. USA. Ltd. L. In addition to managing the Portfolio Funds. and it should not be assumed.P. the fair market value of other equity investments held by the Portfolio Funds has generally been determined by the Investment Manager and has been subject to a 50% beta adjustment to reflect reduced market volatility for purposes of measuring exposures. Ltd. Ltd. While the "investment mix" of the Funds may change over time. Neutral Levered. and the Core Funds. The portfolios of Levered.D. Monthly. year-to-date. the Investment Manager determines the equity value of certain credit instruments for purposes of presenting portfolio exposures and may subject the value of such instruments to an adjustment factor. information is presented as of the last day of the month indicated. ("Neutral"). LDC and Levered are sometimes collectively referred to as the Core Funds. ("Long Enhanced"). Multiple investments in an Issuer are aggregated in determining Investment Concentration. net assets include investor equity. Information concerning the median days trading volume is given with respect to the aggregate positions of the Investment Manager's clients. Ltd. The Portfolio Liquidation Timeline reflects the liquidation of all assets of the Investment Manager’s clients other than the Stable Funds and assumes the liquidation of private investments will take in excess of one month. Long and Long Enhanced are sometimes collectively referred to in the Disclosure Statement as the Portfolio Funds. and is approximate and unaudited. Maverick Capital. Neutral. also manages certain separately managed accounts. The Maverick Core Strategy is comprised of the assets of the Core Funds and those separately managed accounts that generally follow the HES strategy. makes no representation. Maverick Fund II. Neutral and Long generally do not incur substantial amounts of margin debt. Levered. Neutral Levered. the Maverick Long Strategies are comprised of the assets of Long and Long Enhanced and separately managed account assets that are managed in a similar manner. In the case of the Maverick Core Funds Portfolio Exposures. ("Levered"). The returns of each of the funds are computed on a time-weighted total return basis and include the reinvestment of all income derived from. The performance data shown is compiled in accordance with a proprietary investment management model developed by Maverick Capital. Classification of exposures by sector and region are based on classification of publicly traded and non-publicly traded investments in accordance with principles established by the Investment Manager that do not correspond with third party classifications. assets in the Funds' underlying portfolios. Long and Long Enhanced are comprised substantially of the same asset allocations as HES. ("USA"). there is the possibility for loss when investing in the Funds. 1995. Currency Hedge Positions are currency forward contracts and assets derived from borrowings entered into to hedge currency exposures. Ltd. Data contained herein is unaudited. Neutral. The fair market value of publicly traded securities is based generally on quotations from third party sources. Ltd. Small Cap performance attribution is determined by reference to Small Cap investments classified as such by the Investment Manager. Maverick Neutral Levered Fund. Portfolio Exposure information is calculated on the basis of fair market values as of the date indicated. ("Stable Offshore" and together with Stable Partners. the "Stable Funds"). and certain deferred performance and management fees payable to Maverick Capital.