March 7th, 2018

Dear Investor,

February was a positive month for the Fund +0.37%. The Fund is +1.92YTD and has a
NAV of 178.32

The Fund is up +78.32% since inception December 2006 or annualized +5.3% net of all
fees with an average net exposure close to zero.

February Performance
1.0%

0.5%

0.0%

-0.5%

-1.0%

-1.5%

-2.0%

-2.5%

Long Short

Note: this graph shows all positions individually while in our top 3 discussion we net the pair trades, spin-offs, etc. and therefore only discuss
which trades were most relevant during month.

The markets moved lower and became very volatile after a long period of ascend in
tranquillity. For the Fund overall the month was relatively uneventful. Despite our overall
positive performance, we had unfortunately two individual positions (Interserve and
FirstGroup), that hurt our performance by around 3% point this month. We explain in the
next section why we still own these and are excited about these positions.

Farringdon Capital Management

Teniersstraat 2, 1071DX Amsterdam, The Netherlands
Tel: +31 (0) 20 76 30 830, Fax: +31(0) 20 76 30 836
Email: info@farringdoncap.com, Website: www.farringdoncap.com
What Worked:

Altria (Short) was the best performing position for the month. The producer of Marlboro
cigarettes in the US declined 11% for the month. The company reported figures at the
beginning of the month, which showed a 9% volume decline of Marlboro cigarettes for Q4
and 5% for the year. In 2017, the volume decline was not wholly offset by price increases
as gross sales declined year-over-year. Furthermore, what we find interesting is that
Marlboro has lost market share for the second consecutive year, which could be because
of the ever increasing Marlboro prices. Overall, the company was able to grow earnings
because of lower tax rate, higher prices and better margins. The company trades at 16x
2018 earnings. The company believes they will continue to be able to offset further
volume declines with price increases. We think that the acceleration in volume declines
could be proof that the price inelasticity is starting to weaken at these levels. Our
investment case is laid out in our February 2014 newsletter, where we made the point
that a strategy of raising prices to offset volume declines is finite if volumes continue to
shrink because cigarettes will become prohibitively expensive. Perhaps for the first time
we are now starting to see that raising prices is becoming less effective in lifting
revenues.

Amplifon (Short) was the second best performing position. The hearing aid retailer
declined 9% without any noteworthy news being released in February. The decline can, in
our opinion, be attributed to the weaker stock market performance in February and the
very high starting valuation of the company at 28x 2018 earnings. Please see our October
2017 newsletter for the full investment case.

Binckbank (Long) was the third best performing position of the month. The Dutch online
broker released its full year figures, which weren’t very exciting. However higher volatility
and the prospect of higher interest rates does benefit an online broker. We believe this to
be the reason for the double-digit performance of Binck in February.

What Didn’t Work:

Interserve (Long) was the worst position of the month. The international support services
and construction group has frequently featured in our “what didn’t work” section over the
last six months. The stock has lately been extremely volatile, and continued that pattern in
February declining 48%. At the end of January, Capita, a peer, had a profit warning and
announced a significant rights issue. This, coupled with the bankruptcy of Carillion, has
heightened fears that Interserve may have to do a very dilutive equity raising themselves.
The current market cap is GBP88m, hence a potential equity raising will have to be
extremely dilutive to have any meaningful impact of reducing the GBP600m of debt and
provisions. It is worth highlighting that Interserve’s issues are in the Waste-to-Energy
construction contracts, where the company has already taken significant provisions. Other
segments include support services and equipment services, which generate around
GBP150m of EBIT. If the company can refinance its existing liabilities, even at extreme
interest rate levels to provide it more time for further clarity regarding the Waste-to-Energy
contracts, then we deem the upside to be extremely large. This month, news was
Farringdon Capital Management
Teniersstraat 2, 1071DX Amsterdam, The Netherlands
Tel: +31 (0) 20 76 30 830, Fax: +31(0) 20 76 30 836
Email: info@farringdoncap.com, Website: www.farringdoncap.com
released that Emerald Investment Partners has bought a third of the borrowings and
supports a refinancing. If this is indeed true, then we expect a significant re-rating of the
equity, however the risk remains very high.

FirstGroup (Long) was the second worst position of the month. The UK/US bus/rail
provider had a trading update in which it stated that the expected profits would be “slightly
reduced” but that there is no change to the expected cash generation. We are very
surprised that the stock declined 21% on roughly <5% earnings revisions, especially
because the starting multiple of less than 6x earnings is already extremely low. We deem
FirstGroup to be one of the most attractively valued longs that we currently have in the
portfolio and think that it will rerate significantly as it refinances its existing 8+% yielding
debt for less than 4%. FirstGroup trades at 0.5x book, whilst Student Transportation, a
Canadian Peer, trades at nearly 6x book.

We were short Student Transportation as we found the premium to book value and the
31x earnings extreme for a company that generates returns around its cost of capital.
Student Transportation has optically always had a very attractive dividend yield, which
has attracted a lot of non-institutional investors. However, this dividend was funded first
by equity issuances (shares outstanding increased from 56m in 2010 to 96m in 2015) and
later by raising debt (CAD200mn in 2015 to CAD350mn today). At some point this
alchemy would have to come to an end – unfortunately for us, it did in the form of it being
acquired by CDPQ, a public and parapublic pension and insurance manager from
Canada. We think the workers and the pensioners got a very bad deal here and we are
being forced to lock in a permanent loss. It did not make it in the bottom 3 as the position
was only small but we thought it was worth mentioning as we presented this as a pair
trade with FirstGroup at the Ira Sohn conference in London and subsequently in our
newsletter from November 2015.

BAM (Long) was the third worst performing position. The Dutch construction company
released its full 2017 figures, which illustrated the difficulty BAM has in reaching its 2-4%
margin target. The guidance for 2018 is that, at best, the margin would again be around
the 2% level. Despite the operational difficulties, which are likely to persist in this difficult
industry, we find the valuation of 9x 2018 earnings for a company with a net cash balance
sheet to be too cheap. Please see our June 2015 newsletter for the full investment case.

Farringdon Capital Management

Teniersstraat 2, 1071DX Amsterdam, The Netherlands
Tel: +31 (0) 20 76 30 830, Fax: +31(0) 20 76 30 836
Email: info@farringdoncap.com, Website: www.farringdoncap.com
SHORT Canada Goose (CAD41.3, Market Cap 4.45bn)

Canada Goose is the designer and manufacturer of luxury outerwear apparel. The
namesake jacket company IPO’d in March 2017 at CAD17 and has since increased by
nearly 150%. We think the valuation has become too lofty as we will describe in the
following.

Canada Goose jackets have been around for over sixty years, but in recent years it has
gained more traction as illustrated by a more than doubling of their sales in the last three
years. Their most famous line of jackets are called ‘Parkas’ which retail between
USD1,000-1,500 and is marketed to withstand very cold conditions. More recently, the
company has expanded its offering to jackets suitable for spring/fall time as well as
adding knitwear, however, these still constitute a small part of the overall sales. Given the
product profile, it is not surprising that their target market is primarily cold Northern
Hemisphere countries.

Canada represents 38% of Canada Goose’s sales and is thereby their largest market.
The way the company and analysts talk about the future of the company is that the
success achieved in Canada can essentially be rolled out in many other countries and
that the company can extend its products beyond winter jackets. These two avenues of
growth should provide a long runway to grow the company.

The growth in the last three years has quite steadily been around 35%, and it is likely that
the company will still see strong growth in the intermediate future. The following chart
shows that in some large markets the google search terms for Canada Goose are topping
each last winter as a sign of the growing popularity of the brand.

100

80

60

40

20

0
3/10/2013 3/10/2014 3/10/2015 3/10/2016 3/10/2017
USA Japan UK

Farringdon Capital Management

Teniersstraat 2, 1071DX Amsterdam, The Netherlands
Tel: +31 (0) 20 76 30 830, Fax: +31(0) 20 76 30 836
Email: info@farringdoncap.com, Website: www.farringdoncap.com
However, our casual observation from our own not terribly important, nor fashion forward
country, the Netherlands is that these coats are very pervasive on the streets. As a
wealthy and cold country, the Netherlands is an ideal market, and indeed for many years
these coats have been selling well here. However, we would contend that the ‘’Arctic
explorer’’ look is not without fashion risk, and indeed when looking at the google search
results of some of the wealthy and cold Western European nations it looks like the brand
has peaked.

100

80

60

40

20

0
3/10/2013 3/10/2014 3/10/2015 3/10/2016 3/10/2017
Canada Netherlands Sweden Denmark

Apart from fashion risk we also think that given the nature of the product and the price tag
of it – we deem it fairly unlikely that someone who purchases a Canada Goose Parka
jacket in 2017 will buy another in the ensuing years. The brand prides itself on durability
and that it is manufactured in Canada, as such, we think the buyer will not fork out that
amount of money each year to have a new Canada Goose jacket.

Our thesis is that the brand can continue to grow in new and large markets, but there is
fashion risk and that the observations of some of the Western European markets may be
a harbinger for things to come in some of the markets in an earlier phase of the growth
curve.

The current luxury outerwear market is estimated to be roughly USD14bn in size. It is a

very fragmented market where the two largest players, Moncler and Burberry, each have
8% market share. Canada Goose currently has 3% market share and is the third largest
player in the space.

Farringdon Capital Management

Teniersstraat 2, 1071DX Amsterdam, The Netherlands
Tel: +31 (0) 20 76 30 830, Fax: +31(0) 20 76 30 836
Email: info@farringdoncap.com, Website: www.farringdoncap.com
Valuation

We have assumed that Canada Goose increases its sales from roughly CAD500mn to
CAD2bn in 2028, a CAGR of roughly 14% for 10 years. This means that the company will
have roughly 15% market share and is the same size as the current two largest players
combined. We think this is quite an aggressive assumption for two reasons:

1. The price point of Canada Goose jackets is at the very top of the market
spectrum. Therefore, the 14% growth that we have assumed is nearly all a
result of volume. Canada Goose, like any other fashion retailer, has to deal
with fashion risk. Their jackets may be popular now but often, when high-end
luxury brands expand too widely and too quickly, it loses their exclusive
cachet, which is a definite risk given our growth assumption.

2. The ten year growth assumption by definition assumes no cyclical downturn.

Given that we have now had ten years of slow, but steadily economic growth
it is a pretty aggressive assumption to expect the following ten years to look
like the previous ten.

As such, in 2028 Canada Goose would have roughly 15% market share and have an
EBIT Margin that is 50% higher than it is today at 30%. When we use a 9% WACC and
1% terminal growth, we obtain an equity valuation that is 15% lower than it is today. In
this valuation scenario, over 60% of the equity value is derived after 2028.

To maintain a 15% market share in a very competitive low barrier to entry market is
extremely unlikely. Investors are too focussed on the impressive growth over the
intermediate term instead of focussing of what the value is of this business once it’s
reached its full potential.

What could go wrong?

In the short term, growth could surprise on the upside, driving the stock even higher
despite the stock already trading at 49X March 2019 earnings.

In the long run there is a risk that the company can meaningfully expand its product range
beyond winter jackets. So far other categories are not outgrowing winter jackets but we
will closely monitor this and adjust our view if we think this is required.

Farringdon Capital Management

Teniersstraat 2, 1071DX Amsterdam, The Netherlands
Tel: +31 (0) 20 76 30 830, Fax: +31(0) 20 76 30 836
Email: info@farringdoncap.com, Website: www.farringdoncap.com
Farringdon Alpha One – Overview February 2018

Annualized Correlation Standard Deviation

MTD YTD ITD
(ITD) (ITD, monthly) (ITD, daily; YTD daily)

Farringdon Alpha One +0.37% +1.92% +78.32% +5.3% 0.25 8.9%; 8.6%

The fund’s cash gross cash exposure increased slightly to 181%, while the beta adjusted
exposure increased to 151%.

Average Beta Adj. Average Beta Adj. Average Beta Adj.

Exposure As % of NAV Beta Adj.
(MTD) (YTD) (ITD)
Long Positions 87.4% 76.9% 76.1% 81.4% 85.6%

Short Positions 93.5% 74.3% 73.2% 75.7% 79.5%

Gross Exposure 181.0% 151.2% 149.2% 157.0% 165.1%

Net Exposure -6.1% 2.6% 2.9% 5.7% 6.2%

Source: Eze Castle Tradar

Perf (%) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD
2007 -0.17 +2.09 +2.00 +1.24 +2.21 +2.85 +2.45 -5.16 -4.56 +4.34 +1.98 +5.88 +15.59
2008 -1.47 +3.92 +2.58 +3.43 +1.44 -0.92 -3.98 +4.17 -3.24 -12.9 +10.35 +3.28 +4.88

2009 +4.90 +0.54 +2.22 +4.19 +7.66 +1.33 +0.51 +3.55 +1.56 +1.59 -2.15 -1.18 +27.22

2010 -0.41 -0.49 +2.83 -1.70 -1.22 -2.80 +1.46 -3.32 +0.75 +2.10 -2.19 +5.94 +0.56

2011 +1.74 -0.11 +0.57 -0.86 -1.89 +0.80 -4.83 -8.03 +3.00 -2.97 -1.36 +1.06 -12.63

2012 +8.39 +2.38 +2.44 -4.81 +3.04 +0.27 +1.38 +1.04 +1.28 +0.47 -0.39 +2.91 +19.44

2013 +2.17 -0.45 +1.86 +1.29 -0.90 +1.74 -0.42 +3.47 -0.29 +0.82 +1.86 -0.96 +10.56

2014 +2.96 -1.38 +3.24 +1.01 +0.14 +0.60 -2.06 +0.15 +0.52 +0.71 +0.13 +0.68 +6.78

2015 -0.48 +2.11 +3.15 +3.09 +1.88 +1.52 -3.96 +1.65 -2.19 +3.78 +0.69 -0.16 +11.35

2016 -1.91 -6.34 +5.43 +1.02 -3.21 -7.66 -0.75 +3.07 +2.27 -1.07 +1.97 +3.38 -4.59

2017 -4.00 +2.01 -1.50 -1.67 -1.18 -0.33 +0.72 -2.47 +0.34 -4.23 -1.80 -0.30 -13.65

2018 +1.55 +0.37 +1.92

NAV (EUR) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2013 165.05 164.30 167.35 169.51 167.99 170.92 170.20 176.10 175.59 177.03 180.33 178.60
2014 183.89 181.35 187.22 189.11 189.36 190.50 186.58 186.87 187.84 189.17 189.42 190.71
2015 189.80 193.81 199.91 206.08 209.96 213.15 204.71 208.09 203.54 211.23 212.69 212.36
2016 208.31 195.11 205.71 207.81 201.14 185.73 184.33 189.97 194.28 192.21 195.99 202.62
2017 194.51 198.42 195.44 192.17 189.90 189.28 190.65 185.95 186.59 178.70 175.48 174.96
2018 177.67 178.32

Farringdon Capital Management

Teniersstraat 2, 1071DX Amsterdam, The Netherlands
Tel: +31 (0) 20 76 30 830, Fax: +31(0) 20 76 30 836
Email: info@farringdoncap.com, Website: www.farringdoncap.com
Farringdon Alpha One – Net Exposures
OTHER DIVERSIFIED FINANCIAL SERVICES
CONSTRUCTION & ENGINEERING
OIL & GAS STORAGE & TRANSPORTATION
LEISURE FACILITIES
INVESTMENT BANKING & BROKERAGE
INTERNET SOFTWARE & SERVICES
TRUCKING
PUBLISHING
ASSET MANAGEMENT & CUSTODY BANKS
HOTELS, RESORTS & CRUISE LINES
PACKAGED FOODS & MEATS
SYSTEMS SOFTWARE
HOME FURNISHINGS
INVESTMENT COMPANIES
SPECIALTY STORES
PROFESSIONAL SERVICES
DIVERSIFIED BANKS
COAL & CONSUMABLE FUELS
RESTAURANTS
ELECTRONIC EQUIPMENT & INSTRUM
LEISURE PRODUCTS
INDUSTRIAL MACHINERY
CONSTRUCTION MATERIALS
SPECIALIZED REITS
RESEARCH AND CONSULTING SERVICES
HEALTH CARE SUPPLIES
ELECTRICAL COMPONENTS & EQUIPM
RAILROADS
REAL ESTATE OPERATING COMPANIES
SPECIALTY CHEMICALS
TOBACCO
AGRICULTURAL & FARM MACHINERY
HEALTH CARE DISTRIBUTORS
CASINOS & GAMING
PHARMACEUTICALS
FOOD RETAIL
-10% -5% 0% 5% 10%

Source: Eze Castle Tradar : Based on GICS level 3 classification

UNITED KINGDOM

NETHERLANDS

IRELAND

NORWAY

SPAIN

SWITZERLAND

BELGIUM

FRANCE

SWEDEN

ITALY

CANADA

GERMANY

DENMARK

UNITED STATES

-20% -15% -10% -5% 0% 5% 10% 15% 20%

Source: Eze Castle Tradar : Based on GICS level 3 classification

Farringdon Capital Management

Teniersstraat 2, 1071DX Amsterdam, The Netherlands
Tel: +31 (0) 20 76 30 830, Fax: +31(0) 20 76 30 836
Email: info@farringdoncap.com, Website: www.farringdoncap.com
 SECTOR L S Net GEOGRAPHY L S Net
AGRICULTURAL & FARM MACHINERY -4.8% -4.8% BELGIUM 8.8% -6.6% 2.1%
ASSET MANAGEMENT & CUSTODY BANKS 3.0% 3.0%
CANADA -7.8% -7.8%
CASINOS & GAMING 3.3% -9.1% -5.8%
DENMARK -12.1% -12.1%
COAL & CONSUMABLE FUELS 0.7% 0.7%
FRANCE 2.3% 2.3%
CONSTRUCTION & ENGINEERING 8.3% 8.3%
GERMANY 13.5% -23.5% -10.0%
CONSTRUCTION MATERIALS 2.6% -4.6% -2.0%
IRELAND 9.7% 9.7%
DIVERSIFIED BANKS 5.0% -4.1% 0.9%

ELECTRICAL COMPONENTS & EQUIPM -3.6% -3.6% ITALY 3.1% -10.3% -7.2%

ELECTRONIC EQUIPMENT & INSTRUM 0.5% -0.8% -0.3% NETHERLANDS 11.8% 11.8%

FOOD RETAIL -9.5% -9.5% NORWAY 9.0% 9.0%

HEALTH CARE DISTRIBUTORS -5.0% -5.0% SPAIN 4.9% 4.9%

HEALTH CARE SUPPLIES -3.5% -3.5%
SWEDEN 2.5% -4.8% -2.3%
HOME FURNISHINGS 1.9% 1.9%
SWITZERLAND 3.0% 3.0%
HOTELS, RESORTS & CRUISE LINES 2.5% 2.5%
UNITED KINGDOM 12.7% 12.7%
INDUSTRIAL MACHINERY 3.0% -5.0% -1.9%
UNITED STATES 1.5% -26.5% -25.0%
INTERNET SOFTWARE & SERVICES 5.0% -1.3% 3.8%
Grand Total 82.7% -91.7% -8.9%
INVESTMENT BANKING & BROKERAGE 3.8% 3.8%

INVESTMENT COMPANIES 1.8% 1.8%

LEISURE FACILITIES 4.0% 4.0%

LEISURE PRODUCTS -1.0% -1.0%

OIL & GAS STORAGE & TRANSPORTATION 4.0% 4.0%

OTHER DIVERSIFIED FINANCIAL SERVICES 8.7% 8.7%

PACKAGED FOODS & MEATS 2.4% 2.4%

PHARMACEUTICALS -6.8% -6.8%

PROFESSIONAL SERVICES 1.3% 1.3%

PUBLISHING 3.0% 3.0%

RAILROADS -4.0% -4.0%

REAL ESTATE OPERATING COMPANIES 0.4% -4.7% -4.3%

RESEARCH AND CONSULTING SERVICES -2.7% -2.7%

RESTAURANTS 4.9% -4.5% 0.3%

SPECIALIZED REITS -2.5% -2.5%

SPECIALTY CHEMICALS -4.4% -4.4%

SPECIALTY STORES 1.5% 1.5%

SYSTEMS SOFTWARE 2.3% 2.3%

TOBACCO -4.6% -4.6%

TRUCKING 9.0% -5.5% 3.5%

Grand Total 82.7% -91.7% -8.9%

Source: Eze Castle Tradar : Based on GICS level 3 classification

Farringdon Capital Management

Teniersstraat 2, 1071DX Amsterdam, The Netherlands
Tel: +31 (0) 20 76 30 830, Fax: +31(0) 20 76 30 836
Email: info@farringdoncap.com, Website: www.farringdoncap.com
DISCLAIMER

This Farringdon Alpha One (“The Fund”) newsletter is neither an offer to sell nor a solicitation of any offer to buy shares
in the Fund. Any offering is made only pursuant to the relevant prospectus, together with the current financial
statements of the Fund, and the relevant subscription documents all of which must be read in their entirety. No offer to
purchase shares will be made or accepted prior to receipt by the offeree of these documents and the completion of all
appropriate documentation. The shares have not and will not be registered for sale, and there will be no public offering
of the shares. No offer to sell (or solicitation of an offer to buy) will be made in any jurisdiction in which such offer or
solicitation would be unlawful.

The price of shares can go both up and down and can be affected by changes in rates of exchange. Investors in the
Fund are reminded that their capital may be at risk and that they may therefore lose some or the entire amount invested
in the Fund. Investment in the Fund carries risks which are elaborately described in the prospectus. The Fund is only
suitable for sophisticated investors who are aware of the risks of investing in hedge funds. The contents of this
newsletter are not intended to constitute and should not be construed as investment advice. Potential investors in the
Fund should seek their own independent financial advice. Farringdon Capital Management provides neither investment
advice nor receives and transmits orders from investors in the Fund. No recommendation is made positive or otherwise
regarding individual securities mentioned herein. No representation is given that any statements made in this newsletter
are correct or that objectives will be achieved. This newsletter is not a financial promotion and is not intended for public
use or distribution. The information contained in this newsletter is strictly confidential and is intended only for use of the
individual who requested this report and to whom Farringdon Alpha One has provided this report. No part of this report
may be divulged to any other person, distributed, resold and/or reproduced without the prior written permission.

Although the information contained in this publication is composed with great care and although Farringdon Capital
Management always strive to ensure the accuracy, completeness and correctness of this information, imperfections due
to human errors may occur, as a result of which presented data and calculations may vary. Therefore, no rights may be
derived from the provided data and calculations. All information is provided "as is" and is subject to change without prior
notice. Farringdon Capital Management does not warrant the adequacy, accuracy or completeness of any information
and expressly disclaims any liability for errors or omissions therein. The recipients of this publication are responsible for
evaluating the accuracy, completeness or usefulness of this information.

The Fund's Distributor, Farringdon Funds Marketing and Distribution ltd is responsible for the management and
administration of the information generated by the Fund and sharing of such information with existing and potential
investors of such Funds.

Farringdon Capital Management

Teniersstraat 2, 1071DX Amsterdam, The Netherlands
Tel: +31 (0) 20 76 30 830, Fax: +31(0) 20 76 30 836
Email: info@farringdoncap.com, Website: www.farringdoncap.com