1. Introduction

2.  The fund measures its success based on the absolute level of
profitability and not “relative” performance vs. the market
 Invests both long and short to capture profits in both rising
and falling markets
 Low volatility/beta (currently @ .14)
 Low correlation to the broad market

3. Global Macro Strategy
 Ability
to trade multiple instruments in asset classes around
the world at any time
 Employs proven indicators of Point & Figure Charting and
Relative Strength
 Employs objective technical analysis in conjunction with
fundamental research
 Our strategy works because we limit risk and adhere to
a clear trading plan

4. Cash US Stocks Fixed Income
Int’l Stocks Currencies Commodities

5. 1. Not lose money
2. 15 + percent annual returns over the next decade
3. Continuous improvement by analyzing mistakes
4. Gain partners who share our philosophy of
uncompromising risk management & enjoy experience

6. Active trading around core investments
 Defines & limits downside risk by investing in uncorrelated pure alpha streams
("Alpha" in investing language is the return you achieve based on manager skill)
 Invests in a core positions ranging from foreign bonds to currencies to
commodities to global stocks
 Invests in subsidiary holdings at the periphery of the core to enhance returns
 Executes this dual complex strategy by constantly analyzing fifteen or more asset
classes and simultaneously placing 30 or more trades
 Invests in only the most liquid markets that it can get out of quickly if necessary
 Portfolio construction process identifies what each position could add in terms of
overall risk to the portfolio

7. Technical
Market
Analysis
Growth Value
Stock Stock
Screens Screens
CORE
POSITIONS
Event-driven Special
trades/Straddles Situations/Niche
Products/
Chart Pattern Emerging
Recognition companies
Hedges
(portfolio
protection)

8. The “buy-and-hold” myth:
 Buy the “Market” in 1929…
 It took 25 years to get back to even
 Buy it in 1973…
 It took 7.6 years to get back to even
 Starting in 1987 IBM went down 74%...
 It took 10 years to recover
 Cisco Systems (CSCO) was as high as $82 in 2000…
It has yet to recover

9. Market and sector forces together typically
cause 80% of the price movement in a
Market stock. That means the company
fundamentals usually account for less
than 20% of a stock’s price movement.
This is the reason a company’s stock
price sometimes seems to move
Sector
Stock
independently of the fundamentals.
Source: “The Latent Statistical Structure of Securities Price Changes”
Benjamin F. King

10. Most people, however, spend 80% of
their time on stock evaluation and only
Stock
20% on sector and market evaluation.
In other words, they ignore where the
greatest amount of risk lies – the
market and sector forces.
Market
Source: “The Latent Statistical Structure of Securities Price Changes”
Benjamin F. King
Sector

11. What is Fundamental Analysis? What is Technical Analysis?
1. What to Buy 1. When to Buy
2. Company Management 2. Positive Trends
3. Earnings Growth 3. Relative Strength
4. Price/Earnings Value 4. Broad Market Risk
5. New Products 5. When to Sell

12. GROWTH SCREEN
The Investors Business Daily (IBD) 85-85 Index Screen
IBD provides independent data ratings for every U.S. stock, including an Earnings Per Share (EPS) Rating and
a Relative Strength (RS) Rating.
Their research shows that in every market over the last 50 years, the best stocks have had EPS and RS Ratings
of 85 or better BEFORE they made their biggest gains.
The consistently superior performance of the IBD 85-85 Index reinforces this fact and is why we incorporate
this screen as one of our primary tools:
From the total period 11/13/2000 to 2/28/2013, the IBD 85-85 returned 274%,
while the S&P 500 Index returned 12%
Note: IBD's ratings are relative, with an 85 rating meaning the stock is outperforming 85% of all stocks in it's
peer group. The Index is updated after the market close each Thursday. At that time, stocks no longer
meeting the 85-85 criteria are removed, stocks now meeting the criteria are added, and those maintaining
their ratings remain in the Index.

13. VALUE SCREEN
The Buffett/Graham Screen
This screen identifies companies with high quality business at undervalued prices
1. Stock price is less than the net current asset value of the company
2. During the past 12 months, the company generated positive operating cash flow
3. The company has no meaningful debt compared to its cash position
From back testing study 1998-2012, this group had an annual gain of 20%
while the S&P 500 index averaged 2% a year.

14.  Fundamental research tells us what ought to happen with a stock, while technical
analysis tells us what is happening with respect to supply and demand
 Technical analysis, and in particular “Point & Figure” technical analysis, gives us
the discipline to make decisions based on price
 This logical approach helps reduce uncertainty in the market. It allows us to
recognize market risk and therefore:
 Move to cash/short assets when market indicators dictate that supply is in control
 Invest long and more aggressively when demand is in control
 The ability to perceive and manage risk, and thereby preserve our investors’
capital, is our primary objective at Winchester Bluff

15.  We all understand the basic
forces of supply & demand
 The same forces that affect
prices in the supermarket also
affect prices in the stock market
 Stocks, sectors, and asset
classes move in and out of
favor just like produce at
the supermarket

16. Point & Figure Basics
Prices represented by X’s and O’s
Alternate columns of X’s and O’s
as the price changes
X’s = Price is rising
O’s = Price is falling
Trend-line shows strength or weakness
Chart Source: www.dorseywright.com

17. 23 X <- Demand
22 X X X X X wins
21 X O X O X O X O X
20 X X O X O X O X O X
X O X O O X O X O
19 X O X O X O
X O X O
18 X O Notice that supply and demand
X battled it out for a full year
17 X until demand won at $23
0 <- Year 0
0 1

20. 45 O
O X X
O X O X O X X
O X O X O X O X O
O X O O X O X O
40 O X O X O O
O O O
B S
X X X
X O X O X X
35 X O X X O X O X
X O X O X O X O X
X O X O X O O
X O O
X
30
Stock A Stock B

21. Now that you understand
Point & Figure charting
basics, we can move on to
our most important
indicator, the NYSE
Bullish Percent.

22.  Our Primary Market Indicator
 Tells us whether to have the offense or defense on the field
 It is calculated by taking the number of stocks in the NYSE
on a buy signal, and dividing by the total number of stocks
in the NYSE, resulting in a percentage
 For example, if there were only 1,000 stocks on the NYSE
and 500 were on buy signals, the resulting NYSE Bullish
Percent would be 50%, which is then plotted on a Point &
Figure chart.

23. • X’s = Offense – Wealth Accumulation
• O’s = Defense – Wealth Preservation
• Two Important Areas: 30% and 70%
• Measures Risk in the Market
• Does not have to move in tandem with
the S&P 500 or the Dow Jones.

24.  One of the most important considerations when
investing is determining whether to take an offensive
or defensive posture
 When offense is suggested we employ the fund's assets
by making stock purchases
 When defense is suggested we work to protect existing
positions and take advantage of shorting ideas

25.  Buy Exchange Traded Funds (ETFs)
 Buy stocks on breakouts
 Buy leaders
 Consider deep value plays
 Employ liberal stop loss points
 Buy Offensive sectors (BP & X’s)
 Focus on strong technical stocks
 Buy on pullbacks
 Use trend-line stops
 Focus on strong relative strength
 Buy Call Options

26.  Trim or take profits
 Short equities
 Reduce equity exposure
 Raise cash
 Sell weak RS stocks
 Buy Inverse funds
 Buy protective puts
 Tighten stops on long positions
 Increase non-correlated exposure

27. How our process helps us
invest with discipline

28. Over the past 30 years:
The average stock mutual fund has returned 10.7%
The average investor has returned only 3.7%
The difference can be attributed to investors making
emotional decisions
For Example…

29. DECISION INPUT
 WB Process
 Decisions are clear-cut
 Emotion-based Investing
 Input comes from many sources and leads to second-guessing
AT DECISION TIME
 WB Process
 Portfolio construction based on a set of rules
 Emotion-based Investing
 There are no rules

30. COMFORT LEVEL
 WB Process
 Investments are easily reevaluated as indicators change
 Emotion-based Investing
 Decisions put off due to difficulty
EMOTIONS
 WB Process
 Emotions are not a part of decision-making
 Emotion-based Investing
 Emotions cause errors that can have disastrous effect

31. REACTING TO NEWS/MEDIA
 WB Process
 No effect - we stick to an organized plan.
 Emotion-based Investing
 The news causes most investors to panic
PEACE OF MIND
 WB Process
 A lot
 Emotion-based Investing
 None

32. Independent
Statistics Fundamental
Web-Based Research
Technology Asset
85-85 Evaluation
Screen Asset
Value Inventory
Screen
Investment
Market Decision
Risk Technical
Sector Research
Risk Portfolio Risk
Analysis
Relative
Strength Trend
Chart Lines
Patterns

33. Stock: Date:
Sector:
Positive (Y) Negative (N) Comments
Market BP
Sector BP
Value Screen
Growth Screen
Trend
Pattern
Consistent with current DALI
Favored Sector
Technical Attributes
Stop Loss %
Sell Analysis:
1/3 when up 30%
1/3 when up 50%
When broke trend line
When Relative Strength changed
When dropped back to first 1/3 sell
When nothing happening 1+ month
How did stock perform after sale

34. 10-year average annual
return goal: 15%
Investment Process
& $100M AUM
Risk management
Fund launch

35. Private Limited
Fund Subscription
Placement Partnership
Summary Agreement
Memorandum Agreement

36. What is most important is seeing that your money manager
has a coherent process. PROCESS is the key.
Does the concept make sense? Is it robust? Is the organization
committed to its discipline? Is risk managed during the
inevitable downturns?
Over long stretches of time, having a strong process and good
discipline makes all the difference.
Identifying good managers is a tough decision. Of course, we
hope that your choice of a manager will be Winchester Bluff.
The path to good returns is simple: find a manager whose
process you are comfortable with and hang on through thick
and thin.