Element Global Opportunities Equity Portfolio

April 2012

The Element Global Opportunities Equity Portfolio has the mandate to go anywhere in pursuit of attractive investment opportunities, using a bottom-up investment approach. Being equity focused, the portfolio has at least 70% of its assets invested in international equity markets. The portfolio uses as benchmark the MSCI World (Local) but it does not seek to mimic or track this index in any way, which may lead both geographic and sectorial allocation differences.

Portfolio Details
Net Asset Value : Portfolio Assets (): Launch date: Portfolio Managers: 99.19 67100 14-January-2011 Filipe Alves da Silva, CAIA Afonso Janurio

Investment Highlights
As we are writing this report, the results of the elections in Greece and France are known, bringing, yet again, more uncertainty to the European Situation. So far we have not allocated a significant part of our portfolio to Europe, but specific companies are starting to look interesting. We would not be surprised to have a higher allocation to Europe one or two years from now. Warren Buffett is someone who we hold in very high regard. We have studied his annual reports, read several books about him and his investment style and when he speaks we are all ears. We have learned, and continue to learn, much from him. During the month we bought shares in the company he manages, Berkshire Hathaway (BRK). Today BRK does not resemble the Company Buffett bought into during the 60s, it has become a conglomerate of carefully selected, wholly owned, businesses and an investment portfolio, with 15 equity stakes valued at more than $1.5bn each. BRK currently holds $162 billion in publicly traded companies (Coca-Cola, IBM, etc.) and cash & equivalents, and is generating about $17bn in operating income from its wholly owned businesses. To value BRK we combined the stakes in the publicly traded companies plus the cash & equivalents and assigned a 10 multiple on the operating earnings (roughly a 14 PE after tax multiple) arriving at price of $118 per Class B share, a 49% upside from our purchase price. On top of this, earnings should grow at least at a 6% to 8% rate. Late last year, Buffett authorized a share repurchase program, allowing him to buy back shares if they trade below 1.1 times book value (around $73 per share or 7% below our purchase price), which puts a floor on the stock. During the past decade BRK traded at an average of 1.5 times book value multiple. In our view the market is mispricing the stock for 2 main reasons: 1) BRK is now too big and the $1bn in cash that is pouring into Omaha every month will be hard to allocate at an acceptable rate of return; 2) Buffet, now 81, will not be running BRK forever, and has not disclosed his successor. We understand these concerns but, 1) BRK has shown it has no problem in doing big acquisitions (example of Burlington Northern, valued at $34 bn), and 2) Buffett is healthy and should continue running the Company for 5 to 7 yrs and do you really think this man, who is regarded as one of the most brilliant minds of our time, and who has nurtured BRK for the past 40 yrs will really screw up on the most important decision of all. Even so, we doubt the mispricing will correct in the short-term, but, as you know, time and patience are something we have plenty of.
30-Apr

Investment Guidelines
Max. Long Exposure: Min. Long Exposure: Equity Hedging: 130% 70% May use options on single name equities or equity indices to hedge downside risk Hedged on a best effort basis

Currency Hedging:

Weekly Performance Chart

106 103 100 97
94 91 88 85 Portfolio

MSCI World Local

This month we increased our exposure to Telefnica (TEF). During the month we sold a Put option* on TEF, with maturity of June 2013 and a strike price of 11 sdfsf We were paid a premium of 2 (or 18.2%) for selling this protection. In June 2013 one of two things will happen: 1) TEFs stock price is below the strike price, in which case we will have to buy the shares at 11, or 2) TEFs stock price is above the strike price, and we walk away with a 2 gain. Worst case scenario we will be long shares of TEF at 9 (11 strike minus 2 of premium we received), meaning, we will only lose money if, at maturity, the shares are trading below 9. At 9 or below we are very confortable increasing our position in TEF.
8-Apr 30-Jun 16-Sep 2-Dec 17-Feb

82 14-Jan

The portfolio outperformed the MSCI World by +0.91% this month.

Monthly Performance
Jan 2011 2012 -1,11% 7,06% Feb 1,61% 5,19% Mar -2,05% 1,62% Apr 3,30% -0,86% May -1,25% Jun -1,72% Jul -1,37% Aug -7,23% Sep -7,20% Oct 8,70% Nov -2,83% Dec YTD -1,18% -12,57% 13,45%

* - Put option definition in Glossary (next page).

Element Global Opportunities Equity Portfolio

Allocation by Sector
Cash Utilities Telecommunication Services 1,0% 5,1% 5,3% 2,9%

Allocation by Country
Cash Others Brazil China Netherlands Italy Sweden Spain Switzerland Germany Australia France Canada United Kingdom Japan United States 0% 2,9% 8,6% 1,5% 8,6% 0,3% 0,3% 0,3% 7,4% 1,0% 5,1% 1,1% 2,1% 5,1% 3,1% 2,6% 49,9% 10% 20% 30% 40% 50% 60%

Materials
Health Care Consumer Staples Consumer Discretionary Energy Industrials Information Technology Financials 0% 5% 3,1% 3,1%

7,3% 13,8%
19,6%

27,8% 10,8% 10% 15% 20% 25% 30%

Top 10 Positions
i Sha res MSCI Worl d ETF Hedged Fi del i ty Chi na Speci a l Si tua ti ons Mi cros oft Corpora ti on IBM Appl e Inc Peps i Co BMW Teva Pha rma ceuti ca l s Ama deus IT Hol di ngs Archer Da ni el s Mi dl a nds

Weight
26,5% 8,0% 6,4% 5,8% 5,7% 4,6% 4,1% 4,0% 3,7% 3,3%
100%
81,0%

Currency Exposure

80%
60% 40%

20%
8,6% 2,4%

1,5%

3,6%

Total

72,2%

0% EUR USD CNY BRL CAD

0,4%

2,3%

GBP

UAH

Glossary
Put Option An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security (in this case 100 shares of Telefnica) at a specified price (strike) on a specified date (maturity). Because we sold the put option, we are taking the other side of the trade, meaning that we will be the ones buying the security the buyer of the option sells us. For this we received a payment, called the premium. Bottom-up Investing A bottom-up strategy overlooks broad sector and economic conditions and instead focuses on selecting a stock based on the individual attributes of a company. Advocates of the bottom-up approach simply seek strong companies with good prospects, regardless of industry or macroeconomic factors. Net Asset Value The total value of a companys assets less the total value of its liabilities is its net asset value (NAV). For valuation purposes it is common to divide net assets by the number of shares in issue to give the net assets per share, also known as the price per share. Long Exposure Percentage of the Portfolios assets that are invested in equity markets and that benefit from the appreciation of equity markets. Currency Hedging Transaction implemented to protect the Portfolios foreign currency positions (non-Euro) from an unwanted move in exchange rates. Top 10 Positions Top holdings are those securities in which the latest percentage of the Portfolios total assets are invested. They do not include hedging derivatives. A full list of holdings, including derivatives, is available upon request.
E L E M E N T C A P I T A L

Contacts
For more information please contact Afonso Janurio or Filipe Alves da Silva directly or send an email to element.cap@gmail.com
recommendation to buy or sell these securities.
LONDON GENEVA

Disclaimer: Past performance is not indicative of future performance. Reference in this document to specific securities should not be construed as a

Element Global Opportunities Equity Portfolio

Complete List of Holdings

Name
iShares MSCI World ETF Hedged Fidelity China Special Situations Microsoft Corporation IBM Apple Inc PepsiCo BMW Teva Pharmaceuticals Amadeus IT Holdings Archer Daniels Midlands GAP Inc Telefnica Avangard Corning Inc Berkshire Hathaway Jakks Pacific Energold Drilling MRV Engenharia BlackRock OPAP IMAX Corporation Monument Mining Renault Telefonica 11 PUT 06/2013 Cninsure Premier Exhibitions Ted Baker Addvantage Technologies La Seda de Barcelona Cash

Weight
26,5% 8,0% 6,4% 5,8% 5,7% 4,6% 4,1% 4,0% 3,7% 3,3% 3,1% 2,4% 2,3% 2,0% 2,0% 1,8% 1,6% 1,5% 1,2% 1,2% 1,0% 1,0% 1,0% 0,8% 0,6% 0,5% 0,4% 0,3% 0,2% 2,9% 100,0%

Total

Disclaimer: Past performance is not indicative of future performance. Reference in this document to specific securities should not be construed as a
recommendation to buy or sell these securities.