You are on page 1of 11

ANNUAL REPORT CO ENTAR!

! 2013 & 2014: Closing, Reflection, and Five Bad Trades To Avoid Next ear "ece#$er 12, 2013

T% %&r Clients an' In(est%rs, O&r in(est#ent pr%cess c%ntin&es t% )%c&s %n )ilterin* hi*hl+ )a(%ra$le re,ar'-t%-ris. %pp%rt&nities. !et the last 12 #%nths ha(e presente' an interestin* an%#al+. L%%.in* $ac. an' re)lectin* %n 2013, ,e )in' a +ear in%r'inatel+ cl&ttere' ,ith apparent %pp%rt&nities that t&rne' %&t t% $e $a' tra'es. %re s%, in )act, than an+ %ther +ear ,e can re#e#$er. In 2013, avoiding bad trades contributed more alpha t% an in(est#ent p%rt)%li% than i'enti)+in* *reat %pp%rt&nities. N%t l%sin* ,as the ne, ,innin*. T%% #an+ in(est%rs, pr%''e' $+ the &nrelentin* #%netar+ /eit*eist %r their %,n e#%ti%ns 0%r $%th1, (%l&ntaril+ entere' these traps, at %ne ti#e %r an%ther, thr%&*h%&t the +ear. I'enti)+in* the $a' calls in a'(ance, an' i#ple#entin* a $asic )ilter, sa(e' a *reat 'eal %) )inancial an' #ental capital2an' .ept &s in the race. L%%.in* thr%&*h %&r *l%$al #acr% lens, ,e list s%#e %) these p%th%les in chr%n%l%*ical %r'er3 4irst a#%n* the# ,as the &ni(ersal $elie) startin* ar%&n' 5612, an' lastin* ,ell int% 1613, that E#er*in* ar.ets ,ere *%in* t% $e the star per)%r#ers this +ear. Then $+ arch, the latest )ashi%n ,as t% sell the 7ritish P%&n' %n c%#in* 'e(al&ati%n. %(in* int% April, C%pper an' aterials $eca#e a )a(%rite sh%rt t% 8pla+9 the Chinese '%,ntren'. :e(eral )a&lt+ ass&#pti%ns $ehin' that l%*ic chain, t% $e s&re. 7+ late ;&ne, the ra*e ,as t% sh%rt 7%n's %n 8taper tal.9. E#er*in* ar.ets ,ere 'eclare' 'ea'. As ;&l+ ca#e, the "%llar ,as 8$rea.in* %&t9, an' ,as a 8#&st-%,n9. As :epte#$er appr%ache', ec%n%#ists ha' reache' near-&ni(ersal a*ree#ent %n an i##inent 4e' taper. 4e, $%there' t% listen t% ,hat the 4e' ,as act&all+ sa+in*, )%r the $etter part %) three #%nths 0then pr%cee'e' t% $la#e the 4e' )%r p%%r c%##&nicati%n1. 4%rt&natel+, ,e ha' the c%&ra*e t% a(%i' 0an' e(en )a'e1 these 8t%p tra'es9. Other p%c.ets %) )ren/ie' c%nsens&s, t% %&r s&rprise, #ana*e' t% h%l' &p2an' in s%#e cases, $eca#e e(en #%re #isali*ne'. The 8<reat R%tati%n9 act&all+ ca#e t% pass, as retail in(est%rs #ana*e' t% '&#p their 7%n's at the l%,s %nl+ t% pile int% :t%c.s at the hi*h. Ne(er #in' ,h% li)te' th%se 7%n's )r%# the#, an' s%l' :t%c.s t% the#. Preci%&s #etals an' the #iners $r%.e after e(er+%ne sai' the+ ,%&l', then pr%#ptl+ 'isappeare' )r%# the in(est#ent #en&. :ellin* !en a)ter a+, :ellin* 7%n's an' <%l' in late ;&ne, all str&c. &s as reall+ $a' tra'es. %st ha(en9t *%ne an+,here, +et their pr%p%nents are e(en #%re c%n(ince' the *ains are c%#in*. This bizarre contrarian Moebius strip has 'is*&ise' se(eral $a' tra'es as *%%', )%r n%,. E(en )%r the #i*ht+ :=P, >0? %) the +ear9s *ains ,ere cl%c.e' in $+ late a+. Chal. it &p t% r. ar.et9s c%n(incin* tric.s, an' in(est#ent #an'ates ,here patience has $een c&t t% /er%. @a(in* l%n* $elie(e' patience t% $e c%rrelate' ,ith alpha, as ,e transiti%n int% 2015, ,e cann%t en(isi%n a $etter ti#e t% .eep a c%%l hea'. In hin'si*ht, perhaps %ne %) the *reatest less%ns %) 2013 ,as the i#p%rtance %) ;apan t% the #acr% 'isc&ssi%n. T% an+ #ar.et practiti%ner 0ec%n%#ists n%t incl&'e'1 ,h% has *lance' at a A0-+ear chart %) ;apanese EB&ities, the !en, an' U.:. 10-!ear Treas&r+ !iel's, ,e $elie(e these tren's happene' t%*ether )%r (er+ i#p%rtant, fundamentally separate but systemically inter-related reasons2all %) ,hich are t%% i#p%rtant t% )it in a $rie) re)lecti%n n%te. :&))ice t% sa+, i) an in(est%r thin.s that %ne %) these t,% tren's 0;apanCU.:. Rates1 has t&rne' )%r a peri%' rele(ant t% their ti#e h%ri/%n, the+ sh%&l' ta.e the ti#e t% st&'+ ,hat the )&n'a#ental an' s+ste#ic i#plicati%ns are )%r the %ther. Apparentl+, #%st in(est%rs ha(e n%t. Dith%&t )&rther 'ela+, let &s ret&rn t% the 'isc&ssi%n %n 'ecepti(e %pp%rt&nities that $ec%#e $a' tra'es, as ,e p%n'er the c%#in* +ear.

1
Archaea Capital Research, Inc., 2013

Five Bad Trades To Avoid Next ear BA! TRA!" #1 For 2014: $gnoring %ean Reversion The st%c. #ar.et ha' a *reat +ear. :&pp%se'l+, hist%r+ )a(%rs a *%%' )%ll%,-thr%&*h. De 'isa*ree. The chart $el%, sh%,s the :=P9s ann&al ret&rns )%r the 20 +ears that )%ll%,e' t,% c%nsec&ti(e '%&$le-'i*it ann&al *ains in the st%c. #ar.et. O(er nearl+ a cent&r+, the thir' +ear p%ste' a si*ni)icantl+ s#aller ret&rn than the hist%rical #e'ianCa(era*e 084% less than the median return, and 6 % less than the average return13

@ere are the 20 th&#$nail charts %) th%se +ears )%r B&ic. per&sal, in %r'er )r%# the per)%r#ance $ars a$%(e3 1E3> 0-3E?1 1E>3 0-1>?1 1E5F 0-12?1

1E>> 0-12?1

2000 0-10?1

1EG1 0-10?1

2
Archaea Capital Research, Inc., 2013

1EA3 0->?1

1EE0 0->?1

2011 00?1

1EG5 0H1?1

1EG> 0H2?1

1EAF 0H3?1

1EFA 0HE?1

1EA2 0H12?1

1E55 0H15?1

1EA1 0H1F?1

1EEE 0H20?1

1EEG 0H2>?1

1E5A 0H31?1

1EE> 0H31?1

Nearl+ e(er+ chart, ,ith the eIcepti%n %) perhaps 1E5A an' 1EE>, )a(%re' #ean re(ersi%n. In sh%rt, $&+in* %n ;an&ar+ 2 an' h%l'in* J&st #a+ n%t c&t it in 2015. Th%se le(erin* )%r a repeat %) 2013 in U.:. EB&ities are li.el+ ,al.in* in t% a #eat *rin'er. As )%r the less%ns %) 2013 %n c&rrencies, c%##%'ities, an' e(en E#er*in* ar.ets, please rea' the )irst pa*e %) this n%te. Tren's ,ere )ic.le, an' ,e eIpect plent+ %) enc%res in the c%#in* +ear. As a si'e n%te, the #%st $earish %&tc%#e )%r 2015 ,%&l' $e a *ra(it+-'e)+in* $i* ret&rn 0net %) the #eanre(ertin* s,in*s ,e eIpect1. 4r%# the ei*ht $est +ears a$%(e, three ca#e in 1EE>-1EEE2an' ,e .n%, ,hat )%ll%,e'. D%rse, ,ith%&t these three $&$$le +ears, the #e'ian ret&rn )alls t% 0?, an' the a(era*e t% -1.5A?.

3
Archaea Capital Research, Inc., 2013

BA! TRA!" #2 For 2014: &'ic'(flation) This 'e$ate is als% relate' t% #ean re(ersi%n. 7el%, is a 1A-+ear chart %) U.:. CPI ,ith rele(ant Ec%n%#ist #a*a/ine c%(ers #ar.e' in (ertical lines 0t% the nearest #%nth1. The c%(ers rea'3
May !4, "###3 $une "#, !%%43 May !4, !%%83 &ov #, !%"'3 Ec%n%#+ Dars :tarrin* Alan <reenspan, In)lati%n 4i*hter 7ac. t% the 1E>0sK In)lati%n ret&rns, ,%rl',i'e In)lati%n9s $ac.L $&t n%t ,here +%& thin. The perils %) )allin* in)lati%n

As per a$%(e, there are %nl+ ,r%n* ans,ers in this eternal 'e$ate. I) ,e ,ere t% *&ess, the 4e' #a+ )inall+ *et their in)lati%n 8%n tar*et9 neIt +ear2as in)lati%n ten's t% c%nsi'era$l+ la* ec%n%#ic acti(it+ an+,a+ 0r%&*hl+ 2-5 B&arters1 an' 2013 ,as %n $alance an eIpansi%n +ear. Inherent la*s c%&l' easil+ 'ri)t CPI 0an' C%re1 $ac. t% 2? %r hi*her, thr%,in* a ,rench in all the central plannin* #%'els. :pea.in* %) ,hich, $el%, is the Mlast *aspN 0,hite arr%,1 in C%re CPI '&rin* the pre(i%&s c+cle, ,ith a A0-#%nth #%(in* a(era*e )%r *&i'ance. Is a repeat c%#in*K

5
Archaea Capital Research, Inc., 2013

I) the B&esti%n see#s %&tlan'ish, the $el%, chart sh%,s the last se(en U.:. Recessi%ns, an' C%re CPI 0,hite1 relati(e t% the sa#e A0-#%nth #%(in* a(era*e 0$l&e1. The :=P is in +ell%,. Peri%'s %) C%re CPI tren'in* a$%(e its l%n*-ter# a(era*e all le' t% p%%r ec%n%#ic an' in(est#ent %&tc%#es3

L%%.in* t% +et an%ther ti#e )%r *&i'ance, in late 1EGE st%c.s 0+ell%,1 #a'e ne, all-ti#e hi*hs J&st as C%re CPI in)lati%n 0,hite1 sta$ili/e' ar%&n' its l%n*-ter# a(era*e 0$l&e12i'entical initial c%n'iti%ns %$ser(e' t%'a+. In)lati%n then r%se )%r a +ear, ,hile st%c.s ,ere p&t thr%&*h the #eat *rin'er )r%# :epte#$er 1EGE t% :epte#$er 1EE0. Ulti#atel+ st%c.s )ell 20? as recessi%n hit.

7el%, ,e %(erla+ the U.:. 10-!ear Treas&r+ !iel' 0*reen1 a*ainst the sa#e C%re CPI 0,hite1 )%r that peri%'. @ere, +iel's r%se )%r a )e, #%nths in tan'e# ,ith in)lati%n, $&t $+ +ear-en' 1EE0 +iel's ,ere ri*ht $ac. t% ,here the+ ha' starte'. ean-re(ersi%n at its )inest3

A
Archaea Capital Research, Inc., 2013

In a classic repeat %) hist%r+, 2015 c%&l' see a late c+cle 0last *asp1 rise in in)lati%n %) A0-100$ps, an' a 4e' %nce a*ain l%%.in* thr%&*h the rear(ie, #irr%r %) a la**in* in'icat%r t% set p%lic+. As seen )r%# the pre(i%&s charts, this al%ne ,%&l' present a ,h%le ne, set %) pr%$le#s )%r asset prices. An' %) c%&rse, n% %ne ,%&l' see it c%#in*, as the #a*a/ines alrea'+ s&**est. As )%r interest rates, here are the sa#e #a*a/ine c%(ers place' %(er a chart %) the U.:. 10-!ear Treas&r+ !iel'. 7+ the en' %) 2015 the c&rrent 'e)lati%n scare #a+ l%%. a $it sill+. Dhere 7%n' prices en' &p, an' h%, the+ *et there, re#ains t% $e seen. 7et,een n%, an' then, there ,ill $e n% sh%rta*e %) ec%n%#ists ,ith c%nsens&s )%recasts2tr+ t% i*n%re the#.

F
Archaea Capital Research, Inc., 2013

BA! TRA!" #3 For 2014: Forgetting *ate C+cle !+na,ics In)lati%n isn9t the %nl+ late-c+cle the#e that has 'isappeare' )r%# the in(est#ent 'isc&ssi%n3 (arge investors turn cold on commodities24inancial Ti#es, "ece#$er A MA)ter t,% +ears at the hel# %) the ,%rl'9s ,%rst-per)%r#in* asset class, #ana*ers %) c%##%'ities )&n's c%&l' $e )%r*i(en )%r )eelin* &nl%(e'. Dall :treet anal+sts, $i*-pict&re strate*ists an' p%,er)&l c%ns&ltants ha(e t&rne' c%l' %n %il, #etals an' *rain )&t&res as a 'eca'e-l%n* rall+ peters %&t. An' in(est%rs are listenin*, ,ith #an+ n%, rel&ctant t% c%##it )&rther )&n's. :%#e are hea'in* )%r the eIits. OLPN ) *ommodities +ally ,sn-t *arved in .tone2Dall :treet ;%&rnal, "ece#$er 2 MI) the #ar.et ha' its %,n Ten C%##an'#ents, near the t%p ,%&l' $e Qth%& shalt re(ert t% the #eanQ2%r, ,hat *%es &p #&st c%#e '%,n an' (ice (ersa. C%##%'ities $&lls $ettin* %n this li)tin* their )a(%rite in(est#ent %&t %) its )&n. nee' t% as. the#sel(es ,here that #ean is, th%&*h. O...P A$%(e all, in hist%rical ter#s, prices )%r c%pper, %il an' *%l' arenRt e(en that cheap2the+ %nl+ l%%. s% c%#pare' t% recent 'i//+ pea.s. :%#e,here in th%se alternati(e c%##an'#ents is an%ther instr&cti%n )%r in(est%rs3 Th%& shalt n%t catch a )allin* .ni)e.OLPN Interest in the C%##%'ities space has $een pl&#$in* the 'epths thr%&*h%&t #%st %) the +ear2an' the #ar.et 0as #eas&re' $+ the :=P <:CI in'eI1 has, &ns&rprisin*l+, *%ne n%,here3

C%pper has als% ret&rne' as a )a(%rite sh%rt t% 8pla+9 China. The *ran' thesis is that Chinese p%lic+ is shi)tin* )r%# in'&strial t% c%ns&#pti%n-'ri(en *r%,th. :% the c%nsens&s is t% sh%rt C%pper int% the neIt Plen&#. De9ll pass. The i'ea that C%##%'ities are 8'ea'9, as ,e n%te' ,ith 'e)lati%n als% '%#inatin* the ec%n%#ic 'e$ate, see#s t% %))er )ertile *r%&n' )%r a te#p%rar+ s&rprise neIt +ear.

>
Archaea Capital Research, Inc., 2013

BA! TRA!" #4 For 2014: Blind Fait' $n -olic+ ar.ets $rea. r&les. In(est#ent aph%ris#s that *ain en%&*h $elie(ers &s&all+ st%p ,%r.in*2ri*ht ,hen the+ are c%&nte' 0'epen'e'1 %n the #%st. On Pa*e 1 %) the #ar.et r&le $%%. stan's, al%ne, M"%n9t )i*ht the 4e'N 0,ith a n%' t% art+ S,ei*2,h% pr%$a$l+ ,%&l' ha(e crin*e' at h%, &$iB&it%&s the phrase has $ec%#e2an' ,h% als% sai' Mthe pr%$le# ,ith #%st pe%ple ,h% pla+ the #ar.et is that the+ are n%t )leIi$leN1. Central $an. cre'i$ilit+ is li.e an+ %ther asset. It s,in*s in an' %&t %) )a(%r, in )airl+ pre'icta$le c+cles. The ti#e t% *% l%n* 4e' cre'i$ilit+ ,as )i(e +ears a*%. I) ,e c%&l' sell *l%$al central $an. cre'i$ilit+, ,e ,%&l' '% s% t%'a+3

/here are no good options for late-cycle monetary policy. Central $an. #an'ates ha(e an inherent str&ct&ral )la,. The+ are tas.e' ,ith c%ntr%llin* in)lati%n an' &ne#pl%+#ent, $%th %) ,hich la* the real ec%n%#+. That is, ,hen $%th in)lati%n an' &ne#pl%+#ent are sta$le an' i#pr%(in*, an' p%lic+ is acc%##%'ati(e, M"%n9t )i*ht the 4e'N ,%r.s rather $ea&ti)&ll+. :trai*ht lines ,%r. ,%n'ers in ec%n%#ic #%'els. Un)%rt&natel+ at the t&rns, #%'el'ri(en p%lic+ ten's t% )all $ehin' the realit+ c&r(e. Lest ,e )%r*et, 200>-200G ,as a classic eIa#ple. As the $el%, chart sh%,s, acc%##%'ati(e p%lic+ 'i'n9t arrest the crash %) 200G, the tech $&st in 2000, the recessi%n an' $ear #ar.et %) 1EE0-1EE1, the '%&$le-'ip recessi%n %) 1EG2, %r the crash %) 9>5. Perhaps 2015 ,ill see the 4e' 'i**in* itsel) int% the sa#e late c+cle h%le, te#p%raril+ re'&cin* acc%##%'ati%n J&st as &ne#pl%+#ent tr%&*hs an' in)lati%n per.s &p. The #%'els ,%n9t li.e that2an' ,e ,%rr+ )%r th%se )%ll%,in* $lin'l+ at the t&rn.

G
Archaea Capital Research, Inc., 2013

BA! TRA!" #. For 2014: Reac'ing for ield !/ring *ate C+cle %%'+9s #aintains a han'+ hi*h-+iel' cre'it sprea' #%'el $ase' %n ratin* chan*es. 4%r the )irst ti#e in this A-+ear cre'it eIpansi%n c+cle, pre'icte' hi*h +iel' cre'it sprea's ha(e cr%sse' rather si*ni)icantl+ a$%(e act&al. It ,%r.e' B&ite ,ell as a lea'in* in'icat%r '&rin* the crisis. O(erall, the hist%r+ %) these *aps '%es n%t $%'e ,ell )%r s&staine' sprea' c%#pressi%n3

The a$%(e als% s&**ests that placin* $lin' )aith in #%netar+ p%lic+ 0as ,e 'isc&sse' pre(i%&sl+1, as the sole driver )%r )&rther sprea' c%#pressi%n, #a+ &lti#atel+ 'isapp%int cre'it in(est%rs. I*n%rin* cre'it B&alit+ 'eteri%rati%n in late c+cle is si#pl+ a $a' tra'e.

E
Archaea Capital Research, Inc., 2013

A'' C%(enant Lite Iss&ance at F0? %) l%ans, )ar s&rpassin* the 200> hi*hsL

An' PIT iss&ance %)) the charts 0nearl+ a thir' t% pa+ 'i(i'en's1L

In $%th cases, ,e ha(e a pict&re %) in(est%rs ,h% '% n%t appear t% $e care)&ll+ anal+/in* in'i(i'&al cre'it ris.. 4&rther, c%#panies are n%t le(erin* &p t% in(est in )&t&re *r%,th, $&t t% )ee' their shareh%l'ers. Call it the pilla*in* %) c%rp%rate $alance sheets, $+ the (er+ insi'ers char*e' ,ith steerin* the ship. Inci'entall+, J&st as the+ are 0in a**re*ate1 'irectin* their c%#panies t% $&+ $ac. shares an' pa+ 'i(i'en's 0c%&rtes+ %) sa(ers, pr%''e' $+ the 4e'1, %nl+ 1>? %) recent in'i(i'&al insi'er transacti%ns ha(e $een p&rchases. Acc%r'in* t% Pr%). NeJat :e+h&n %) the Uni(ersit+ %) ichi*an, this is the l%,est le(el since 1EE0, ,hen his 'ata$ase $e*ins 0the a(era*e r&ns at 3G?1. Dhat c%&l' p%ssi$l+ *% ,r%n*K

10
Archaea Capital Research, Inc., 2013

As ,e enter a ne, +ear, ,e than. +%& )%r the %pp%rt&nit+ t% $e a part %) +%&r in(est#ent pr%cess. a+ ,e t%*ether M)i*&re %&tN the pieces %) the #ar.et p&//le. a+ 2015 $e re,ar'in* )%r the patient, 'ili*ent in(est%r. As ,e li.e t% sa+, Mi#a*inati%n, inn%(ati%n, &n'erstan'in*, an' acti%n are pillars share' $+ all s&ccess)&l in(est%rsN. Dhen s%#e %) the $est %pp%rt&nities c%#e )r%# '%in* n%thin*, the #ar.et9s #essa*e is %ne %) *reat in)%r#ati%nal (al&e. The (al&e %) a(%i'in* $i* #ista.es in 2015 #a+ $e *reater than e(er $e)%re. An' ,ith a l%n* list %) p%tentiall+ $a' tra'es alrea'+ c%#petin* )%r in(est%rs9 attenti%n at the %penin* *ate, ,e ,ill prepare )%r the c%#in* +ear in care)&l st&'+ an' th%&*ht. @app+ @%li'a+s an' %nt% 2015.

This c%p+ri*hte' rep%rt is p&$lishe' $+ Archaea Capital Research, Inc., an' is inten'e' s%lel+ )%r &se $+ 'esi*nate' recipients. Archaea Capital Research, Inc., speciali/es in #acr% in(est#ent anal+sis )%r instit&ti%nal in(est%rs. Archaea Capital Research, Inc., e#pl%+s a 'iscipline' an' e(%l(in* c%#$inati%n %) pr%prietar+ *l%$al #acr%, asset all%cati%n, )&n'a#ental, B&antitati(e, an' technical research #%'els t% pr%'&ce ec%n%#ic rep%rts, #%'el p%rt)%li% chan*es, an' price )%recasts )%r eB&it+, rates, c&rrencies an' c%##%'ities #ar.ets. Archaea Capital Research, Inc.9s *l%$al clients incl&'e pensi%n )&n's, )a#il+ %))ices, he'*e )&n's, an' instit&ti%nal #%ne+ #ana*ers. 4%r inB&iries, e#ail in)%Uarchaeacap.c%#. This pr%prietar+ p&$licati%n is pr%tecte' $+ U.:. an' Internati%nal C%p+ri*ht la,s. All ri*hts reser(e'. N% license is *rante', eIcept )%r the s&$scri$er9s pers%nal &se. N% part %) this p&$licati%n %r its c%ntents #a+ $e c%pie', '%,nl%a'e', st%re' in a retrie(al s+ste#, )&rther trans#itte', %r %ther,ise repr%'&ce', st%re', 'isse#inate', trans)erre', %r &se', in an+ )%r# %r $+ an+ #eans, eIcept ,ith the pri%r ,ritten per#issi%n %) Archaea Capital Research, Inc. An+ )&rther 'iscl%s&re %r &se, 'istri$&ti%n, 'isse#inati%n %r c%p+in* %) this p&$licati%n, #essa*e %r an+ attach#ent is strictl+ pr%hi$ite'. N% repr%'&cti%n, retrans#issi%n, %r %ther &se %) the in)%r#ati%n %r i#a*es is a&th%ri/e'. This p&$licati%n c%ntains state#ents an' statistics that ha(e $een %$taine' )r%# s%&rces $elie(e' t% $e relia$le $&t are n%t *&arantee' as t% acc&rac+ %r c%#pleteness. Re)erences t% an+ speci)ic sec&rities %r in(est#ent a'(ice %) an+ .in' '% n%t c%nstit&te an %))er t% $&+ %r sell sec&rities. The past per)%r#ance %) an in(est#ent %r in(est#ent strate*+ cann%t *&arantee its )&t&re per)%r#ance. It sh%&l' n%t $e ass&#e' that s&ch anal+sis, past %r )&t&re, ,ill $e pr%)ita$le %r ,ill eB&al past per)%r#ance %r *&arantee )&t&re per)%r#ance %r tren's. All tra'in* an' in(est#ent 'ecisi%ns are the s%le resp%nsi$ilit+ %) the rea'er. Incl&si%n %) in)%r#ati%n a$%&t p%rt)%li% chan*es an' %ther in)%r#ati%n is n%t inten'e' as an+ t+pe %) rec%##en'ati%n, n%r s%licitati%n. LI ITE" RE E"IE: = LIA7ILIT! IN NO EVENT :@ALL ARC@AEA CAPITAL RE:EARC@, INC., 7E LIA7LE 4OR AN! O4 T@E 4OLLODIN<3 LO:T PRO4IT:, LO:T REVENUE, IN"IRECT, INCI"ENTAL, :PECIAL, CON:E6UENTIAL OR PUNITIVE "A A<E: EVEN I4 IT @A: 7EEN A"VI:E" O4 T@E PO::I7ILIT! O4 :UC@ "A A<E:. 4URT@ER ORE, ALL IN4OR ATION IN T@I: REPORT I: PROVI"E" ON AN MA: I:N 7A:I:. EWCEPT A: EWPRE::L! :ET 4ORT@ @EREIN, NEIT@ER ARC@AEA CAPITAL RE:EARC@, INC., NOR AN! OT@ER PART! ATE: AN! REPRE:ENTATION OR DARRANT! O4 AN! TIN", EIT@ER EWPRE:: OR I PLIE", DIT@ RE:PECT TO T@E ACCURAC! AN"COR CO PLETENE:: O4 :UC@ IN4OR ATION AN" ARC@AEA CAPITAL RE:EARC@, INC., EWPRE::L! "I:CLAI : AN! AN" ALL I PLIE" DARRANTIE: O4 ERC@ANTA7ILIT! AN" 4ITNE:: 4OR AN! PARTICULAR PURPO:E.

11
Archaea Capital Research, Inc., 2013