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Strictly Confidential.
Not for Public Distribution.
GATOR FINANCIAL PARTNERS, LLC
October 2019
GATOR FINANCIAL PARTNERS
Important Disclosures
The information contained in this presentation is confidential and proprietary to Gator Capital Management, LLC (the “GeneralPartner” or “Manager”) regarding Gator Financial Partners, LLC (the “Fund”). By receiving this presentation and the informationtherein, you are agreeing that you will not share, distribute, or otherwise divulge the information herein to any third party without the prior written permission of the General Partner.
This presentation does not constitute an offer to sell securities of the proposed Fund, which offer, if made, will be made pursuant to a confidential private placement memorandum (“PPM”) that should be carefully reviewed before determining whether to invest. All investments are subject to risk of loss, and investors may lose money on an investment in the proposed Fund if it is offered and launched.
The information contained in this presentation contains information related to holdings of the Fund as of specified dates. Fundholdings change over time and may change frequently without notice. The historical information in this presentation is providedfor informational purposes only to help you understand the Fund’s Portfolio, as of the specified date, and the Fund’s investmentstrategy. Any investment descriptions, examples, case studies, or the like are provided for illustration and discussion purposes only to reflect the Manager’s investment process, will not apply in all situations, are not complete, may not be fully indicative of any present or future investments, may be changed in the discretion of the Manager and are not intended to reflect performance.
The information contained herein also reflects certain opinions and projections of the General Partner as of the date of publication, which are subject to change without notice at any time subsequent to the date of issue. The General Partner does not represent that any opinion or projection will be realized. While the information presented herein is believed to be reliable, no representation or warranty is made concerning the accuracy of any data presented. Prospective investors should not treat information in these materials as advice or recommendations in relation to legal, taxation, or investment matters.
Statements herein that reflect projections or expectations of future financial or economic performance or potential performance of the proposed Fund are forward-looking statements. Such “forward-looking” statements are based on various assumptions, which assumptions may not prove to be correct. Any projections and forward-looking statements included herein should be considered speculative. Accordingly, there can be no assurance that such assumptions and statements will accurately predict future events or, if the Fund is offered and launched, the Fund’s actual performance, and no representation or warranty can be given that the estimates, opinions or assumptions made herein will prove to be accurate.
No representation is made that the Fund’s or the Manager’s investment process, investment objectives or risk management techniques will or are likely to be successful or achieved.
PAGE 2
GATOR FINANCIAL PARTNERS
Important Disclosures
Benchmarks and financial indices are shown for illustrative purposes only and are provided for the purpose of making general market data available as a point of reference only. Such benchmarks and financial indices may not be available for direct investment, may be unmanaged, assume reinvestment of income, do not reflect the impact of any trading commissions and costs, management or performance fees, and have limitations when used for comparison or other purposes because they, among other reasons, may have different trading strategy, volatility, credit, or other material characteristics (such as limitations on the number and types of securities or instruments). A Fund's investment objective is not restricted to the securities and instruments comprising any one index. No representation is made that any benchmark or index is an appropriate measure for comparison.
Private Funds, depending upon their investment objectives and strategies, may invest and trade in a variety of different markets, strategies and instruments (including securities, non-securities and derivatives) and are NOT subject to the same regulatory requirements as mutual funds, including requirements to provide certain periodic and standardized pricing and valuation information to investors. There are substantial risks in investing in a Private Fund (which also are applicable to the underlying Private Funds, if any, in which a Private Fund may invest). Prospective investors should note that:
• A Private Fund represents a speculative investment and involves a high degree of risk. Investors must have the financial ability, sophistication/experience and willingness to bear the risks of an investment in a Private Fund. An investor could lose all or asubstantial portion of his/her/its investment.
• An investment in a Private Fund is not suitable for all investors and should be discretionary capital set aside strictly for speculative purposes. Only qualified eligible investors may invest in a Private Fund.
• A Private Fund’s prospectus or offering documents are not reviewed or approved by federal or state regulators and its privately placed interests are not federally, or state registered.
• An investment in a Private Fund may be illiquid and there are significant restrictions on transferring or redeeming interests in a Private Fund. There is no recognized secondary market for an investor’s interest in a Private Fund and none is expected to develop. Substantial redemptions within a limited period of time could adversely affect the Private Fund.
• Certain portfolio assets of a Private Fund may be illiquid and without a readily ascertainable market value. The manager’s/advisor’s involvement in the valuation process creates a potential conflict of interest. Instances of mispriced portfolios, due to fraud or negligence, have occurred in the industry.
• A Private Fund may have little or no operating history or performance and may use performance information which may not reflect actual trading of the Private Fund and should be reviewed carefully. Investors should not place undue reliance on hypothetical, pro forma or predecessor performance.
PAGE 3
GATOR FINANCIAL PARTNERS
Important Disclosures
• A Private Fund may trade in commodity interests, derivatives and futures, both for hedging and speculative purposes, and may execute a substantial portion of trades on foreign exchanges, all of which could result in a substantial risk of loss. Commodities, derivatives and futures prices may be highly volatile, may be difficult to accurately predict, carry specialized risks and can increase the risk of loss.
• A Private Fund’s manager/advisor has total trading authority over a Private Fund. The death or disability of a key person, or their departure, may have a material adverse effect on a Private Fund.
• A Private Fund may use a single manager/advisor or employ a single strategy, which could mean a lack of diversification and higher risk. Alternatively, a Private Fund and its managers/advisors may rely on the trading expertise and experience of third-party managers or advisors, the identity of which may not be disclosed to investors, which may trade in a variety of different instruments and markets.
• A Private Fund may involve a complex tax structure, which should be reviewed carefully, and may involve structures or strategies that may cause delays in important financial and tax information being sent to investors.
• A Private Fund’s fees and expenses, which may be substantial regardless of any positive return, will offset such Private Fund’s trading profits. If a Private Fund’s investments are not successful or are not sufficiently successful, these payments and expenses may, over a period of time, significantly reduce or deplete the net asset value of the Private Fund.
• A Private Fund and its managers/advisors and their affiliates may be subject to various potential and actual conflicts of interest.
• A Private Fund may employ investment techniques or measures aimed to reduce the risk of loss which may not be successful or fully successful.
• A Private Fund may employ leverage, including involving derivatives. Leverage presents specialized risks. The more leverageused, the more likely a substantial change in value may occur, either up or down.
The above summary is not a complete list of the risks, tax considerations and other important disclosures involved in investing in a Private Fund and is subject to the more complete disclosures in such Private Fund’s offering documents, which must be reviewed carefully prior to making an investment.
Oakpoint Solutions, LLC, member FINRA, SIPC
PAGE 4
GATOR FINANCIAL PARTNERS
Executive Summary
§ Target less efficient small and mid-cap companies in the Financials sector. Specialize in non-banks.
§ Focus on deep value situations in which specialized knowledge and experience help uncover value.
§ Average 3+ year holding period. Allows for greater tax efficiency and time arbitrage.
PAGE 5
Gator Financial Partners, LLC (“GFP” or the “Fund”) focuses on the U.S. Financials sector1.
Strategy
Experience
Results
Competitive Advantages
§ Portfolio Manager’s deep sector experience opens up complex, difficult to analyze opportunities within the Financials sector.
§ Long-tenured, granular investor base allows manager to focus on long-term returns.
1. “Financials sector” is defined as companies included in the Global Industry Classification System (“GICS”) sectors 40 and 60, which contain financial and real estate companies, respectively. Prior to August 2016, real estate companies were included in a single GICS sector with financial companies.
2. Source: Barclays Hedge https://www.barclayhedge.com/research/rankings/yearly_rankings/2016/hf/sector_specific_Financial.html. The rank above was created by Barclay Hedge based upon the estimated performance as reported by the Fund managers. Consequently, when the final performance is reported by the managers it might not match the position awarded and the manager could have moved up or down in the rank. Barclay Hedge Sector-Financial includes Funds with assets greater than $10M as of month-end December 2016. The manager did not pay a fee to participate.
§ The Fund is led by Derek Pilecki who has spent two decades investing in the Financials sector.
§ Prior: Portfolio Manager at Goldman Sachs Asset Mgmt and industry experience at Fannie Mae.
§ Strategy AUM: $85.2M.
§ 21.4% annualized compounded return net of fees since inception in July 2008.
§ 7.6% annualized compounded return for the S&P 1500 Financials since Fund Inception.
§ Ranked #1 Financials sector focused hedge fund in 2016, based on Barclays Hedge2 database.
STRICTLY CONFIDENTIAL. NOT FOR DISTRIBUTION.
GATOR FINANCIAL PARTNERS
Portfolio Manager’s Career Timeline
PAGE 6
Derek Pilecki has managed Gator Capital Management, LLC for the past ten years. Before launching Gator, he coveredFinancials for three equity buy-side firms including Goldman Sachs. Prior to business school, he worked in the industry as anasset/liability analyst at Fannie Mae.’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19
Duke University
1992
BA in Economics
Federal NationalMortgage Association
Analyst 1994 to1998
Provided interest rate risk analysis for the company’s mortgage investment portfolio, portfolio net interest income forecasting, and corporate strategy projects.
University of ChicagoBooth School of Business
2000
MBA with honors in Finance and Accounting
Goldman Sachs Asset Management
Analyst, Financials Sector2002 to 2008
Analyzed, selected, and managed equity positions in Financials sector for Goldman, Sachs Asset Management’s Growth Teamacross market capitalizations
Gator Capital Management, LLC
Managing Member and Portfolio Manager2008 to Present
Founded and manage Gator Financial Partners, LLC, a long/short equity fund focused on the Financials sector.
Burridge Group & Clover Capital
2000 to 2002
Financials sector analyst at buy-side firms in Chicago and Rochester
GATOR FINANCIAL PARTNERS
Performance Breakdown
PAGE 7
-150%
-100%
-50%
0%
50%
100%
150%
Jul-0
8Ju
l-09
Jul-1
0Ju
l-11
Jul-1
2Ju
l-13
Jul-1
4Ju
l-15
Jul-1
6Ju
l-17
Jul-1
8Ju
l-19
Long Short Exposure History
Long Short Net
19.03%
9.08%
21.39%
15.02%
10.46%7.59%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
3 Year 5 Year Since Inception
Annualized Returns
Gator S&P Financials
97.2%
55.6%
100.0% 100.0%
0.0%
40.0%
80.0%
120.0%
Up Capture Down Capture
Upside / Downside Capture
Gator S&P Financials
0.0%10.0%20.0%30.0%40.0%50.0%60.0%
Jun-0
9
Jun-1
0
Jun-1
1
Jun-1
2
Jun-1
3
Jun-1
4
Jun-1
5
Jun-1
6
Jun-1
7
Jun-1
8
Jun-1
9
Rolling 1 Year Volatility
Gator S&P Financials
Past performance is not indicative of future results.
STRICTLY CONFIDENTIAL. NOT FOR DISTRIBUTION.
GATOR FINANCIAL PARTNERS
Opportunity in Financials
PAGE 8
Market Inefficiencies Opportunity Drivers Gator Success Factors § Stock prices often misprice
significant news before information is fully digested by the market.
§ Financial restructurings require depth of experience and research to understand changes to business fundamentals.
§ Complicated nature of financial balance sheets limits investor pool.
§ Price discovery is less efficient for small and mid-cap securities or those held by a non-institutional investor base.
§ The market often resets stock prices/expectations to the extreme on bad news while positive developments are generally slow to be priced in.
§ Many investors have limited investment mandates. This can lead to forced selling or sub-optimal investment decisions (i.g., stock is removed from an index).
§ Stocks with non-institutional investor base.
§ Larger competing funds more inclined towards more liquid public securities.
§ 10-year history of following and developing a proprietary knowledge base of 300+ Financials stocks.
§ Patience to analyze available information and make realistic assumptions related to business drivers.
§ Gator has the ability to invest in securities that are not widely held by institutional or index investors.
§ Early identification of ongoing or underappreciated change in business fundamentals.
Derek Pilecki has spent his entire 20+ year career working within the Financials sector. Having invested throughout prior cycles whilefollowing 300+ financial companies, Pilecki is able to draw on his deeply specialized knowledge and apply his past experience to currentmarket environments. Being able to identify short term setbacks and investor fatigue, often leads to an early identification of mispricingsand can provide significant upside to the portfolio.
GATOR FINANCIAL PARTNERS
Opportunities and Concerns vary across the Financials Sector
PAGE 9
Industry Opportunities ConcernsBanks • Inexpensive
• Solid Credit Quality• Strong capital return
• Deposit growth is difficult• M&A lackluster• Competitive intensity increasing• Potential credit issues:
• Leveraged lending• Loans to non-bank lenders
Capital Markets • Extremely low valuations• Most have low capital needs
• FICC trading environment not attractive• Equities trading continues to struggle• Interest rate environment
Non-bank Lenders • Extremely low valuations• Solid Credit quality• Underwriting seems to be stable
• Timing of economic cycle• New entrants
Asset Managers • Strong flows for private equity• Several traditional asset managers trade
<6x EBITDA
• Shift from active management to passive management• Fee pressure
P&C Insurance • Stable businesses• Uncorrelated to economy• Reinsurance pricing improving
• Expensive due to recent outperformance
Life Insurance • Extremely low valuations • Many own asset managers• Capital intensive businesses• Several business lines with poor economics
REITs • Strong momentum• Easy to understand businesses
• Diversity of environments depending on property type: retail, health care, NYC office
• Will underperform with higher long-term rates
GATOR FINANCIAL PARTNERS
Differentiated Ideas
PAGE 10
Gator tends to find opportunity in names that are largely ignored by Institutional Investors. Gator does not own any of the 50 positions in the Goldman Sachs Hedge Fund VIP Index and has minimal overlap with the XLF Financial Sector ETF. Due to the non-institutional investor base and complex balance sheets of many of Gator’s holdings, price discovery is less efficient and can provide attractive entry opportunities.
68
7
010203040506070
XLF Gator
Posit
ion
Cou
nt
XLF Position Overlap
100%
6.21%0%
20%
40%
60%
80%
100%
120%
XLF % of Benchmarkin Gator'sPortfolio
Weight in XLF50
00
10
20
30
40
50
Top 50 MostPopular Hedge
Fund LongPositions
Gator
Posit
ion
Cou
nt
Popular Hedge Fund Position Overlap
GATOR FINANCIAL PARTNERS
Timeline of Ideas
PAGE 11
Gator takes concentrated positions where the Portfolio Manager believes there is favorable asymmetrical risk. Gator will holdthe positions until the Portfolio Manager’s hypothesis is proven wrong, leading to periods of accepted volatility when the initialthesis remains intact.
Idea 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Deep Value Small & Mid Cap Financials - ++ 0 + 0 0 + - + + - +
GSE Preferreds - - +++++ 0 ++ + ++ - 0 + 0 0 ++
Private Equity 0 - - 0 + 0 +
Muni Bond Insurer Liquidation 0 + - ++ 0 + +
TARP Warrants - + + 0 - ++ + - 0
Spin-offs & Special Situations + + + + -
Bank Recapitalizations ++ 0 0 + + 0
CRE REITS + ++
GP/LP Pair Trades + +++ 0 0 +
European Banks - 0
Hedges - + 0 - 0 0 - - 0
Thematic Contribution Over Time
GATOR FINANCIAL PARTNERS
Prospective Investment Themes in Portfolio
PAGE 12
The Fund’s current Long Portfolio is largely composed of 5 investment themes in additional to single name holdings:
European Banks
Consumer Finance
Financial Guaranty Recovery
Alternative Asset Managers
TARP Warrants
Consumer credit is very strong due to the strong employment environment. The consumer finance companies trade at significant discounts to regional banks despite having high growth rates and higher returns on equity.
Alternative asset managers have attractive growth, but trade at discounts to traditional asset managers due to their corporate structure. We believe these companies are addressing the issues with their corporate structures.
European banks trade at significant discounts to their U.S.-based peers, but they have made substantial improvements in their credit quality and capital levels. We also believe they will be the largest beneficiaries of the ECB pulling back from QE.
The TARP warrants were issued by the banks to the U.S. Treasury in the Fall of 2008. Long-term warrants provide a unique way for investors to benefit on higher interest rates and improving valuations. Gator continues to hold warrants issued by ZION and AIG.
These companies have all been recovering from mortgage losses during the Great Financial Crisis. Examples include Ambac, Syncora, and Fannie Mae.
GATOR FINANCIAL PARTNERS
Long Portfolio Has Low Multiples
PAGE 13
The Portfolio Manager believes that as these holdings report consistent earnings their multiples will increase.The Portfolio Manager also believes the average Price-to-Earnings ratios in the Fund’s Long Portfolio is 67% ofthe overall market multiple and only 90% of the Financials sector, so we are less concerned about the overallmarket reaching all-time highs.
Source: Bloomberg9/16/19
Company PriceDividend
Yield 2019 P/E 2020 P/E Price/TBSYNCORA HOLDINGS LTD 4.77 0.00 NA NA 0.68ZIONS BANCORP NA 45.18 2.66 10.7 10.3 1.33AMBAC FINANCIAL GROUP INC 19.63 0.00 7.8 -436.2 0.86SUNTRUST BANKS INC 68.34 2.93 12.3 12.2 2.32BLACKSTONE GROUP INC/THE-A 53.52 4.26 23.4 17.4 8.83ALLY FINANCIAL INC 34.77 1.84 9.3 8.2 0.97KKR & CO INC -A 28.25 2.21 16.5 13.8 1.66CREDIT SUISSE GROUP AG-REG 12.88 2.28 10.3 8.5 0.83SLM CORP 9.50 0.95 7.8 6.8 1.50BARCLAYS PLC-SPONS ADR 7.61 0.00 9.2 8.3 0.50NMI HOLDINGS INC-CLASS A 27.36 0.00 11.3 9.0 2.29GOLDMAN SACHS GROUP INC 217.22 1.68 9.4 8.6 1.04CARLYLE GROUP/THE 26.06 5.64 15.6 10.5 3.73ONEMAIN HOLDINGS INC 38.04 6.57 6.2 5.8 2.20SVB FINANCIAL GROUP 221.36 0.00 10.4 11.2 2.13MORGAN STANLEY 44.75 2.68 9.2 8.4 1.16UBS GROUP AG-REG 11.52 6.11 9.5 8.7 0.91BBX CAPITAL CORP 4.80 NA 14.1 17.1 1.20COWEN INC - A 16.04 0.00 5.7 4.9 0.91KINGSTONE COS INC 8.90 4.49 -84.8 9.1 1.10COMMUNITY BANKERS TRUST CORP 8.79 0.34 13.6 13.4 1.33VICTORY CAPITAL HOLDING - A 16.40 0.00 6.4 4.2 -5.62AMERIPRISE FINANCIAL INC 147.43 2.49 9.1 8.3 NAAMERICAN INTERNATIONAL GROUP 56.32 2.27 10.9 10.9 0.77BIMINI CAPITAL MANAGEMENT-A 1.45 0.00 6.6 5.6 0.621347 PROPERTY INSURANCE HOLD 4.93 0.00 NA NA 0.70
Median 1.84 9.4 8.7 1.13
STRICTLY CONFIDENTIAL. NOT FOR DISTRIBUTION.
GATOR FINANCIAL PARTNERS
Current Long Idea: Ally Financial (ALLY) – Consumer Finance
PAGE 14
GATOR FINANCIAL PARTNERS
Ally Financial is an auto lender with an online bank. Ally runs one of the leading online banks and has grown deposits greater than 20% annually since 2010. Roughly 50% of Ally’s assets are consumer auto loans, 30% are floorplan loans to dealers, and the remainder of the balance is split between first mortgage loans and corporate loans.
• The Portfolio Manager believes Ally Financial has asymmetric risk / reward at this level.
• Auto lender is currently trading below tangible book value.
• Ally’s stock is inexpensive in part due to what the Portfolio Manager believes is over-concern about the auto cycle.
• Self-help story by increasing yields on auto loans and reducing funding costs by growing online bank deposits.
• Company has cleaned up capital structure over past three years and plans to repurchase 7% of stock over next year like it did over each of the 3 previous years.
Gator Thesis
Investment Risks
Company Overview
Key FinancialsStock Price $34.77
Market Cap $13.6B
2019/2020 EPS Est $3.72 / $4.23
2019/2020 Price/Earnings 9.3x / 8.2x
Price/Tangible 0.97x
Dividend Yield 1.84%
• If used car prices drop, will have higher losses on repossessed cars
• Difficulty in growing loan portfolio if auto cycle slows
• Dealers to whom Ally lends experience financial stress
Source: bigcharts.com
STRICTLY CONFIDENTIAL. NOT FOR DISTRIBUTION.
GATOR FINANCIAL PARTNERS
Current Long Idea: SVB Financial (SIVB) – Regional Bank
PAGE 15
GATOR FINANCIAL PARTNERS
SIVB is the bank holding company for Silicon Valley Bank, which has a strong franchise providing commercial banking to venture capital firms and their venture-backed investment companies. Over the past 20 years, SIVB’s stock has returned 17.3% annually compared to the S&P 500 returning 5.9% and the bank index returning 2.6%.
• The Portfolio Manager believes SVB Financial is an excellent growth financial stock trading at a discounted valuation.
• Regional bank focused on the venture capital community.
• Shares at low end of historical valuation range due to several temporary factors.
• Expect continued double-digit loan and deposit growth.
• Arguably, the Bank has the best deposit franchise in the nation with $40 billion of deposits costing only 0.20%.
Gator Thesis
• SIVB faces interest rate headwinds if rates decline
• Technology start-up valuations and velocity may be unsustainable
• SIVB’s technology lending is vulnerable to recession
• SIVB’s gains from warrants may be unsustainable
Investment Risks
Company Overview
Key FinancialsStock Price $221.36
Market Cap $11.4B
2019/2020 EPS Est $21.39 / $19.76
2019/2020 Price/Earnings 10.4x / 11.2x
Price/Tangible 2.1x
Dividend Yield None
Source: bigcharts.com
STRICTLY CONFIDENTIAL. NOT FOR DISTRIBUTION.
GATOR FINANCIAL PARTNERS
Current Long Idea: Barclays PLC (BCS) – European Bank
PAGE 16
GATOR FINANCIAL PARTNERS
BCS has been a frustrating stock for investors. But, we think improved stock price performance could finally be on the horizon for Barclays and hope our purchase will prove timely. Barclays should produce improved returns over the next three years due to its cost-cutting and reallocation of capital within its investment bank. Barclays is a “self-help” story.
• Largest UK investment bank and 2nd largest UK retail bank trading at 60% of tangible book value.
• Legacy issues and restructuring finally completed after 10 years.
• Likely to announce first stock repurchase in 20 years.
• Potential upside from recovery in trading business and/or a potential sin-off of retail bank from the corporate and investment bank.
• Activist investor, Sherborne Investors, has a 5% stake in the bank. Sherborne has a history of producing high returns from its activist investments.
Gator Thesis
• CEO’s job is at-risk
• Britain’s economy & Brexit
• Some investors perceive something is wrong with the culture at Barclays
• Capital Markets environment
Investment Risks
Company Overview
Key FinancialsStock Price $7.61
Market Cap $32.8 B
2019/2020 EPS Est $1.04 / $1.14
2019/2020 Price/Earnings 7.3x / 6.6x
Price/Tangible 0.50x
Dividend Yield 5.73%
Source: bigcharts.com
GATOR FINANCIAL PARTNERS
Gator’s Approach to Shorting
PAGE 17
The Fund’s Short Portfolio is composed of four different types of holdings:
The Fund shorts companies that are facing secular headwinds, have flawed business models, or have completed value destroying M&A.
The Fund hedges its portfolio of TARP bank warrants by shorting about 20 SMID banks that have high valuations and are liability sensitive.
The Fund periodically hedges some of our TARP bank warrant positions with theunderlying common stock. The Fund may also hedge our Alternative Asset Manager positions with stock in their publicly traded portfolio companies.
The Fund uses several financial sector ETFs and leveraged ETFs to dynamically hedge the portfolioETF Hedges
Bank Hedges
Alpha Shorts
Single Stock Hedges
Current Alpha Shorts
1) Secular headwinds:a) Money management shift from active to passive.b) Online threat to incumbent Money Transfer firms: WU.
2) Flawed business models: LC, ATH, AMH & INVH.
GATOR FINANCIAL PARTNERS
Short – No Growth or Banks with High Valuations
PAGE 18
The Fund continues to short banks with high valuations that we believe are expensive and/or have low growth expectations.
Expensive Regional Banks
Company PriceDividend
Yield 2019 PE 2020 PE Price/TB ROTEFIRST REPUBLIC BANK/CA 96.21 0.76 19.4 17.9 2.02 10.4%COMMERCE BANCSHARES INC 61.38 1.58 16.8 17.0 2.35 14.0%UNITED BANKSHARES INC 38.99 3.49 15.3 15.7 2.26 14.8%GLACIER BANCORP INC 41.28 3.27 17.2 17.0 2.75 15.9%COMMUNITY BANK SYSTEM INC 64.99 2.34 20.0 19.6 3.32 16.6%UMB FINANCIAL CORP 66.62 1.79 14.3 14.5 1.43 10.0%CVB FINANCIAL CORP 21.56 2.97 14.6 14.8 2.47 16.9%WASHINGTON FEDERAL INC 38.14 1.99 14.8 14.1 1.78 12.0%COLUMBIA BANKING SYSTEM INC 37.47 4.00 14.9 14.9 2.08 13.9%SOUTH STATE CORP 77.31 1.93 14.1 13.9 2.04 14.5%TRUSTMARK CORP 34.99 2.63 14.9 15.4 1.83 12.3%CAPITOL FEDERAL FINANCIAL IN 13.94 7.03 20.5 20.7 1.49 7.2%NORTHWEST BANCSHARES INC 16.66 4.26 16.0 16.1 1.84 11.5%WESTAMERICA BANCORPORATION 64.56 2.49 22.2 22.8 3.05 13.7%PROVIDENT FINANCIAL SERVICES 25.61 3.44 14.6 14.6 1.78 12.3%N B T BANCORP INC 37.61 3.43 14.1 14.6 2.09 14.8%SOUTHSIDE BANCSHARES INC 35.07 3.51 15.3 14.7 2.07 13.6%LAKELAND FINANCIAL CORP 45.82 2.36 14.2 14.3 2.08 14.7%HERITAGE FINANCIAL CORP 28.01 2.78 15.4 14.6 1.92 12.5%MERIDIAN BANCORP INC 18.49 1.51 15.7 13.6 1.47 9.4%NORTHFIELD BANCORP INC 15.93 2.64 21.1 21.0 1.22 5.8%
Median 2.64 15.3 14.9 2.04 13.6%S&P Financials 2.36 11.4 11.1 1.36 13.2%
Soure: Bloomberg9/16/2019 17:45
GATOR FINANCIAL PARTNERS
Portfolio Construction and Risk Management
PAGE 19
Positions
§ Initial Position Size:§ Long: 2-4%§ Short: 1-2%
§ Maximum Position Size:§ 10% at cost
§ 5 Yr. Avg. Position Count:§ Long: 24 § Short: 45
Exposure Targets
§ Gross: Less than 200%§ Net: 50-100%§ 5 year average:
§ Net +50%§ Gross 165%
§ Exposures are built primarily from a bottom-up perspective
§ Focus on stocks that could double in 3 years or less
§ Concentrate positions where the Portfolio Manager’s research results in strong conviction
§ Hedge where appropriate to mitigate market risk
§ Portfolio liquidity is kept high subject to market conditions
§ Drive returns from individual stock selection rather than sector performance
§ Limiting the Fund’s positions to situations where there is favorable asymmetrical risk
§ Hold positions until Portfolio Manager’s hypothesis is proven wrong
§ Greater than 80% of the portfolio manager’s liquid net worth is invested in the Fund
No representation is made that the Fund’s or the Investment Manager’s investment process, investment objectives or risk management techniques will or are likely to be successful or achieved.
Philosophy
Construction
Portfolio
GATOR FINANCIAL PARTNERS
Fund Has Ample Capacity
Analysis assumes trades are 20% of average trading volume in each stock. The Fund could liquidate all outside investor capital within 10 days.
Assuming Gator Financial reached $250 million in AUM, the Fund would still have more liquidity than three of our top Financials sector competitors*.
* Note – Assumes Gator does not add to its existing microcap positions.
PAGE 20
% of portfolio sold 1 Day 10 Days
GFP Portfolio 66% 84%
% of portfolio sold 1 Day 10 Days
GFP @ $250MM 55% 75%
Competitor A 7% 34%
Competitor B 10% 61%
Competitor C 29% 61%
GATOR FINANCIAL PARTNERS
Monthly Returns – Gator Financial Partners, LLC
PAGE 21
Net of fees. Past performance is not indicative of future results.
Year Jan Feb Mar Apr May June Jul Aug Sep Oct Nov Dec YTD S&P Financials
2019 17.76% 4.44% (2.60%) 4.25% (4.74%) 4.58% 1.05% (4.86%) 7.60% 0.98% 29.94% 21.93%
2018 8.59% (2.36%) (4.57%) 1.20% 0.44% (0.12%) 4.06% 0.22% (1.31%) (7.37%) (0.29%) (14.01%) (16.02%) (13.03%)
2017 1.19% 5.58% (3.54%) 1.09% (3.75%) 3.02% 4.78% (3.21%) 4.67% (1.12%) 3.50% 5.14% 17.98% 20.89%
2016 (12.35%) 2.02% 8.77% 4.68% 3.00% (9.79%) 12.80% 4.95% (0.77%) 1.72% 23.95% 5.67% 48.08% 24.28%
2015 (6.78%) 3.56% (2.34%) 3.67% 0.74% (0.90%) (3.78%) (4.45%) (5.96%) 4.60% 2.49% (9.85%) (18.55%) (0.72%)
2014 0.27% 8.12% (0.48%) (2.69%) (0.49%) 0.88% (2.27%) 1.44% (1.87%) (2.89%) (0.04%) (0.52%) (0.97%) 14.89%
2013 8.26% 3.97% 4.11% 3.80% 5.89% (3.78%) 2.70% (3.51%) (0.71%) 5.06% 4.73% 2.68% 37.76% 34.20%
2012 4.55% 1.65% 7.51% (1.37%) (0.67%) 3.99% 1.94% (1.57%) 2.40% 7.61% 1.72% 3.01% 34.87% 26.90%
2011 14.03% 9.26% (4.00%) 1.20% 6.43% 1.32% 0.36% (5.00%) (5.34%) 2.76% (0.41%) (4.34%) 15.34% (15.01%)
2010 (2.97%) 6.01% 4.55% 5.77% (3.00%) (17.98%) 3.93% (6.65%) 7.03% 7.73% 5.61% 5.13% 12.39% 13.31%
2009 22.60% 7.00% 19.23% 11.00% 17.19% 20.93% 7.90% 15.28% (0.50%) (12.63%) (0.87%) 8.65% 186.31% 15.46%
2008 (1.89%) (7.24%) (21.90%) 16.63% (7.93%) 11.02% (15.26%) (33.48%)
Cumulative Returns
Hypothetical Growth of $100,000 invested at Fund inception:
Note: The S&P 500 Index and S&P 1500 Financials Index are each total return indices. Accordingly, the performance data assumes reinvestment of dividends. The performance data for the indices also does not include the subtraction of any fees or expenses. Indices are not available for direct investment.
As of October 31, 2019
GATOR FINANCIAL PARTNERS
Attribution of 2014-2016 Drawdown and Recovery
§ Gator had drawdown from February 2014 until January 2016. We had a strong recovery over the next 23 months.
§ The 5 positions that detracted the most during the drawdown drove the recovery.
§ This reflects our strong conviction in our portfolio positions. We correctly recognized the market decline did not signal a permanent impairment in value.
PAGE 22
Top Detractors During Drawdown
Price: March 2014
Price: January 2016
Price: December 2017
March 2014 -January 2016
Attribution
February 2016 -December 2017
Attribution
1 SYCRF $2.24 $0.26 $3.50 -6.5% 12.2%
2 FNMAJ $9.35 $2.45 $6.83 -6.4% 7.0%
3 AMBC $31.03 $14.04 $16.20 -5.8% 2.6%
4 ZIONZ $4.60 $0.91 $14.75 -5.1% 16.1%
5 STI/WS/B $5.00 $2.99 $20.91 -2.4% 10.3%
Past performance is not indicative of future results.
GATOR FINANCIAL PARTNERS
09/30/2019 Portfolio Positions
PAGE 23
Alt Asset Managers Banks (large) Preferred StockLong Short Long Short Long ShortBX 3.30% None ALLY 6.30% CBSH -1.06% FNMAJ 6.85% NoneKKR 6.25% BCS 4.16% CBU -1.16% FNMAT 2.47%Total 9.56% CS 2.03% CVBF -0.70% FNMFN 3.18%
SIVB 3.56% FRC -1.67% Total 12.51%STI 7.70% TRMK -0.92%ZION 6.03% UMBF -1.14% Index HedgesZIONW 3.28% WAFD -2.07% Long Short
Capital Markets Total 33.06% Total -8.73% None FAZ -1.28%Long Short Total -1.28%AMP 1.39% HLNE -1.16%COWN 0.96% Total -1.16% Banks (small) Real EstateGS 4.87% Long Short Long ShortMS 4.62% ESXB 1.79% CFFN -1.48% BBX 2.24% AMH -1.83%VCTR 1.29% WAL 3.69% COLB -0.99% Total 2.24% DRE -1.52%Total 13.14% Total 5.48% EBSB -2.02% INVH -2.69%
GBCI -0.68% Z -0.80%Non-Bank Lenders LKFN -1.12% Total -6.84%Long Short NBTB -0.86%AMBC 8.09% LC -0.62% NFBK -1.24% Processors & ExchangesNMIH 3.67% WU -1.94% NWBI -1.16% Long ShortOMF 3.61% Total -2.56% PFS -0.88% None NoneSLM 4.15% SBSI -0.97%SYCRF 9.98% SSB -1.42% Life InsuranceTotal 29.50% UBSI -1.08% Long Short
WABC -0.92% None NoneP&C Insurance Total -14.82%Long ShortAIG/WS 1.10% NoneKINS 1.75%Total 2.85%
GATOR FINANCIAL PARTNERS
Investor Friendly Terms
PAGE 24
Management Fee 1%
Incentive Fee 20%
Prime Brokers Interactive Brokers & Jefferies
Legal Kilpatrick Townsend
Auditor Kaufman Rossin & Co.
Third-Party Fund Administrator ALPS Fund Services | SS&C
Minimum Investment $100,000
Lock-ups No
Liquidity Monthly
Redemption Period 10 Business Days
Transparency Full-Portfolio Positions Released Quarterly
GATOR FINANCIAL PARTNERS
Organizational Structure
PAGE 25
Managing Member
Derek Pilecki
Outsourced Operations to Oakpoint Advisors, LLCInvestment Management
Chief FinancialOfficer
Erik Anderson
Portfolio Accountant
Beau Audirsch
Analyst
Chris Pilecki
Marketing
Marketing Analyst
Alexis Sayers
Outsourced Compliance
Chief Compliance
Officer
Kyle Bubeck
Portfolio Manager
Derek Pilecki
GATOR FINANCIAL PARTNERS
Contact Information
PAGE 26
Derek Pilecki, CFAPortfolio Manager
[email protected](813) 282-7870
Gator Capital Management100 S. Ashley Drive, Suite 895
Tampa, FL 33602 www.gatorcapital.com
GATOR FINANCIAL PARTNERS
Appendix
Consumer Balance Sheets are Strong 28
Consumer Loan Defaults are Stable at Low Levels 29
Employment is Healthy 30
High-Risk Loans to Capital has not Increased this Cycle 31
C&I Loans and CRE Loans 32
Bank Deposits Benefitted from 0% Fed Funds Rates 2010-2015 33
Financials Sector has Lowest P/E Multiple 34
Relative P/E: Financials vs. Market 35
Relative P/E: Banks vs. Market 36
PAGE 27
STRICTLY CONFIDENTIAL. NOT FOR DISTRIBUTION.
GATOR FINANCIAL PARTNERS
Consumer Balance Sheets are Strong
PAGE 28
9%
10%
11%
12%
13%
1979 1985 1990 1996 2001 2007 2012 2018
Household Debt Service Payments to Disposable Personal Income
Source: St. Louis Federal Reserve Bank6/21/19
STRICTLY CONFIDENTIAL. NOT FOR DISTRIBUTION.
GATOR FINANCIAL PARTNERS
Consumer Loan Defaults are Stable at Low Levels
PAGE 29
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
2004 2006 2009 2012 2014 2017
S&P/Experian Auto Default Index
0%
2%
4%
6%
8%
10%
300
340
380
420
460
2014 2016 2017 2019
Federal Reserve H.8 Auto Loan Data
Auto Loans ($ B) YoY change
-20%
0%
20%
40%
0
400
800
1,200
2001 2004 2006 2009 2012 2014 2017
Thou
sand
s
Credit Card Loans
Credit Card Loans YoY Change
0.00
2.00
4.00
6.00
8.00
2000 2005 2010 2015
Credit Card Delinquency Rate
Source: Bloomberg6/21/19
STRICTLY CONFIDENTIAL. NOT FOR DISTRIBUTION.
GATOR FINANCIAL PARTNERS
Employment is Healthy
PAGE 30
0
200,000
400,000
600,000
800,000
1995 1998 2001 2004 2006 2009 2012 2014 2017
Initial Jobless Claims
0
5
10
15
20
1995 1998 2001 2004 2006 2009 2012 2014 2017
Unemployment Rate vs. U-6 Rate
Unemployment Rate U-6 Rate
Source: Bloomberg6/21/19
STRICTLY CONFIDENTIAL. NOT FOR DISTRIBUTION.
GATOR FINANCIAL PARTNERS
50
100
150
200
1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
(Total CRE + Construction Loans) / Tangible Equity
High-Risk Loans to Capital has not Increased this Cycle
PAGE 31
Source: FDIC6/21/19
STRICTLY CONFIDENTIAL. NOT FOR DISTRIBUTION.
GATOR FINANCIAL PARTNERS
C&I Loans and CRE Loans
PAGE 32
C&I loans are growing at a healthy pace after pausing in 2015-2016 due to weakness in the Energy sector. CRE loans are growing at a reasonable 3-4%.
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
1982 1987 1993 1998 2004 2009 2014
Commercial Real Estate (CRE) Loans
CRE Loans CRE YoY
-30%
-20%
-10%
0%
10%
20%
30%
0
500
1,000
1,500
2,000
2,500
3,000
1982 1987 1993 1998 2004 2009 2014
Commercial & Industrial (C&I) Loans
C&I Loans C&I YoY
Source: St. Louis Federal Reserve Bank6/21/19
STRICTLY CONFIDENTIAL. NOT FOR DISTRIBUTION.
GATOR FINANCIAL PARTNERS
Bank Deposits Benefitted from 0% Fed Funds Rates 2010-2015
PAGE 33
0.0
500.0
1000.0
1500.0
2000.0
2500.0
1975 1985 1995 2005 2015
Total Checkable Deposits
0
2
4
6
8
1998 2001 2003 2006 2009 2011 2014 2017
Money Market Mutual Fund Yields vs. Money Market Deposit Account Yields
Vanguard Prime MMMF 7 Day Yield
US Bank Money Market Account Average Yield
02000400060008000
100001200014000
2002 2007 2013 2018
Money Market Mutual Fund Assets vs. Bank Deposits
MMMF Assets Bank Deposits
0%2%4%6%8%10%12%14%
02,0004,0006,0008,000
10,00012,00014,000
2001 2007 2012 2017
Deposit Growth Rate
Bank Deposits Growth Rate of Deposits
Source: Bloomberg6/21/19
STRICTLY CONFIDENTIAL. NOT FOR DISTRIBUTION.
GATOR FINANCIAL PARTNERS
Financials Sector has Lowest P/E Multiple
PAGE 34
Source: Bloomberg6/21/19
STRICTLY CONFIDENTIAL. NOT FOR DISTRIBUTION.
GATOR FINANCIAL PARTNERS
Relative P/E: Financials vs. Market
PAGE 35
The Financials sector usually trades at 80% P/E Multiple of the broader market. It current trades at a 68% relative multiple.
Source: Bloomberg6/21/19
STRICTLY CONFIDENTIAL. NOT FOR DISTRIBUTION.
GATOR FINANCIAL PARTNERS
Relative P/E: Banks vs. Market
PAGE 36
The major banks trade at the same discount as early 2016.
Source: Bloomberg6/21/19