Otter Creek Advisors, LLCOctober 30, 2018 | 3rd Quarter Review
Overview
Executive Summary
Attribution
Investment Process
Framing the Macro and Market Environment
Current Themes
Portfolio Composition
Table of Contents
1
• Otter Creek Advisors
• Fundamentally focused investors
• Value orientated
• 100% employee owned
• Launched the Otter Creek Long/Short Opportunity Fund December 30, 2013
• Fund assets are $160.7 million as of September 30th, 2018
Firm Overview
Past performance does not guarantee future results 2
Performance Returns As of September 30, 2018 Portfolio Statistics As of September 30, 2018
Since Inception 1
Since Inception 3
Institutional Class (OTTRX) 13.58% 2.73% Weekly Standard Deviation Investor Class (OTCRX) 12.38% 2.50% S&P 500 Index 74.47% 12.46% Morningstar L/S Equity Category 16.10% 3.20%
Total Expense Ratio 4 Weekly Correlation (since inception) As of September 30, 2018
r2
Institutional Class (OTTRX) OTTRX vs. S&P 500 Index Investor Class (OTCRX)
4 1 Cumulative return s ince Fund inception date of December 30, 20132 Annual ized return for one year and three years3 Annual ized return s ince Fund inception date of December 30, 2013
1 Year 2 3 Year 2 OTTRX S&P 500‐2.83% ‐0.12% 6.2% 11.8%‐3.03% ‐0.35%17.95% 17.33%5.69% 5.42%
The Fund's investment advisor has contractual ly agreed to reduce i ts fees and/or absorb expenses of the fund unti l at least February 28, 2019. The expense ratios are based on estimated amounts and may not reflect the actual expense ratios .
Gross Net r 2.34% 2.31% ‐0.05 0.002.60% 2.57%
STRATEGY
Generate absolute risk-adjusted returns with a focus on long-term capital appreciation with below average volatility by investing in opportunities both long and short which are driven by intensive fundamental analysis
Attempt to achieve capital preservation during periods of dislocation
Executive Summary
Performance data quoted is past performance. Past performance does not guarantee future results. The investment and principal value of aninvestment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The current performancemay be lower or higher than the performance data quoted. Performance data current to the most recent month‐end may be obtained by calling(855) 681‐5261. Performance data quoted does not reflect the 1% redemption fee on shares held for 60 days or less. If reflected, total returnswould be reduced.
3
Attribution: Long and Short
Otter Creek Advisors focuses on generating absolute returns in both our long and short portfolio for the Fund
Past performance does not guarantee future results 4
1 For the period from January 1, 2018 through September 30, 2018 4 For the period from January 1, 2015 through December 31, 20152 For the period from January 1, 2017 through December 31, 2017 5 For the period from January 1, 2014 through December 31, 20143 For the period from January 1, 2016 through December 31, 2016 Source: Company Reports
7.5%
-8.5%
-0.6%-2.2%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
20181
Long Short Cash Net
19.3%
-17.9%
-1.6%-3.6%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
20172
Long Short Cash Net
12.5%
-0.7%-1.7%
9.8%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
20145
Long Short Cash Net
5.5% 5.8%
-1.9%
9.5%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
20154
Long Short Cash Net
11.7%
-8.7%
-1.8%
0.1%
-10%
-5%
0%
5%
10%
15%
20163
Long Short Cash Net
Past performance does not guarantee future results
Fund Attribution 2018 3rd Quarter
5
Long Short NetInformation Technology 2.5% ‐0.2% 2.3%Consumer Discretionary 0.7% ‐2.6% ‐1.9%Health Care 1.5% ‐0.2% 1.2%Industrials 0.8% ‐1.7% ‐0.9%Financials ‐1.2% 0.3% ‐0.9%Real Estate ‐0.2% ‐0.1% ‐0.3%Consumer Staples 0.3% ‐0.1% 0.2%Materials ‐0.2% 0.0% ‐0.2%Utilities 0.1% 0.0% 0.1%Other 0.0% ‐0.1% ‐0.1%Energy 0.0% 0.0% 0.0%Gross Return 4.4% ‐4.7% ‐0.5%
Net Expenses ‐0.2%Net Return ‐0.7%
Quarter‐to‐Date Sector Attribution
Fund Contributors and Detractors2018 3rd Quarter
Fund holdings and allocations are subject to change at any time and should not be considered a recommendation to buy or sell any securities
Notable Changes Trimmed gains in Leidos Holdings to maintain approximate position size
Modestly added to Zimmer Holdings during the quarter
Covered a portion of our short equity and added puts in Proto Labs
Covered a portion of our short equity and added puts in NVIDIA
Added to our put position in Snap-on
Added puts in Ollies
Past performance does not guarantee future results
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Top 5 Contributors Long/Short
Security Return(Q3)
Portfolio Contribution Top 5 Detractors Long/Short
Security Return(Q3)
Portfolio Contribution
Leidos Holdings Inc Long 17.7% 1.1% Proto Labs Inc Short 36.0% ‐0.8%
Zimmer Biomet Holdings Inc Long 18.2% 0.8% NVIDIA Corporation Short 18.7% ‐0.7%
Trimble Inc Long 32.3% 0.7% Snap‐on Inc Short 14.8% ‐0.7%
FLIR Systems Inc Long 18.6% 0.7% Ollies Bargain Outlet Holdings Inc Short 32.6% ‐0.6%
Aramark Corp Long 16.3% 0.6% E‐Trade Financial Corp Long ‐14.3% ‐0.6%
The Otter Creek Investment ProcessFundamentally Driven
INVESTABLE UNIVERSEWilshire 5000 & American Depositary Receipts
Any listed security in capital structureMost attractive risk/reward in capital structure
INVESTMENT PROCESSNarrow investment universe by:
• Develop a macroeconomic thesis• Frame bond and equity market valuations• Identify thematic ideas• Identify secular trends
CONCENTRATED PORTFOLIOTypically 30‐35 longs and 30‐35 shorts
Equity put exposure ranges from 1% ‐ 5% of capital
IDEA GENERATIONIndustry conferencesFinancial screensNetwork base
SHORT• Aggressive accounting• Deteriorating balance sheet metrics• Low quality earnings• High financial leverage• High level of insider selling
COMPANY CHARACTERISTICSLONG• Operating margins > 10%• Return on Equity > 15%• #1 or #2 market share position• Low‐to‐moderate financial leverage• Consistent and growing dividends
7
Past performance does not guarantee future results
Fund AttributionOctober 1st through October 26th
8
Top Contributors Ellie Mae (ELLI)
Snap-on (SNA)
NVIDIA Corp (NVDA)
SVB Financial Group (SIVB)
BlackRock (BLK)
Proto Labs (PRLB)
Source: Company ReportsSector and Top Contributors are for the period 10/01/2018 to 10/26/2018
Long Short NetInformation Technology ‐1.8% 4.5% 2.6%Financials ‐1.9% 3.5% 1.5%Industrials ‐1.6% 2.6% 1.0%Materials ‐0.9% 0.0% ‐0.9%Utilities ‐0.4% 0.0% ‐0.4%Consumer Discretionary ‐1.3% 1.6% 0.3%Other 0.0% 0.1% 0.1%Consumer Staples ‐0.3% 0.2% ‐0.1%Energy ‐0.1% 0.0% ‐0.1%Health Care ‐1.0% 0.9% ‐0.1%Real Estate 0.0% ‐0.1% ‐0.1%Gross Return ‐9.0% 14.0% 3.7%
Net Expenses 0.1%Net Return 3.9%
Month‐to‐Date Sector Attribution
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Macro & U.S. Divergence
A negative estimate revision cycle is underway
Source: Hedgeeye as of 09/30/2018
Source: Lohman Econometrics, Bloomberg
Consecutive Quarters of Accelerating YoY U.S. Real GDP Growth
10Source: Bloomberg , Morgan Stanley Research
U.S. Micro
45
50
55
60
65
70
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Jun-18
Sep-18
Manufacturing ISM & New Orders
ISM ISM New Orders
Source: Bloomberg as of 09/30/2018
Source: BLS, Smith Travel Research Source: Haver Analytics, Gluskin Sheff
Increasing evidence growth peaked 1H18Growth in U.S. manufacturing remains steady
Housing data points continue to soften
RevPar decelerating
11Source: Bloomberg as of 06/21/2018
Rates and Federal Reserve Bank
*Referencing U.S Economy
The magnitude of increase in 2YR real rates is similar to prior recessions
Financial conditions tightening after significant easing since
2016
Source: Goldman Sachs as of 10/20/2018
Source: Thomson Reuters
Global yields are now rising
The Fed’s view of the economy is more optimistic despite the evidence that growth peaked
12Source: Bloomberg as of 06/21/2018
Earnings Revisions & Peak Margin
‐5%0%5%10%15%20%25%30%
‐30%‐20%‐10%0%10%20%30%40%50%
Q1 20
13Q2 20
13Q3 20
13Q4 20
13Q1 20
14Q2 20
14Q3 20
14Q4 20
14Q1 20
15Q2 20
15Q3 20
15Q4 20
15Q1 20
16Q2 20
16Q3 20
16Q4 20
16Q1 20
17Q2 20
17Q3 20
17Q4 20
17Q1 20
18Q2 20
18Q3 20
18Q4 20
18 Est
Q1 20
19 Est
S&P 500 Growth Metrics
EBIT Growth Earnings Growth Sales Growth (RHS)
Source: Alphasense, Morgan Stanley Research Source: Alphasense, Morgan Stanley Research
Source: Nordea Capital Markets
Up 4x from end of 2016
2019 estimates could be challenging to meet given mixed macro, cost pressure and difficult comparisons
13
Source: Bloomberg as of 09/30/2018
Valuations
0.5
0.7
0.9
1.1
1.3
1.5
1.7
1.9
2.1
2.3
2.5
S‐93
O‐94
N‐95
D‐96
J‐98
F‐99
M‐00
A‐01
M‐02
J‐03
J‐04
A‐05
S‐06
O‐07
N‐08
D‐09
J‐11
F‐12
M‐13
A‐14
M‐15
J‐16
J‐17
A‐18
S&P 500 Price to Sales
Price/Sales Average 1 St‐Dev 2 St‐Dev
S&P 500 valuation remains elevated on a price to sales basis, but less so on price to earnings
Rising real rates typically pressure equity valuations especially for high-multiple stocks
14Source: Strategas
Market Observations
Source :FactSet Research Systems 9/21/2018
Source: Strategas as of 10/21/2018
Record high buybacks .. yet negative EPS revisions increasing
Relatively Low Gross and Net Fund Exposure
• We look for attractive absolute return opportunities
• We maintain a high cash balance for when absolute return opportunities increase
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Gross delta‐adjusted exposure 171.2% Net delta‐adjusted exposure 6.9%Source: Company Reports Source: Company Reports
Historical Delta-adjusted ExposureHistorical Delta-adjusted Gross Exposure As of September 30, 2018 As of September 30, 2018
60%
80%
100%
120%
140%
160%
180%
01/31/14
04/30/14
07/31/14
10/31/14
01/31/15
04/30/15
07/31/15
10/31/15
01/31/16
04/30/16
07/31/16
10/31/16
03/31/17
06/30/17
09/30/17
12/31/17
03/31/18
06/30/18
09/30/18
-82.1%
89.1%
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
01/31/14
04/30/14
07/31/14
10/31/14
01/31/15
04/30/15
07/31/15
10/31/15
01/31/16
04/30/16
07/31/16
10/31/16
03/31/17
06/30/17
09/30/17
12/31/17
03/31/18
06/30/18
09/30/18
Long Delta Short Delta Net Delta
Investment Themes
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THEME RATIONALE COMPANY
America First Companies that are beneficiaries from the current administration's agenda Leidos (LDOS), FLIR Systems (FLIR), Harris (HRS)
Financial Deregulation Benefits from deregulation should provide a multi-year tailwind to earnings and drive higher capital returns to shareholders via higher share repurchases and dividends
Seacoast Bank Corp. (SBCF), Ameris Bancorp (ABCB) CenterState Bank Corp. (CSFL)
Hard Asset Companies that should benefit from higher inflation and commodity prices Archer-Daniels-Midland (ADM), Nutrien (NTR), Newmont Mining (NEM)
Water Companies benefiting from demand for an improvement in water infrastructure Xylem (XYL), American Waterworks (AWK), SJW Group (SJW)
Demographic Changes: Millennials & Baby Boomers
Millennials spending habits are changing, new demands for healthier foods and using e-commerceAging population will drive long term secular demand for healthcare
Calavo Growers (CVGW), Thermo Fisher (TMO)Abbott Laboratories (ABT), Zimmer Biomet (ZBH)
Special Situations Visibility on tax rates, tax repatriation, improved business confidence will result in higher M&ACompanies going through value-enhancing break-ups
Ashland (ASH), DowDupont (DWDP), E*TRADE (ETFC)
THEME RATIONALE COMPANY
Interest Rate Risks Companies that could be negatively impacted from rising interest rates, in addition face increased competition, rising input costs
Snap-on (SNA), Elli Mae (ELLI), Aaron's (AAN)
Exchange Regulatory Risk Business mix has shifted to increasing exchange fees which is unsustainableRegulatory initiatives will adversely effect exchanges
Intercontinental Exchange (ICE), Nasdaq (NDAQ)
Risk in Restaurants We expect negative estimate revisions as benefits from tax cuts slow, wage pressure increases and sales growth slows
Dine Brands Global (DIN), BJ's Restaurants (BJRI)
Peak Semis Peak stock prices don't reflect the potential profit slowdown over the next 6-12 months
Broadcom (AVGO), NVIDIA (NVDA), Intel Corp (INTC), Qorvo (QRVO)
Profitless Growth Companies growing sales, but losing incrementally more money, facing increased competition
Tesla (TSLA), Shopify (SHOP), Wayfair (W), Netflix (NFLX), Zillow Group (ZG)
As of 09/30/2018
LONG INVESTMENT THEMES
SHORT INVESTMENT THEMES
Red = new position or theme
Otter Creek Long/Short Opportunity Fund Investment Themes As a Percent of Invested Capital
Source: Company ReportsAs of 10/26/2018
17
Long Theme: Water
18
Investment Thesis: • Depleted water infrastructure in the U.S• U.S water infrastructure is rated a “D” by Civil
Engineers• Secular growth opportunity as infrastructure
investment increases
• Key beneficiaries:• AWK• XLY
Short Theme: U.S Stock Exchanges
19
Investment Thesis:• Market consolidation has led to competition concerns
• Operates as an Oligopoly 13 exchanges with 12 of them owned by three companies (58% market share)
• Business mix has shifted to increasing exchange fees which we believe is unsustainable
• We believe regulatory initiatives will adversely effect exchanges
• Brett Redfearn, formerly head of all Market Structure at JPMorgan, recently left to become the Head of the SEC’s trading and market division. Redfearn’s main goal as head of the SEC’s trading & market division is to reform the exchanges and lower prices.
• SEC Commissioner Jackson last week gave a significant policy address, titled, “Rethinking Exchange Regulation”
Source: SEC.gov, Company Filings
Source: Company filings, Bloomberg as of 06/30/2018
0%5%10%15%20%25%30%35%40%
FY2004
FY2005
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
FY2015
FY2016
FY2017
Market Data Business % of Revenue
ICE NDAQ
InterContinental Exchange (ICE)
NYSE
NYSE ARCA
NYSE American LLC
NYSE National, Inc
Chicago Stock Exchange
Nasdaq (NDAQ)
NASDAQ PHLX LLC
Nasdaq BX
Nasdaq Stock Market
CBOE Global Markets (CBOE)
CBOE BYX Exchange
BZX Exchange
CBOE EDGA Exchange
CBOE EDGX Exchange
Exchange Market Share
New Short: Cambrex (CBM)
20
Company Discretion:• Manufactures pharmaceutical ingredients for
drug manufacturers• GILD is CBM’s largest customer (35% sales)
Investment Thesis:• Gilead’s Hep C Franchise meaningfully improved
CBM’s sales and margins, however, we believe the decline in the Gilead business will now drive meaningfully lower margins
• An international competitor experienced similar margin improvement to CBM and margin are now down over 1,000bps
• Significant insider selling by management with strong track record of selling before disappointing events
• We expect management to rebase margin expectations lower over next 1-2 quarters.
Source: SEC.gov, Company Filings
Exchange Market Share
Source: 3D Advisors
Short Theme: Restaurants Update
21
Short Investment Thesis:
• Tax cuts created a temporary improvement in sales from casual dining restaurant stocks - who we believe have secular challenges
• Survey work suggests sales growth peaked in 3Q18
• Input cost pressure via wages building
• We expect sizeable negative estimate revisions
• Stocks we are short:• BJRI: up 78% YTD, valued at
30x earnings
• DIN: up 60% YTD, 7x levered
Source: Evercore ISI 10/19/2018Source: Company filings, Bloomberg as of 06/30/2018
Exchange Market Share
Source: Evercore ISI 10/19/18
Otter Creek Long/Short Opportunity FundCurrent Sector Exposure
22
Source: Company ReportsAs of 09/30/2018
Otter Creek Long/Short Opportunity FundValuation of Portfolio
23
Weighted Averages As of October 26, 2018 Market Cap As of September 30, 2018
P/E '18 2
Long Portfolio Mega (>= 100 billion) Short Portfolio Large (>= 10 billion & < 100 billion) S&P 500 Mid (>= 1 billion & < 10 billion)1 Market Cap is in millions of dollars Small (< 1 billion)2 P/E estimated based on non‐Generally Accepted Accounting Principles (GAAP) 2 Gross Exposures are Delta Adjusted
Source: Bloomberg
% of Net Assets % of Net Assets
KLX Inc KLX IncLeidos Holdings Inc Leidos Holdings IncFLIR Systems Inc Zimmer Biomet Holdings IncCDK Global Inc Aramark CorpAshland Inc Snap‐on IncBerkshire Hathaway Inc‐CL B FLIR Systems IncPotlatch Corporation Seacoast Banking Corp of FloridaNextEra Energy Partners LP Berkshire Hathaway Inc‐CL BKirby Corp Ashland IncSeacoast Banking Corp of Florida E‐Trade Financial Corp
Market Cap 1 Gross Exposure 2
5.7%93.1%
15.4x27.7x
5.6%4.8%4.3%
6.4%
$60,780$35,170
57.6%8.6%
Top 10 Securities As of June 30, 2018 Top 10 Securities As of September 30, 2018
16.3x
3.3%3.3%
6.6%6.4%5.0%4.5%‐4.2%4.1%3.8%3.6%3.5%3.4%
4.3%3.5%3.4%3.3%
Drawdown AnalysisS&P 500 Drawdowns of 3% Since Inception of OTTRX
24
Performance data quoted is past performance. Past performance does not guarantee future results. The investment and principal value of an investment willfluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The current performance may be lower or higher thanthe performance data quoted. Performance data current to the most recent month‐end may be obtained by calling (855) 681‐5261. Performance data quoteddoes not reflect the 1% redemption fee on shares held for 60 days or less. If reflected, total returns would be reduced.
Source: Company ReportsAs of 09/30/2018
Definitions
• Correlation is a statistical measure of how two securities move in relation to each other. The correlation coefficient (r) is a measure that determines the degree to which two variable's movements are associated. The coefficient of determination (r2) is a measure used in statistical model analysis to assess how well a model explains and predicts future outcomes.
• Delta is the ratio comparing the change in price of the underlying asset to the corresponding change in the price of a derivative.• Delta‐adjusted equity exposure is a representation of the portfolio's equity exposure which has been adjusted to take into account the combined effect of options and equity
positions.• The EPS Growth is the change from year to year in the earnings per share of the S&P 500.• P/E or Price‐to‐Earnings is a ratio derived by dividing the price of a stock by the earnings per share of the company.• Standard deviation is a measure of the dispersion of a set of data from its mean. • A basis point (BP) is 1/100 of a percentage point. The Largest Drawdown is the greatest percentage peak‐to‐trough decline (high point to low point over consecutive days) since
inception of the fund. • GDP reflects the Gross Domestic Product of a country. It is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. • Generally Accepted Accounting Principles (GAAP) are a common set of accounting standards and procedures which companies should use to compile their financial statements in
order to ensure consistency across different companies.• The Price to Sales Ratio (P/S) is calculated by dividing the company’s market capitalization by its total sales over a twelve month period.• The Book Value is the total value of a company which is calculated by taking the total assets minus the intangible assets (patents, goodwill, etc.) and liabilities. • The Market Capitalization (Market Cap) is the current market value of a company. It is derived by taking the outstanding shares times the current price.• FX and FOREX are acronyms that stand for Foreign Exchange. This is the idea of purchasing one currency by selling another.• Free cash flow is a measure of financial performance calculated as operating cash flow minus capital expenditures. • Capital expenditure, or CapEx, are funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. It is often used to
undertake new projects or investments by the firm.• Duration is a measure of the sensitivity in the value for a security whenever there is a change in interest rates. • Cash Flow is the net amount of cash and cash‐equivalents moving into and out of a business.• The Enterprise Multiple (EV/EBITDA) is a ratio used to determine the value of a company. It is calculated by taking the Enterprise Value and dividing it by EBITDA.• The Enterprise Value to Sales ratio (EV/sales) is a way to measure a company’s enterprise value versus its sales.• The Enterprise Value (EV) is a measure of a company’s value. It is calculated as market cap plus debt, minority interest and preferred shares, minus total cash and cash
equivalents.• EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation, and Amortization expenses. It is a measure used to analyze and compare profitability between companies
of different characteristics because it largely eliminates the effect of accounting and financing decisions.• Earnings growth is the annual rate of growth of earnings from investments.
25
Definitions
• The Standard and Poor's 500 Index (S&P 500) is a capitalization‐weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
• The Wilshire 5000 Index is a capitalization‐weighted index of over 5,000 securities. The index is designed to measure performance of all US equity securities with readily available price data.
• The Institute for Supply Management (ISM) Manufacturing Purchasing Managers’ Index is an index which is comprised of surveys from purchasing managers in the manufacturing sector. It can be used as an indicator of the economic health of the manufacturing sector.
• The Non‐Manufacturing ISM is a report produced by The Institute of Supply Management (ISM) for all sectors of the economy other than manufacturing. It can be used as an indicator of the overall economic condition for the non‐manufacturing sector.
• The Institute for Supply Management (ISM) Purchasing Managers’ Composite Index is an index which is comprised of surveys from purchasing managers across all sectors of the economy It can be used as an indicator of the economic health of the economy as a whole.
• NASDAQ is a global electronic marketplace for buying and selling securities as well as the benchmark index for U.S. technology stocks.• The NASDAQ Composite Index is a broad‐based capitalization‐weighted index of stocks in the NASDAQ marketplace.• The Federal Reserve Bank of New York (FRBNY) Underlying Inflation Gauge captures sustained movements in inflation from information contained in a broad set of price, real
activity and financial data. • The Goldman Sachs Discretionary Most Short Index is an index of the most shorted consumer discretionary stocks which is compiled from data at Goldman Sachs Prime
brokerage and New York Stock Exchange short interest data.• The EM10FX Spot Index is an index comprised of the 10 largest Emerging Market currencies as measured against the US Dollar.• The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) reflects a market estimate of future volatility based on the weighted average of the implied volatilities for a
wide range of strikes. The index is a widely used measure of market risk and is often referred to as the “investor fear gauge”.
26It is not possible to invest directly in an index
Legal Disclaimers
Otter Creek Advisors, LLC is the Advisor to the Otter Creek Long/Short Opportunity Fund which is distributed by Quasar Distributors, LLC.
The Fund's investment objectives, risks, charges, and expenses must be considered carefully before investing. The statutory and summary prospectuses contain this and other important information about the investment company, and may be obtained by calling 1‐855‐681‐5261 or visiting www.ottercreekfunds.com. Read carefully before investing.
Mutual fund investing involves risk; Principal loss is possible. The Fund is non‐diversified meaning it may concentrate its assets in fewer individual holdings than a diversified fund. Therefore, the Fund is more exposed to individual stock volatility than a diversified fund. Investments in debt securities typically decrease when interest rates rise. This risk is usually greater for longer‐term debt securities. Investments in lower‐rated and non‐rated securities present a greater risk of loss to principal and interest than higher rated securities. Investments in Asset‐Backed and Mortgage‐Backed securities include additional risks that investors should be aware of including credit risk, prepayment risk, possible illiquidity and default, as well as increased susceptibility to adverse economic developments. Investments in foreign securities involve political, economic, and currency risks, greater volatility, and differences in accounting methods. The Fund may use certain types of exchange traded funds or investment derivatives. Derivatives involve risks different from, and in certain cases, greater than the risks presented by more traditional investments. Derivatives may involve certain costs and risks such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. Investing in derivatives could lose more than the amount invested. ETF investments involve additional risks such as the market price trading at a discount to its net asset value, an active secondary trading market may not develop or be maintained, or trading may be halted by the exchange in which they trade, which may impact a fund's ability to sell its shares. Short sales of securities involves the risk that losses may exceed the original amount invested. Investments in Master Limited Partnerships (MLPs) which concentrate investments in the natural resource sector and are subject to the risks of energy prices and demand and the volatility of commodity investments. Damage to facilities and infrastructure of MLPs may significantly affect the value of an investment and may incur environmental costs and liabilities due to the nature of their business. MLPs are subject to significant regulation and may be adversely affected by changes in the regulatory environment. Investments in IPOs are subject to market and liquidity risks and such investments may have a magnified impact on the performance of the Fund. To qualify for treatment as a regulated investment company ("RIC") under the Internal Revenue Code ("Code"), the Fund must meet certain income source, asset diversification and annual distribution requirements. If, in any year, the Fund fails to qualify as a RIC for any reason, the Fund would be taxed as an ordinary corporation and would become (or remain) subject to corporate income tax. The resulting corporate taxes could substantially reduce the Fund's net assets, the amount of income available for distribution and the amount of the Fund's distributions.It is not possible to invest directly in an index.EPS Growth is not a measure of the Fund’s future performance
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