Ewing Morris Opportunities Fund LP An investment partnership managed by Ewing Morris & Co. Investment Partners Ltd. Investor Presentation December 2017 Ewing Morris & Co. Investment Partners Ltd. 1407 Yonge St., Suite 500 M4T 1Y7 Toronto ON www.ewingmorris.com 416.640.2791
Guiding Principle Our goal is to build an investment firm of which we would want to be clients. - John Ewing & Darcy Morris
Contents I. Ewing Morris Overview 4 II. Track Record 5 III. Ewing Morris Team 6 IV. Opportunities Fund Overview 8 V. Current Investment Opportunity 15 VI. Appendix 22 VII. Contact Us 25 VIII. Disclaimer 26
Ewing Morris Overview Who We Are Value-driven Canadian boutique investment firm established in 2011 $273 million of assets under management 6 investment professionals Ewing Morris Opportunities Fund LP (the Fund ) 10.4% annualized net return to limited partners since inception (1) 70% average net exposure indicating conservative approach Long /short equity strategy with global flexibility Strategy Overview Preservation and growth of capital through superior security selection Concentrated portfolio focused on inefficient markets Primarily North-American based small capitalization companies Target 10-15% IRR over the long term (1) As of November, 30 2017. Fund inception was September 9, 2011. Past returns are not indicative of future performance. Please note, all AUM and returns are estimates until NAV is finalized. 4
Track Record Ewing Morris Opportunities Fund LP cumulative return on $1,000,000 Ewing Morris Opportunities Fund LP $2,000,000 $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $1,850,898 Nov-11 May-12 Nov-12 May-13 Nov-13 May-14 Nov-14 May-15 Nov-15 May-16 Nov-16 May-17 Nov-17 Cumulative Annualized 2011 (2) 2012 2013 2014 2015 2016 2017 (3) Since Inception Since Inception Ewing Morris Opps Fund LP (1) 6.3% 11.5% 16.2% -1.7% 8.3% 18.9% 6.2% 85.1% 10.4% (1) Fund returns are net of all fees and expenses. Past returns are not indicative of future performance. (2) Fund inception was September 9, 2011. (3) As of November 30, 2017. 5
Ewing Morris Team Experienced team with strong Advisory Board and governance structure John Ewing, CFA Co-President & Chief Investment Officer Portfolio Management & Research Team Anthony Hammill, CFA Co-Portfolio Manager Darcy Morris Co-President & Chief Executive Officer Randy Steuart, CFA Portfolio Manager Client Service Team Jenna Gillies, CFA Investor Relationships Matt Irwin, MBA Chief Financial & Operating Officer Operations & Compliance Perry Schultz Operations Advisory Board Martin Connell Linda Haynes Rosamond Ivey John MacIntyre David Peterson Harry Rosen Bill Stedman David Wilson Lee Matheson, CFA Co-Portfolio Manager Alex Ryzhikov, CFA Portfolio Manager Amy Zaghloul Investor Relationships Jill Hamblin Office Manager 6
Portfolio Manager Chief Investment Officer and Opportunities Fund Portfolio Manager Co-founded Ewing Morris & Co. Investment Partners in June 2011 Former V.P. and Director of Research at Burgundy Asset Management John Ewing, CFA Honours BSc(Eng), University of Guelph, 2005: Minor in Business Administration President s Trophy as Guelph s top student-athlete in 2005 7
Opportunities Fund Overview 8
Structural Advantages Three advantages provide an edge in achieving above-average returns Fund Size Ability to quickly establish a desired position size Smaller companies ignored by larger funds entirely Size hinders investment returns in less liquid asset classes Flexibility Flexibility to seek opportunities where they arise Best ideas are concentrated in one portfolio Focused on one Fund rather than on asset gathering Focus Private-equity approach to public company investing Concentrated portfolio of carefully-selected businesses & management Long-term investment orientation 9
Size Advantage Focused on overlooked and undervalued small capitalization companies The median market capitalization of the Opportunities Fund is $414 million Median Market Capitalization $21.7bn $3.3bn $414 Opportunities Fund S&P/TSX S&P 500 Source: CapIQ, December 2017. 10
Flexibility Advantage Unconstrained from traditionally rigid and inflexible investment mandates Market Capitalization Breakdown (1) Capital Structure Breakdown (1) Geographic Breakdown (1) <$300mm 29% $300mm-$2bn 38% Credit Securities 12% Canada 63% U.S. 32% Int'l 5% >$2bn 33% Equity Securities 88% (1) In terms of portfolio AUM. Source: CapIQ, December 2017. 11
Focus Advantage Meaningful holdings in highest conviction investments The Top 10 investments account for 78% of the portfolio Top 10 Investments 78% 34% 22% Opportunities Fund S&P/TSX S&P 500 Source: CapIQ, December 2017. 12
Investment Strategy Unique "Playbook" investment strategy used to classify each investment and help maintain a disciplined investment approach Great Businesses = Good Economics Great Capital Allocators = People Broken Businesses = Poor Economics Cheap Assets = Price Note: Please refer to the Playbook case studies for examples on each investment play. 13
Investment Diversification Diversified portfolio across investment play and commonwealth regions KEY As of March 2016. 14
Current Investment Opportunity 15
Current Opportunity Positioned for a strong 2017 High conviction portfolio >50% of portfolio in Cheap Assets with catalysts 16
High Conviction Portfolio Top 10 investments account for 78% of portfolio Investment Play Sector Weight Valuation Metric Catalyst Great Capital Allocator Internet Services 16% 10x run-rate EBITA Short-term headline risk Cheap Asset Energy (Net) (1) 15% Various discounts to NAV Oil price rebound Cheap Asset US Housing-Related (2) 8% Various discounts to 15-yr avg OSB price Housing starts reversion to mean Cheap Asset Convertible Debentures 8% 12.5% yield to maturity Asset sales Cheap Asset Industrial Manufacturing 7% 12x EBIT Repositioned as dividend growth Great Business Technology (Hardware) 5% 14x EBIT Successful product launch Cheap Asset Industrials 5% 9x EBITDA Meaningful capital deployment Great Business Retirement Villages (3) 5% < 1.5x adjusted book value Demographic tailwind Great Capital Allocator Multi-Res Apartments 4% 10% discount to NAV Aggressive stock buyback Cheap Asset Asset Management 4% 0.9x book value Dividend increase Examples are not representative of entire portfolio. As of November 30, 2017. (1) Nine energy-related long investments. (2) Two US housing-related investments. (3) Two retirement village investments. 17
>50% of Portfolio in Cheap Assets Success related to company-specific catalyst, rather than general market Normally 3-5 year investment horizon Visibility on catalysts in 6-18 months Catalysts include problem resolution, stock buybacks, balance sheet restructurings, acquisitions, board nominations, or private equity buyouts 18
Cheap Asset Example Webtech Wireless Catalyst: Problem Disappears Realized Investment Summary Target Weight: 2% Investment Type: Cheap Asset Time Horizon: 20 mos (Feb 2014 Oct 2015) Market Cap (1) : $46mm Stock Return (2) : 22% (Share Price) $3.00 $2.50 $2.00 $1.50 Lawsuit Cleared +40% $1.00 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Investment Overview Leading North American software business Selling cheaply in February 2014 1.3x recurring revenue vs. comparables of 2x Valuation suggested +30% from current price Several purchasers lined-up with Board support What could have gone wrong? Customer concentration risk Brazilian customer lawsuit dispute ~$50mm Investment Highlights Subject to customer lawsuit for $50mm in damages 2x market value of company ($25mm EV) Likely to scare off potential investors Thesis that lawsuit was without merit May 2015 lawsuit was cleared Stock price increased +40% in one day Example is not representative of entire portfolio. Past returns are not indicative of future performance. (1) As of purchase date; February 2014. (2) Cumulative return, purchase date to sale date. 19
Cheap Asset Example Medworxx Catalyst: Acquisition Realized Investment Summary Target Weight: 5% Investment Type: Cheap Asset Time Horizon: >3 yrs (May 2012 Oct 2015) Market Cap (1) : $9mm Return (2) : 88% (Share Price) $0.70 $0.60 $0.50 $0.40 $0.30 Entry Acquisition Announcements +77% $0.20 Mar-12 Nov-12 Jul-13 Mar-14 Nov-14 Jul-15 Investment Overview Toronto-based niche patient flow software firm Selling cheaply in early 2012 2x recurring revenue vs. comparables of 2-6x Management plan to expand and sell in 5 years What could have gone wrong? Failed international expansion Platform shift to mobile Larger company bundled solution Investment Highlights Expectation of revenue growth & limited downside By 2015 had successfully expanded internationally Landed clients in the U.K, U.S., Australia, France Ewing Morris and another large shareholder suggested they consider strategic alternatives (sale) Resulted in company s sale in October 2015 Example is not representative of entire portfolio. Past returns are not indicative of future performance. (1) As of purchase date; May 2012. (2) Cumulative return, purchase date to sale date. 20
Cheap Asset Example ZCL Composites Inc. Investment Summary Weight: 7% Investment Type: Time Horizon: Market Cap (1) : Investment Overview Cheap Asset September 2015 - Current $343mm Manufacturer of fiberglass tanks 70% of revenue from petroleum end market Replacement demand triggered by insurance Sustainable competitive advantage in North America Uneconomical to ship tanks from abroad Duopoly in North America Exclusive coverage of Canada and Midwest High returns on tangible capital (23% 10-yr avg) Significant pricing power; tanks are small portion of customers cost with high cost-of-failure Other business segments were dragging profits, divestments announced (Share Price) $17.00 $15.00 $13.00 $11.00 $9.00 $7.00 $5.00 Oct-15 Nov-16 Dec-17 Investment Highlights Increased position Entry 10% weight 5% weight Stable demand and attractive valuation $0.50 special dividend in March 2016 Regular dividend increased 60% from $0.05 to $0.08 Darcy Morris elected to the Board in May 2016 Example is not representative of entire portfolio. (1) CapIQ, December 2017 21
Appendix 22
Returns Overview Canadian equities, excluding resources, is a very inefficient equity market S&P 500 S&P/TSX S&P/TSX Small Cap Fund Cumulative Returns 162.0% 56.2% 13.6% 85.1% Cumulative Annualized 16.7% 7.4% 2.1% 10.4% 2017 (YTD) 20.5% 7.8% -0.4% 6.2% 2016 12.0% 21.1% 38.5% 18.9% % Canada 0% 100% 100% 63% Median Market Cap $21.7bn $3.3bn $583mm $414mm Average Net Exposure 100% 100% 100% 70% Source: CapIQ. The Fund has a flexible investment mandate. Therefore the Fund s composition is materially different than major indices. We have listed the above indices as they are representative of widely known and followed investment alternatives. As of November 30, 2017. Cumulative returns since Fund inception, September 9, 2011. 23
Summary of Key Terms Alignment of interests Fees Perpetual High Water Mark Lockup provision Liquidity Reporting Custodian/Prime Broker Legal Auditors Fund Administrator 100% of John Ewing and Darcy Morris investable assets are invested in the Fund Class A: 1.50% annual fee + profit allocation (1), 15-day redemption notice period Class MT: 1.25% annual fee + profit allocation (1), 12-month redemption notice period Class LT: 1.00% annual fee + profit allocation (1), 24-month redemption notice period If an investor suffers a loss, the 20% profit allocation does not start accruing until after the previous losses have been recouped + 4% hurdle rate None Monthly (2% early redemption fee payable to LP) Monthly investment statements and pricing Quarterly commentary Annual Limited Partners Meeting TD Securities Borden Ladner Gervais LLP PricewaterhouseCoopers LLP Commonwealth Fund Services (1) 20% of profits over a 4% hurdle rate. 24
Contact Us Darcy Morris Co-President darcymorris@ewingmorris.com 416.640.2791 John Ewing Portfolio Manager johnewing@ewingmorris.com 416.640.2792 Jenna Gillies Investor Relationships jennagillies@ewingmorris.com 416.548.5615 25
Disclaimer This document does not constitute an offer to sell units of the Ewing Morris Opportunities Fund LP. Units of the Ewing Morris Opportunities Fund LP are only available to investors who meet investor suitability and sophistication requirements. 26