Irving H. Picard v. Saul B. Katz et al

Filing 84

DECLARATION of David J. Sheehan in Support re: 82 MOTION to Strike the Expert Report and Testimony of John Maine.. Document filed by Irving H. Picard. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7-1, # 8 Exhibit 7-2, # 9 Exhibit 8, # 10 Exhibit 9, # 11 Exhibit 10)(Sheehan, David)

Exhibit 9

STERLING STAMOS
Company Overview
Discussion with

Merrill Lynch
1J

H

rl
H

February 2004
Confidential Presenta/ion

SterlingStamos
01

M
-J
M

CQNFIDENTIrL

SET954273

Contents

Partnership

Principles
People

Products

-

Security

- Growth
C-)

s
H
e,
t'i
H

Process

Postscript

This document does not constitute an offer to sel], ora solicitation oían offer to buy the limited partnership interests described herein. No such offer or solicitation will be made prior
to the delivcry of a definitive offering memorandum and other materials relating to the matters herrin. Before making an investment decision with respect to the partnership, potential
investors are advised to read carefully the offering memorandum, the limited partnership agreement and the related subscription documents, and to consult with their tax, legal, and
financial advisors.
This document contains a preliminary sussnhas7 of the purpose and principle busincss terms of die partnership; this summary does not purport to be complete and is qualified in its
entirety by reference to the more detailed discussion contained in the private offering memorandum and the actual tort of the limited ìartnership agreement The General Partner has
the ability in its sole discretion to 'change the serateg,' described herein.
'This document is being provided(to you on a confidential basis solely to assist you in deciding whether or flot to proceed with afurther investigation of an investment in Sterling
Sumos. Accordingly, this document may not be reproduced in whole or in part, and may not be delivered to any person without prior written consent of Sterling Searnoa; 575 Fifth
Avenue - 40th fl; New York, NY 10017; (212) 4S5-4370.

I!

Sterlingstamos

Sterling Equities

G Acquired or developed more than:
- 17 million square feet of office property

- 8.5 mifflonquare feet of retail property
- 41,000 residential units in 43 states
Purchased more than 2,000 mortgages and notes

Developed over 4.1 million square feet of Class "A" office space

SterlingStamos

2

The Sterling PartnersÑp

t

Sterling Equities
- real Estate. Development

- Principal Investments - "Pathogenesis, cWT"
t

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Sterling Amel-ican Properties
- Real Estate Funds

American Securities Capital Partners
- Private Equity Funds

Sterling Sports and Entertainment
- New York Mets and Brooklyn Cyclones

Sterling Startos
- Investment arm of the Sterling Partnership

SterlingStamos

urnwslnp

3

Sterling Stamos Partnérship

Sterling Stamos began as an investment partnership on behalf of the
Katz, Wilpon, and Stamos families
Y

The Sterling Stamos Partnership now includes over 125 families and
institutions $td over 40 hedge fund managers

i!

SterlingStamos

1kuî?sflEp

4

The Value of Partnership

Trust-based relationships built on full transparency
Access and capacity in emerging and closed fund managers

. A unique network a "collective intelligence"

Sterlingstamos

Partnership

s

Lessons from the Partnership

Always help yóur partners succeed
Ensure staying power in the market

a Protect capital and strive for consistent, positive returns.
RESULT:

40 years of never losinga partnership, never losing a building,
and never having a down year

SterlingStamos

J.

Partnership

6

Principles

Partnership

We treat our investors as partners and always put their interests first
Trust
.
g

We build trust-based relationships, demand transparency, and deliver it
to our investqrs

Values
We live by the charge of our founders: "Do well by doing good"

SterlingStamos
o

Principles

Advantages

40 years experience developing, managing, owning, and investing
in real estate

20 years experience investing in hedge funds
- Over $600 million of Principals' capital invested
ui 12 years expérience in private equity

10 years of the Principals working together
û
o
hi

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C

6 years of the Principals investing together
Long-term relationships with leading investment managers !n
public and private investment vehicles
Core relationships with all leading investment banks and major
financial institutions
Approximately $200 million invested by Sterling Stamos Principals
across all Sterling Stamos funds
Internal capitèl commitments from Principals of between 20-33
percent of total assets under management across all Sterling
Stamos fundà

SterlingStamos

rícinles

Milestones

1972 Fred Wilpon and Saul Katz found Sterling Equities
ï 1980 - Sterling acquires an ownership stake in Major League baseball team,
the Nw York Mets

ï 1984 Sterling Principals begin investing in hedge funds
1986 - Sterling acquires 50 percent ownership in the New York Mets

ï 1992 - Sterling launches Sterling American Properties (SAP) Fund I - IRR 22%

ï 1993 - Sterling seeds the financing of Pathogenesis

ï 1994 - Stamos Assoóiates, Inc. (SA!) ficilitates hospital megers throughout
the Urilted States
1996 - Sterling launches SAP Fund Il - IRR 27%

ï 1996 Sterling Leadership and SAI facilitate North Shore and LI.) merger
g j997 - SAI acquired by Perot Systems, Inc.
1998 - Sterling and SAI Principals begin to jointly invest
s 1999 - Sterling launches SAP Fund III - IRR 29%

s 2002 - Sterling acquires full ownership of the New York Mets
2002

- SterIin9 launches SAP Fund IV

2002 - Sterling and SAI Principals form Sterling Stamos

'o

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M
o
M

SterlingStamos

Principles

9

Origins of Sterliirig Stamos

Katz, Wilpon, and Stamos families jointly invest in hedge funds, public equities, and
private equity.
Form Sterling Stamos to diversify assets across hedge fund strategies in order to
preserve exisbng wealth
Replicate 40 years of investment success for Limited Partners through a diversified
alloòation of hedge fund managers
C)

Annual Return

SD

Sharpe Ratio

Security Fund

9.55%

1.93%

4.0

Growth Fund

13.73%

1.58%

6.5

SterlinyStamos
a
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o
o)

Principles

w

Investment Principles'

Sterling Stamos utilizes its access to
economic, geopolitical, and financial
information to identify market
discontinuities and highlight
investment ojportunities

Ö

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With this macro perspective, we hedge
our investments by diversifying across
asset ciasses and strategies. In this
way, we capture a significant portion
of the upside:.and minimize exposure
to the downside

Macro Perspective
Economic

i Geopolitical
Financial

PORTFOLIO ALLOCATION

Micro Perspective
AssÒt class performance
Strategy performance
Manager performance

Sterlin9Stamos
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Princiules

Assets Under Managenent

STERLING STAMOS

Running Summary of Assets Under Management
(s Million)

Projected
9131/02

8/30/03

9/31/03

12131/03

3/31/04

6130104

9/31104

12131/04

3131/05

6/30105

0/31105

12/31/05

32

49

63

85

177

236

410

550

650

750

850

950

1,050

1,150

Internal Capital

g

3/31/03

Total Capital

Q
Q

12131102

31

42

47

54

78

84

137

160

166

196

209

236

255

280

External Capital

1

7

16

32

99

153

274

390

485

554

641

714

795

870

97%

86°/o

75%

63%

44%

35%

33%

29%

25%

26%

25%

25%

24%

24%

L'i

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s

% Internal

SterlingStamos

ñwbfls

12

Sterling Stamos People

INVESTMENT
PROFESSIONAL

TITLE

EXPERIENCE

EDUCATION

PcftrS. Stamos

Chief Executive Officer
Managinft Partner

Stamos Associates, Inc. (SAl)
US Senator Bill Bradley
McKinsey & Company

Stanford University, BA

Booz Allen & Hamilton
Doblin Group
Harvard University, Dept. of Economics
Saw/B. Katz
o

President of Sterling Equities
General Panner

"J

Sterling Equities
New York Mets and Brooklyn Cyclones

Oxford University, DPhil
Harvard University, JD
Rhodes Schola
Truman Scholar

Biooklyn College, BS
CPA

LTJ Chairman of the Board

H

Fnd J Vi/pon

Spìn Starnos

Chairman of Sterling Equities
General Partner

Chief AdÖinistradve Officer

General lartner

Sterling Equities

University of Michigan, BS

New York Mets and Brooklyn Cyclones
Bear Steams & Co. Board
Loews Corporation Board
Stamos Associates, Inc. (SAl)
Whitaker Corporation

McGill University, BA

At] anthc Richfield

Hughes Aircraft

Executive VP of Sterling Equities

Sterling Equities

General Partner

David Katz

Hofstra University, BA

Changing World Technologies
New York Mets

SterliflgStamos

People

13

Sterling Stamos People

INVESTMENT
PROFESSIONAL

TITLE

EXPERIENCE

EDUCATION

Chili 5/atuos

Chief Operating Officer
Partner

Snatch & Saatchi
Stamos Creative
US Environmental Protection Agency

Stknford University, BA
Oxford University, MA
International University of Japan, MA
Newton Tatuni Scholar

Mombusho Scholar
Kevin Barcelona

Chief Fin ncial Officer
Partner

RKConsulfing
Dreyfirs Corporation

C

Seton Hall University, MS
I-Iofstra University, BBA

CPA

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E/bn T Hothig

Arhok Chachra

Kevin Ohirnolo

Senior Portfolio Advisor
Partner

Portfolio Manager
Partner

Pront Office Manager
Partner

Iflghgate Partners
Gabefli & Co., Inc.
Weiss, Peck & Greer
Merrill Lynch & Co.

Columbia University, 'fflA
Colorado University, ES

MeKinsey & Cothpany

Carnegie Mellon University, 135

Léndon School of Economics

Morgan Stanley
Chase Securities

Robertson Stephens

Santa Clata University, BS

?víD Vista

People

ISterlingstamos

14

Sterling Stamos People

INVESTMENT
PROFESSIONAL

TITLE

EXPERIENCE

EpLICATION

Cathy Tie

Associate

Magna Secuñûes
Meriill Lynch & Co.
Goldman Sachs & Co.

NYU, Leonard Stem School of Business, BS
The Wharton School, MBA

Robit Kumar

Associate

Highgate Partners
Gabelli & Co., Inc.
Weiss, Peck & Greer
Merrill Lynch & Co.

Indian Insütute of Technology, 35
Xavier Institute of Management, MS
NYU, Leonard Stem School of Business, MBA

Ange/la Rainford

Associate

McKinsey & Company

Harvard University, BA
Univçrsity of Cambridge, MS

Ted Conrads

Analyst

Boston Consulting Group, ValueScience

Stanford University, BA

Catherine Lin

Analyst

Merrill Lynch & Co.

Nanjing University, BS
Renmin University, MS
UCLA, Anderson School of Management, MS

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SterlingStamos

-.

People

15

Sterling Stamos Prodùcts

CAPITAL PRESERVATION

Fund

Cash Fund
Security Fund

CAPITAL APPRECIATION

i Growth Fund
u Equity Fund

CAPITAL OPPORTUNITY

Reäl Estate Fund
Private Equity Fund

Generate consistent absolute
returns with low risk

Generate significant absolute
returns with moderate risk

Generate wealth with high
risk

Moderate (8-12%)

High (12-15%)

High (15-30%)

Liquidity

Quarterly

Semi-Annual (Growth Fund)

Capital Call Structure

investor Horizon

Quarterly-to-Annual

3-5 years

10+ yars

Investment
Objective
C

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Target

SterlingStamos

Products

16

Security Fund

- Investment Objective

Serve as an alternative to fixed income investments by:

- Achieving moderate absolute returns

8-12 percent

- Mai ntai fling low quarterly volatility

2-4 percent

SterlingStamos
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©1s=ScuriLy

117

Security Fund

Allocation (February 2004)

STRATEGY ALLOCATION

SUB STRATEGY ALLOCATION
Options

rbitrage
7%

Cash

0%
L / S Equities

Asset Backed Securities
13%

19%

û

Merger Arbitrage

Equity Market Neutral

1%

H

Market Neutral
67%

L f S Credit
4%
Distressed Debt
5%
Capital Structure Arbitrage
2%
Multi-Strategy
8%

SterlingStamos

3%

Mortgage Backed Securities
2%
Fixed Income Arbitrage
11%

Statistical Arbitrage
12%

Security

18

Security Fund - Managers
SECURITY FUND, LP MONTHLY PERFORMANCE (February 2004)
(Net of All Fees & Expenses)
¿Jnaudited net returns
STRATEGY

SUBSTRATEGY

FUND

FUND

MANAGER STATUS

INCEPTION
DATÉ

AUM

INVESTMENT
CAPACITY

ANNUALIZED STANDARD
RETURN

DEVIATION

SKARPE
RATIO

A

Closed

1993

1,000 MM

50&

14.0%

3.1°/o

3.4

Equity Stat Arb

A

Closed

2001

1,000MM

50MM

19.3%

6.9%

2.3

ConvertAib

A

Closed

1992

750 MÎvf

25MM

21.1%

4.1%

4.3

B

Open

1995

300 MM

Open

15.1%

4.2°/e

2.8

A

Closed

2000

300MM

50MM

14.2%

4,2%

2.6

B

Open

2002

700MM

Open

8.4%

2.1°/o

5.1

C

Closed

1999

100MM

NA

17.1%

3.6%

3.8

MBS Arb

A

Open

1993

1,000MM

Open

10.1%

9.9%

3.6

Asset Backed

A

ted

1997

325 Wvf

25

v1

13,3%

2.0°/e

5.0

B

Closed

1996

300 MM

10 tyflyf

121%

2.4%

3.6

C

Closed

2002

700MM

10MM

13.7%

0.9%

11.5

EquítyMlN

A

Open

1997

250MM

Open

18.2%

11.8%

1.3

Muid Strategy

A

Open

1993

1,000 MM

Open

10.0%

2.9%

2.3

B'

Open

1994

1,000MM

Open

18.1%

6.8%

2.2

C

'ted

2002

1,000 MM

50 MM

16.5%

5.3%

2.5

A

''ted

2002

400MM

50MM

27.4%

7.8%

3.1

Market Neutral OpúonArb

n
o

FI Arb

1

bi

H

e

Cap StructArb
Source: SterEos Stamo anafriis

SterlingStamos

Proilucts - Security

19

Security Fund

Managers

SECURITY FUND, LP MONTHLY PERFORMANCE (February 2004)
(Net of All Fees & Expenses)
Unauditeci net returns
STRATEGY

SUB-STRATEGY

FUND

FUND

MANAGER STATUS

INCEPTION
DATE

AIiM

INVESTMENT ANNUALIZED STANDARD
CAPACITY

RETURN

DEVIATION

SHARPE
RATIO

Distressed

A

limited

1993

500 MNI

50M_M

19.0°/o

5,4%

1.2

Muid Event

A

Closed

1999

4,000MM

10MM

13.6%

4.5°/o

2.2

High Grade Sprd

A

Closed

2002

600 MM

50 MM

20.7°/o

7.8%

2.2

MergerArb

A

Open

1995

300M_M

Open

8.7%

3.6°/o

1.5

Equity Hedged Lf S Equity

A

Closed

1999

1,800 MM

0M_M

19.9%

9.6%

1.4

B

Closed

2002

1,500 MM

20MM

14.9%

4.0%

2.9

LongEquity

A

Closed

1993

200MM

5MM

131°/o

19.1%

.5

Muid Strategy

A

limited

2003

60 MM

NA

NA

NA

NA

Emerging Mkts

A1

Closed

1993

900MM

20 lvTh{

14.3°%

4.6%

2.4

Macro

A2

Open

2000

1,000 MM

Open

1.4%

19.2%

0.8

Syst Global

A3

Limited

2001

250 MM

50MM

10.3°/o

9.2%

0.7

Event Driven

n
9
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L'I

Macro

Source: Stet/ins Statuto: anafrüh

I. Performance to reflect change in investment team and strategy
Performance data reflects proprietary trading performance prior to the launch of Macro Fund A.
Performance prior to August 2002 is based upon proprietary account managed by investment team adjusted to reflect effect of approximate leverage Syst. Global Fund Aintends to employ.

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Sterlinystamos

Products

Security

2e

Security Fund Performance
SECURITY FUND MONTHLY PERFORMANCE
(Net of All Fees & Expenses)
Unaudited net returns
2002

2003

2004

January

0.70%

128%2

February

0.59%

March

0.46%

Aprii

1.19%

May

1.28%

June

0.52%

July

-0.44%

August

0.46%

Ç

September

1.77%

Qctober

0.71%1

1.23%

November

1.04%

0.75%

-0.19%

0.88%

1.56%

9.79%

December
YTD

I

1.28%

Source: Sterling Stamos anabsis

1. October 2002 marks the official offering to the public
Z Based on intcrnal estimate as of 2/fl (2004

I!

SterlingStamos

Proøucts

- Security

j21

Security Fund - Performance

RETURN I RISK COMPARISON

SECURITY FUND PERFORMANCE

Nasdaq

Index,

15%

$1,150

Security Fund

$1.130$1,110 -

Lehman
Aggregate
Bond Comp.

Security
Fund

io

$1,090-

$1070-

.s&P 500
Index

. Lehman Muni
Bond 10 Yr.

$1050$1.030-

LIBOR
5%

$1,010 $9go $970 $950

0%

oct-02

Dec-02

Feb-03

Apr-03

Jun-03

Aug-03

Oct-03

Dec-05

Feb-04

0/
LOW RISK

Steil i ngStamos

1:.

5%

10%

15%

Standard Deviation

20%

25%

h- HIGH RISK

122

Security Fund

- Terms and Conditions

Legal Structure:

Investor Eligibility:

US $5,000,000

Management Fee:

1% per annum

Performance Fee:
o

Quajified Purchasers

Minimum Investment:

C-)

Domestic 3(c)(7) Limited Partnership

5%

Hurdle Rate:

5%

Hiqh Water Mark:

Yes

Lock-up:

1-Year

Redempilons:

Quarterly

Notice Period:

90 days prior written notice

General Partner:

SSP Associates GP, LLC

Management Company:

SP Capital Management, LP

SterlingStamos

fliíkv

23

Growth Fund - Investment Objective

o An alternative to equity investments

-

Achieve high absolute returns

- Maintain moderate annual volatility

SterlingStamos

12-15 percent

3-5 percent

24

Growth Fund

- Allocation (February 2004)

STRATEGY ALLOCATION

SUB STRATEGY ALLOCATION

Macro
6%

Emerging Markets
3%

Cash
4%

C

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Il
H

Convertible Arbitrage
12%

Asset Backed Securities
8%
Equity Market Neutral
6%

Statistical Arbitrage

Event/Driven

12%

5%

LIS Credit

Market Neùtral
42%

5%

LIS Equity
40%

i!

SterlingStamos

Statistical Arbitrage
5%

Products - Crowth

25

Growth Fund - Managers

GROWTH FUND, LP MONTHLY PERFORMANCE (February 2004)
(Net of All Fees & Expenses)
Unaudited net returns
STRATEGY

SUBSTRATEGY

FUND

FUND

MANAGER STATUS

INCEPTION
DATE

AU M

NVESTMENT
CAPACITY

ANNUALIZED
RETURN

STANDARD
DEVIATION

SHARPE
RATIO

A

Closed

1992

750 Mlvi

25 IviM

21.1%

4.1%

4.3

A

Open

1997

250MM

Open

18.2°/a

11.8%

1.2

Multi Strat Macro

A

Limited

2002

1,000 Mlvi

50MM

16.5%

5.3%

2.5

AssetBacked

A

Closed

1996

300MM

10MM

12.1%

2.4%

3.6

Equity Stat Arb

A

Closed

2001

1,000MM

50MM

19.3%

6.9%

2.3

Event Driven

LIS Credit

A

Closed

2002

600 Mlvi

50 MM

20.7%

7.8%

2.2

Equity Hedged

L/S Garp

A

Closed

1999

1,300MM

20MM

27.2%

12.1%

2.0

A

Closed

2001

900 MM

20MM

9.9%

4.8%

1.3

A

Open

1993

1,000MM

Open

20.9%

9.9%

1.8

B

Closed

2001

700MM

10MM

13.5%

3.9%

2.6

A

Closed

1999

1,200MM

OMM

21.2%

12.0%

1.5

B

Closed

2002

100MM

10MM

22.6%

8.0%

2.4

A

Open

2003

100 MM

Open

5.5%

6.6%

0.3

Market Neutra!

Convert

EquityM/N

ç)

o
H
o
t'i

z
s.]

LIS Growth
LIS Value

LIS w! Caalyst

LIS Global

I

',

Source: S/er/lug S/amos anafrüs

SteruingStamos

Products - Growth

26

Growth Fund

- Managers

GROWTH FUND, LP MONTHLYPERFORMANCE (February 2004)
(Net of All Fees & Expenses)
Unaudited net returns
STRATEGY

SUB-STRATEGY

FUND

FUND

MANAGER STATUS

INCEPTION
DATE

AUM

INVESTMENT
CAPACITY

AÑNUALIZED
RETURN

STANDARD
DEVIATION

SHARPE
RATIO

Emerging Markets

A

Closed

1993

900 Mlvl

20 Mbtí

14.0%

4.8%

2.2

Syst Global

A

limited

2001

250 Mlvi

50MM

10.3%

9.2%

0.7

Macro

Global

A

Open

2002

500MM

Open

15.1%

7.3%

1.6

S outre: Sterling Siamo: ana/yü:

SterlingStamos
(n
o)

o

o

Products - Growth

27

Growth Fund

- Performance

GROWTH FUND MONTHLY PERFORMANCE
(Net of All Fees & Expenses)
Unaudited net returns
2003

[.42%2

January
February

2004

/

March

April
May

June

July

I

August
September

October

1.41%1

November

Ô.54%

December

O.86%

YTD

2.84%

1.42%

Somre: 5/erlag S/amos anafrsis
October2003 marks the oPtieThJ offering ro the pubUc
Based on invernal estimate as of /i 1/2004

SterlingStamos

Products - Growth

128

Growth Fnd - Performance

RETURN I RISK COMPARISON
30%

-

25%
.4.

E 20% G,

n
o

Growth Fund Managers

s

/

15% -

t

s

I

Index

I

co

t'

I

10%

Aggregtte

L4hman

Bond Comp.

5% -

N4asdaq

,F
S&P 500 Index

Lehrn_aIÇMuni
oc1d 10 Yr.

_t_ - -

s

0%

0/o
LOW RISK

I:

SteruingStamos

5%

10%

15%

Standard De'Aation

20%

25%

f) HIGH RISK

owth

29

Growth Fund

- Terms and Conditions

Legal Structure:

Domestic 3(c)(7) Limited Partnership

Investor Eligibility:

Qualified Putchasers

Minimum Investment:

US $5,000,000

Management Fee:

l% per annum

Performance Fee:

10%

Hurdle Rate:

7%

Aigh Water Mark:

Yes

Lock-up:

NA

Redemptions:

Semi-annual

Notice Period:

90 days prior written notice

General Partner:

SSP Associates GP, LLC

Management Company:

SP Capital Management, LP

Sterlin9Stamos

n

J

30

Risk Management OvéÑiew

RISK TOOLS

Portfolio Optimization

ANALYSIS

Mean-Variance optimization model by strategy and Fund Manager
utilizing historical monthly performance data

Time Series Analysis

Covariance/correlation analysis by Fund anager-to-Fund Manager, tostrategy, and to-the-Market
¡ Distribution Curve mapping (i.e., Skewness and Kurtosis)
i Drawdown attribution and downside deviation/recovery analysis

Portfolio Value-at-lisk

Allocation range limits set by strategy and Fund Manager given 2-3
standard deviation adverse move (assuming normal market conditions)
Probability of loss determined through historical simulation as well as
parametric methods such as Monte Carlo Simulation

Stress/Scenario Testing

Worst case scenario analysis developed through straining the covariance
matrix and analysis of historical returns and factor observations outliers
Qualitative case studies of high volatility périods and adverse moves in
key asset classes (e.g., Russian default, Worldcom) to build "What if'
scenario testing capabilities

Style Analysis

Style drift and asset allocation analysis to quanti fund manager's
performance attribution to the Fund's stated strategy and asset class
Factor sensitivities and factor tilt analysis to determine underlying drivers
of a specific fund manager's performance at different points

SterlinyStamos

Process

31

Sterling Stamos Investment Process

Forward-looking approach to allocate assets across hedge:fund
strategies
Complete transparency from underlying fund managers
- Position levels, performance, and risk metrics are communicated by
managers on a daily, weekly, and monthly basis
Leverages mir unique network of hedge fund managers in order to
gain capacityand achieve superior portfolio construction

SterlingStamos
u'
(a

o
In

Moess

32

Investment Process

MACRO ECONOMIC
ANALYSIS

SECTOR
ANALYSIS

MANAGER
SOURCING

DUE

DILIGENCE

RISKJ

PRTFOLIO
MANAGEMENT

ONGOING
MONITORING

Identify key macro economic trends based upon:
- Fundamentals

- Technieals

- Liquidity
4 Determine potential investment opportunities and risks among:
- Asset classes

- Geographiçs

SterlingStamos
'D
01

ti,

o

o

Procöss

I3

Investment Process

MACRO ECONOMIC
ANALYSIS

8

SECTOR
ANALYSIS

MANAGER
SOURCING

DUE
DILIGENCE

RISK!
PORTFOLIO
MANAGEMENT

ONGOING
MONITORING

. Determine directional portfolio concentrations to specific hedge fund
strategies based on:
Macro ecox&omic opportunity set

-

Risk ana1yis

SterlingStamos

Process

investment Process

MACRO ECONOMIC
ANALYSIS

AÑALYSIS

MANAGER
SOURCING

DUE
DILIGENCE

RISK!
PORTFOLIO
MANAGEMENT

ONGOING
MONITORING

t Leverage network and relationships of Sterling Stamos to::
- Identify enierging managers

-

Obtain capacity with "closed managers"

Leverage relationships with Investment Banks, Third-Party Marketers,
Consultants, and Research Firms to identify Fund Managers
Utilize industry- specific databases, newspapers, and magazines to
identify Fund Managers

SterlingStamos
01

w
o
03

Process

35

Investment Process

MACRO ECONOMIC
ANALYSIS

C-)

o

SECTOR
ANALYSIS

MANAGER
SOURCING

DUE
DILIGENCE

RJsK/
PORTFOLIO
MANAGEMENT

ONGOING
MONITORING

Contact Fund Manager to obtain information on fund specific strategy,
monthly returns, performance attribution, and references prior to an
initial meeting
Analyze performance, liquidity, and correlations between proposed
Fund Manager and existing Fund Managers in portfolio

Conduct inten jews and on-site visits to gain understanding of:
- Strategy (position level detail)

- Operations (decision making rules, execution, and infrastructure)
- Risk management
- Other procédures (e.g., portfolio pricing)

i!

SterlingStamos

Process

36

Investment Process

MACRO ECONOMIC
ANALYSIS

SECTOR
ANALYSIS

MANAGER
SOURCING

DUE

DILIGENCE

RISK!
PORTFOLIO
MANAGEMENT

ONGOING
MONITORING

Maintain portfolio exposure limits by:

-

Sector

- Strategy
- Fund Manager
Monitor each asset class and strategy associated with underlying Fund Managers to
determine market opportunities and key events
Compare weÔkly NAys from Fund Managers with performance of associated
market/asset class

i!

SterlingStamos

Process

37

Investment Process

MACRO ECONOMIC
ANALYSIS

SECTOR
ANALYSIS

MANAGER \
SOURCING

DUE

/ DILIGENCE

RISK!
PORTFOLIO
MANAGEMENT

ONGOING
MONITORING

Facilitate monthly/quarterly conference calls to discuss market conditions
and fund performance with each underlying Fund Manager
Review portfolio to assess performance, risk, and allocation on
- Weekly basis by Portfolio Team and Principals

-

Quarterly basis by Sterling Stamos Investment Committee

Process

ISterlingStamos

jsa

Infrastructure

Prïiate Wealth Management
Deutsche Bank

La
pyjvate bank

û
o

2i ERNST& YOUNG
Quality In Everything We Do

RK Consulting
FUND ADMINISTRATION SERVICES

SterlingStamos

SCHULTE RoTnc& ZARa ELF

'
IRANRORMING MJSINESS WITH JECHNOtOGY

Infrastructure
Deutche Bank
Commercial Iank and investment counterparty

The Citigroup Private Bank
-a

Private banking

Ernst& Young
u Auditing and tax services

a "Big 4" accoûnting firm

Schulte Roth& Zabel LLP
Legal counsel

Premüer, global law firm for alternative investments

RK Consulting, LLC
a Accounting and fund administration
a Administering over $100 billion in assets

Pragmatix/IBM
a Consulting and technology services company
a IBM business partner since 1992

SterlingStamos

Postscript

140

Selected Biographies

Mr. Peter S. Stamos is the Chief Executive Officer of the Management Company and the managing member of the
General Partner, and is tixnate1y responsible for the investment decisions of Sterling Stamos. Mr. Stamos was the Chief
Executive Officer of Stamos Associates, Inc. (SAI), a healthcare and technologr company that was acquired by Perot Systems,
Inc., where he headed the merger and acquisitions practice. In addition, he was the Senior Vice President of Channelpoint, Inc.
Prior to founding SAI, Mr. Stamos was the Chief of Staff and Chief Economist for U.S. Senator Bill Bradley. He was also a
Principal with Booz Allen & Hamilton, a Senior Management Consultant with McKinsey & Company, and the Managing Partner
of the Doblin Group.

-

In addition to his private and public sector work, Mr. Stamos taught economics at Harvard University - where he received the
Allen Young Award for Teaching Excellence - and at Stanford University where he was an occasional guest lecturer at the
Graduate School of Business. Mr. Stamos serves on several boards and advisory boards, including the Board of Stanford
University Hospitals nd Clinics, where he is a member of the Finance and Audit Committees and s Chairman of the Investment
Committee.
L'I

I,

-

Mr. Stamos earned a BA in economics and political science from Stanford University, where he was a Truman Scholar, received
the Sterling Award, and graduated PhiBeta Kappa with Honors and Distinction. Mr. Stamos received aJD from Harvard Law
School 'with Honors and a doctorate from Oxford University, where he was a Rhodes Scholar.

Mr. Christopher Stamos is the Chief Operating Officer of Sterling Stamos and is responsible for all organizational and
operational aspects of the firm as well as the maxketing and branding of all Sterling Stamos materials. Mr. Stamos spent the last
ten years in Asia, studying and working in China and Japan, and most recently working for Saa&hi & Saatchi doing branding,
developing new business, and consulting on strategic planning in Taiwan.

Mr. Stamos earned a BA in Philosophy from Stanford University, where he was awarded a Stanford Golden Grant and a Newton
Tatum scholarship (offered to Rhodes Scholarship finalists) towards an MA in Politics, Philosophy, and Economics from Oxford
University, graduating tth honors. After attaining fluency in Mandarin at the Cultural University of Beijing, Mr. Stamos received
a Mombusho scholarship towards an MA in East Asian International Relations from the International University ofJapan,
graduating valedictorian with the Dean Citation and with Distinction.

SterliragStamos

Postscript

41

Selected Biographies

Kevin Barcelona is ihe Chief Financial Officer at Sterling Stamos. Mr. Barcelona was a Partner with Rothstein Icass and RK
Consulting where he spFnt eight years providing services to investment partnerships including fund of funds, private equity funds,
and offshore funds, and consulting on accounting, tax, and operational issues.
He received an MS in taxation from Seton Hall University, and his BBA from Hofstra University. He is a Certified Public
Accountant (CPA) and is member of the NewJersey Society of CPAs (NJSCPA) and the American Institute of CPAs (AICPA).

Mrs. Ellen Horing is the Senior Portfolio Advisor of Sterling Stamos. She is also a principal of ETH Corp/Highgate Partners, a
fund of funds which invests in portfolio managers that employ various investment strategies, including, but not limited to,
long/short equity, emerging market, distressed debt, private equity, mezzanine debt, venture capital, and commodities. Mrs Horing
served as Vice Presiderit'and as Direcior of Research for Gabelli & Co.; Inc., a money management and brokerage firm. She also
served as ait Equity Research Analyst at Weiss, Peck & Creer, L L C and was an Equity Block Trader at Merrill Lynch & Co., Inc.
Mrs. Horing earned a BA in Economics from the University of Colorado and received an MBA in Finance and Accounting from
Columbia Business Scho1.

Mr. Ashok Chachra is the Portfolio Manager of Sterling Stamos and is responsible for Portfolio Manager sourcing, due
diligence, risk management, and on-going portfolio monitoring. Prior to joining Sterling Stamos, he was a Senior Business Analyst
with McKinsey & Company, focusing on assignments in the Financial Services and Healthcare industry sectors.
Mr. Chaclira earned a B.S. in Business Administration with University Honors from Carnegie Mellon University.

Mr. Kevin Okimoto. Mr. Okimoto is the Front Office Manager of Sterling Stamos, responsible for developing and managing the
firm's relationships with all of its investors. Before joining Sterling Stamos, he was a financial professional at Robertson Stephens,
an investment bank, whre hisresponsibilides included facilitating stock distributions on behalf of venture capital funds to general
and limited partners. Prior to joining Robertson Stephens, Mr. Okimoto was a Business Analyst and Manager at vvista, an
internet healthcare company.
Mr. Okimoto earned a BS in Marketing from Santa Clara University and holds a General Securities Registered Representative
license.

SterlingStamos
(J)

Postscript

42