dealers for transactions and determining the reasonableness of their compensation (
e.g.,
commissions).
No supervised person of Mangrove accepts compensation for the sale of securities or other
investment products, including interests in or shares of the Funds.
Item 6: Performance-Based Fees and Side-By-Side Management
Please see Item 5 above for a description of the performance-based compensation allocated to
Mangrove Capital. Because a Mangrove affiliate is allocated, directly or indirectly, performance-
based compensation from each of Mangrove’s clients, Mangrove does not face the conflicts of
interest that may arise when an investment adviser accepts performance-based fees from some
clients but not from others.
Conflicts Mangrove recognizes that these types of arrangements may create an incentive for Mangrove (i)
to make investments on behalf of the Funds that are riskier or more speculative than would be
the case in the absence of such an arrangement and (ii) to favor accounts for which the principals
of Mangrove have greater personal capital investments. In order to address the second of these
potential conflicts, Mangrove has developed and implemented the appropriate policies and
procedures (
e.g., trade allocation) to ensure that all clients are treated fairly and equally.
Item 7: Types of Clients
Mangrove provides portfolio management services to private investment funds. A minimum
initial investment of $1,000,000 is generally required to invest in any of our private funds, with
additional capital contributions equal to at least $50,000. However, Mangrove has discretion to
reduce the minimum initial or additional investment to not less than $100,000 for one or more
investors (or prospective investors) as long as they qualify to invest based on all other suitability
and regulatory requirements.
US persons must satisfy certain minimum income or asset standards in order to purchase an
interest in a Fund.
Mangrove may decline to accept an investment even if the proposed investor satisfies such
suitability and regulatory requirements.
Item 8: Methods of Analysis, Investment Strategies and Risk of Loss
The Funds’ shared investment objective is to organically compound their net worth while
minimizing the chances of a permanent loss of capital. Mangrove’s investment strategy
concentrates on an identified subset of systematically underfollowed investments and inefficient
markets. Our goal is to generate positive returns from both long and short investments as
opposed to employing a relative value or market hedging strategy. Our investment process
involves in-depth analysis and valuation work at the company level while being cognizant of
underlying industry dynamics. Our deep value discipline in combination with our focus on
underfollowed securities gives us our edge.
We believe that the day to day movements of markets and the valuations of securities to be highly
inefficient as a result of the emotions of the people participating in markets and trading securities.
Markets tend to set a dear price for the comfort of investing in familiar businesses, popular
industries, fast-growing companies, liquid securities, and steady streams of earnings, dividends,
and/or coupons. Conversely, market participants often overlook and undervalue industries that
are unfashionable, securities that are small, illiquid, or not covered by brokerage firms,
investments where there exists complexity or uncertainty on the outcome of events, the debt
(and occasionally equity) of firms subject to bankruptcy proceedings or risk, and companies that
are in distress, experiencing setbacks, stagnating, or declining. We believe that investors often
confuse investments that are characterized by having uncertain outcomes, complex analysis, or
unpopular dynamics with investments that are unsafe to own or unattractive in risk.
In order to profit from these core beliefs, we build portfolios that concentrate on an identified
subset of systematically underfollowed investments and inefficient markets. Our goal is to
generate positive returns from both long and short investments as opposed to employing a
relative value or market hedging strategy. Our investment process involves in-depth analysis and
valuation work at the company level while being cognizant of underlying industry dynamics.
Where and when we invest is driven by our deep value discipline in combination with our focus
on underfollowed securities. Presiding over all of the investment and portfolio management
decisions is a rigorous risk management discipline focused on taking intentional and defined risks
at the position, industry, and portfolio level.
The Funds are likely to devote a portion of their capital to selling securities short. Mangrove
believes that short selling, when practiced in a disciplined manner, has the ability to
simultaneously generate attractive returns and reduce the Funds’ market risk. The Funds will
endeavor to sell short the securities of companies Mangrove believes are executing a flawed
business or funding plan, capitalizing on a fad or engaging in fraud. The Funds will endeavor to be
sensitive to the risks of engaging in short sales, including the unlimited potential for loss, the
importance of maintaining borrow on securities sold short, and the historic (and likely future)
broad upward price trend to securities markets. Accordingly, the Funds will employ risk controls,
including limiting position sizes, actively trading shorted securities, and concentrating on limited
duration short investments with anticipated catalysts.
Investments in securities of any kind involve risk of loss that investors should be prepared to bear.
The Funds may make investments or engage in certain strategies that involve specific risks
associated with those investments or strategies, including, but not limited to the following:
Leverage. The Funds may employ leverage, which increases both the possibilities for
profit and the risk of loss.
Short Sales. The Funds may sell short. Selling short risks losing an amount greater than
the proceeds received. Theoretically, securities or other financial instruments sold short
are subject to unlimited risk of loss because there is no limit on the price that such security
or other financial instrument may appreciate before the short position is closed. In
addition, the supply of securities and other financial instruments that can be borrowed
fluctuates from time to time. The Funds may be subject to losses if a lender demands
return of the lent security or other financial instrument and an alternative lending source
cannot be found or if the Funds are otherwise unable to borrow when necessary to cover
their positions.
Distressed Investing. The Funds may invest in equities or other securities of companies
that are experiencing significant financial or business difficulties, including companies
involved in debt restructurings, in bankruptcy or other reorganization and liquidation
proceedings. Although such investments may result in significant returns, they typically
involve a high degree of risk. Among the problems involved in investments in such issuers
is the fact that it frequently may be difficult to obtain information as to the conditions of
such issuers.
Small and Medium Capitalization. The Funds may invest in the securities of companies
with small to medium sized market capitalizations. While Mangrove believes that such
companies may provide significant potential for appreciation, such securities generally
involve higher risk in some respect than the securities of larger capitalization companies.
Derivatives. The Funds may invest in derivative instruments, or “derivatives,” which
include futures, options, puts, contracts for difference, swaps, structured securities and
other instruments and contracts that are derived from, or the value of which is related to,
one or more underlying
securities, financial benchmarks, currencies, or indices. The value
of a derivative depends largely upon price movements in the underlying asset. Therefore,
many of the risks applicable to trading the underlying asset are also applicable to
derivatives of such asset. However, there are a number of other risks associated with
derivatives trading. For example, because many derivatives are “leveraged,” and thus
provide significantly more market exposure than the money paid or deposited when the
transaction is entered into, a relatively small adverse market movement can not only
result in the loss of the entire investment but may also expose the Funds to the possibility
of a loss exceeding the original amount invested. Derivatives may also expose investors
to liquidity risk, as there may not be a liquid market within which to close or dispose of
outstanding derivatives contracts, and to counterparty risk.
Real Estate. The Funds may invest in real estate. Real estate investments generally will
be subject to the risks incident to the ownership and operation of commercial real estate,
including (i) risks associated with the domestic and international general economic
climate; (ii) local real estate conditions; (iii) risks due to dependence on cash flow; (iv)
risks and operating problems arising out of the absence of certain construction materials;
(v) changes in supply of, or demand for, competing properties in an area (as a result, for
instance, of overbuilding); (vi) the financial condition of tenants, buyers and sellers of
property; (vii) changes in availability of debt financing; (viii) energy and supply shortages;
(ix) changes in the tax, real estate, environmental and zoning laws and regulations; (x)
various uninsured or uninsurable risks; (xi) natural disasters; and (xii) the ability of the
Funds to manage the real properties.
Shipping. The Funds may invest in maritime assets. Shipping investments generally will
be subject to the risks incident to the ownership and operation of commercial maritime
assets, including (i) risks associated with the local, national and international general
economic climate; (ii) the cyclical nature of the shipping industry which may lead to
decreases in charter rates and lower vessel values; (iii) experience and availability of third
party service providers; (iv) risks due to dependence on cash flow; (v) risks and operating
problems arising out increased crew costs, fuel prices or other vessel parts or supplies;
(vi) changes in supply of, or demand for, competing vessels in an area or on a route (as a
result, for instance, of scrapping rates of older vessels and the number of newbuilding
deliveries or the demand for the cargo or goods the Fund’s vessels carry); (vii) failure of a
vessel to pass inspection by classification societies; (viii) arrest or attachment of a vessel
relating to unsatisfied debts, claims or damages; (ix) damage or destruction of a vessel or
cargo due to a marine accident or disaster caused by human error, mechanical failure or
bad weather; (x) liability arising from environmental accidents; (xi) the financial condition
of charterers; (xii) embargoes and strikes; (xiii) changes in availability of debt financing;
(xiv) local and international energy and supply shortages and pricing; (xv) political and
governmental conditions in the countries where the Fund’s vessels are flagged or
registered and in the regions where they trade; (xvi) acts of piracy or other hostilities;
(xvii) changes in local, national and international tax, safety, security and environmental
laws and regulations; (xviii) compliance risks associated with economic and trade
sanctions imposed by the U.S., the EU and other jurisdictions; (xix) various uninsured or
uninsurable risks or the insufficiency of insurance coverage; (xx) natural or manmade
disasters; and (xxi) the ability of the Funds to manage the maritime assets.
Private Equity and Private Debt Securities. The Funds may invest in private equity and
private debt securities which involve an extraordinarily high degree of business and
financial risk and can result in substantial or complete losses. Some portfolio companies
in which the Funds invest may be operating at a loss or with substantial variations in
operating results from period to period and may need substantial additional capital to
support expansion or to achieve or maintain competitive positions.
Litigation & Regulatory Based Investments. The Funds may invest in securities that
depend upon favorable legal or regulatory rulings. There is no guarantee that any
litigation will be successful, or that the issuer will obtain a favorable regulatory ruling.
Arbitrage Investments. The Funds may engage in various types of arbitrage and relative
value trading strategies. These strategies are based on the apparent presence of pricing
inefficiencies and the expectation that these anomalies will revert to historical averages
over time.
Concentration of Holdings. While Mangrove intends to allocate the other Funds’ equity
among a number of investments, there are no fixed allotments. At any given time, the
Funds’ assets may become highly concentrated within a particular company, industry,
asset category, trading style or financial or economic market. In that event, the Funds’
portfolio will be more susceptible to fluctuations in value resulting from adverse
economic conditions affecting the performance of that particular company, industry,
asset category, trading style or financial or economic market, than a less concentrated
portfolio would be. Therefore, although the Funds seek a diversified portfolio, there is a
risk that one of the investments may have a disproportionate share of the Funds’ assets
and/or that the Funds’ portfolio will be concentrated and more susceptible to adverse
conditions, poor investment decisions or other factors which negatively affect the
performance of the Fund. As a result, if the Funds’ investment portfolio becomes
concentrated, its aggregate return may be volatile and may be affected substantially by
the performance of only one or a few holdings. Concentrated holdings may also subject
the Funds to specific risks in the industries in which the investment operates.
Catalyst and Event Driven Investing. The Funds may invest in securities of companies
which it believes will likely engage in, or are potential candidates for, extraordinary
events, including, but not limited to, mergers, liquidations, bankruptcies, restructurings
or recapitalizations, spin-offs or carve-outs and tender offers. Such securities may have
significant exposure to overall market movements.
Activist Strategy. The Funds may effect shareholder activism strategies, which activism
may not be successful and may result in significant costs and expenses. If Mangrove
concludes the commitment of time, energy and capital is justified in light of the potential
for reward, it may seek to be a catalyst to realize value from a targeted investment (a
“Target”) by taking an active role in effectuating corporate change either working alone
or in conjunction with other investors. These activist techniques may include working with
management of a Target or other more aggressive steps such as acquiring substantial
publicly disclosed stakes in a Target, proposing a restructuring, recapitalization, sale, or
other change in strategic direction, seeking potential acquirers, engaging in proxy
contests, making tender offers, changing management and other related activities. In
pursuit of an activist strategy, the Investment Manager may determine to use litigation
as a course of action. The Funds may be parties to lawsuits initiated by third parties,
including the Target, other shareholders, or governmental bodies. There can be no
assurance that any litigation, once begun, will be resolved in favor of the Funds. As a
result, the Funds may be exposed to the risk of monetary damages and other sanctions
or remedies. In addition, as an activist investor, the Funds are subject from time to time
(and especially in the context of a proxy contest) to formal or informal investigations or
inquiries by the SEC and other governmental and self-regulatory organizations in
connection with its activities. Litigation and regulatory investigations may require
significant amounts of Mangrove’s time and result in significant expenses to the Funds.
The Funds may take controlling stakes in Targets. Activist investments may involve a
number of risks, such as the risk of liability for environmental damage, product defect,
failure to supervise management, violation of governmental regulations and other types
of liability in which the limited liability characteristic of business operations may be
ignored. In addition, in connection with the disposition of this investment, the Funds may
make representations and warranties about such investment’s business and financial
affairs typical of those made in connection with the sale of any business, or may be
responsible for the contents of disclosure documents under applicable securities law. The
Funds may also be required to indemnify the purchasers of such investment or
underwriters to the extent that any such representations and warranties or disclosure
documents turn out to be incorrect, inaccurate or misleading. All of these risks or
arrangements may create contingent or actual liabilities and materially affect the Funds
and any investment in the Funds.
Risk Arbitrage Investments. Risk arbitrage strategies attempt to exploit merger activity to
capture (or sell short) the spread between current market values of securities and their
values after successful completion of a merger, restructuring or similar corporate
transaction. Merger arbitrage investments often incur significant losses when anticipated
merger or acquisition transactions are not consummated.
Hedging Transactions. Mangrove may utilize a variety of financial instruments, such as
derivatives, options, interest rate swaps, caps and floors, futures and forward contracts,
both for investment purposes and for risk management purposes in order to: (i) protect
against possible changes in the market value of the investment portfolios resulting from
fluctuations in the securities markets and changes in interest rates, (ii) protect against the
reduction of unrealized gains in the value of the investment portfolios, (iii) facilitate the
sale of any such investments, (iv) enhance or preserve returns, spreads or gains on any
investment, (v) hedge the interest rate or currency exchange rate on any liability or asset,
(vi) protect against any increase in the price of any securities Mangrove anticipates
purchasing at a later date or (vii) for any other reason that Mangrove deems appropriate.
Mangrove is not required to hedge portfolio positions and may determine not to do so.
Furthermore, Mangrove may not anticipate a particular risk so as to hedge against it.
While Mangrove may enter into hedging transactions to seek to reduce risk, such
transactions may result in a poorer overall performance for the Funds than if it had not
engaged in any such hedging transaction.
Loans of Portfolio Securities. The Funds may lend their portfolio securities. In the event
of the bankruptcy of the other party to a securities loan, the Funds could experience
delays in recovering the loaned securities. The Funds could experience a loss if such
securities are not recovered.
Counterparty Creditworthiness. The Funds may engage in transactions in securities and
other financial instruments that may involve counterparties, and no counterparty
exposure limits have been imposed on these transactions. Any nonperformance, whether
due to insolvency, bankruptcy or other causes, could subject the Funds to substantial
losses.
Non-U.S. Investments. The Funds may invest in securities and other financial instruments
on markets located outside the United States. Such investments require consideration of
certain risks not typically associated with investing in securities or other financial
instruments traded in the United States, including, without limitation, unfavorable
currency exchange rate developments, restrictions on repatriation of investment income
and capital, imposition of exchange control regulation, confiscatory taxation and
economic or political instability in foreign nations. Liquidity and trading costs can vary
significantly over time and across markets, particularly in emerging market countries.
Non-U.S. trading costs generally are higher than in the United States. Non-U.S. settlement
procedures and trade regulations may involve certain risks (such as delay in payment or
delivery of securities or in the recovery of assets held abroad) and expenses not present
in the settlement of domestic investments. In addition, legal remedies available to
investors in certain foreign countries may be more limited than those available to
investors in the United States or in other foreign countries. The laws of some foreign
countries may limit the ability to invest in, or repatriate investments in, non-U.S. securities
or other financial instruments. In addition, there may be less publicly available
information about certain non-U.S. companies than would be the case for comparable
companies in the United States, and certain non-U.S. companies may not be subject to
accounting, auditing and financial reporting standards and requirements comparable to
or as uniform as those of U.S. companies.
American Depositary Receipt and Global Depositary Receipt Securities. The Funds may
invest in sponsored or unsponsored American Depositary Receipts and Global Depositary
Receipts typically issued by a bank or trust company which evidence ownership of
underlying Securities issued by a corporation. Generally, Depositary Receipts in
registered form are designed for use in the U.S. Securities market and Depositary Receipts
in bearer form are designed for use in Securities markets outside the United States.
Depositary Receipts may not necessarily be denominated in the same currency as the
underlying Securities into which they may be converted. Depositary Receipts may be
issued pursuant to sponsored or unsponsored programs. In sponsored programs, an
issuer has made arrangements to have its Securities trade in the form of Depositary
Receipts. In unsponsored programs, the issuer may not be directly involved in the creation
of the program. Although regulatory requirements with respect to sponsored and
unsponsored programs are generally similar, in some cases it may be easier to obtain
financial information from an issuer that has participated in the creation of a sponsored
program. Accordingly, there may be less information available regarding issuers of
Securities' underlying unsponsored programs and there may not be a correlation between
such information and the market value of the Depositary Receipts.
Currency Risk. The Funds may make investments denominated in one or more currencies
other than U.S. Dollars. Mangrove may, to the degree it deems appropriate, cause the
Funds to enter into arrangements in an attempt to hedge the exposure to significant
currency fluctuations between the U.S. Dollar and the applicable currency or currencies.
Such arrangements may subject the Funds to additional transaction costs. However, price
movements of currencies are difficult to predict accurately because they are influenced
by, among other things, changing supply and demand relationships; governmental, trade,
fiscal, monetary and exchange control programs and policies; national and international
political and economic events; and changes in interest rates. Governments from time to
time intervene in certain markets in order to influence prices directly. Accordingly,
Mangrove cannot guarantee that it will be successful in accurately predicting currency
price and interest rate movements, and there can be no assurance that the hedging
arrangements, if any, entered into on behalf of the Funds will be sufficient to address all
currency risks.
Frequency of Trading. Some of the strategies and techniques employed by the Funds are
based on short-term market considerations, which may require frequent trades to take
place. The portfolio turnover rate of those investments may be significant, potentially
involving substantial brokerage fees and commissions. As a consequence, portfolio
turnover and brokerage commissions may be greater than for other investment entities
of similar size.
Illiquid Investments. Investments made by the Funds may be illiquid and, consequently,
the Funds may not be able to sell such investments at prices that reflect Mangrove’s
assessment of the value or the amount paid for such investments by the Funds.
Designated Investments. The Funds may at any time invest a portion of their assets in
securities or other financial instruments that Mangrove determines are difficult to value
and/or not readily marketable, or should be held until the resolution of a special event or
circumstance. Mangrove may elect to place such security or other financial instrument in
a separate special account (a “DI Account”) of the pertinent Fund (each, a “Designated
Investment”). In general, an Investor will not be able to withdraw portions of the
Investor’s capital account attributable to an interest in a DI Account until the relevant
Designated Investment becomes liquid or is sold or otherwise disposed of by Mangrove.
Item 9: Disciplinary Information
Mangrove has no legal or disciplinary events to report that would impact the evaluation of a client
or prospective client (or Investor) of Mangrove’s advisory business or the integrity of our
management.
Item 10: Other Financial Industry Activities and Affiliations
Mangrove and its employees do not have any relationships or arrangements with any affiliated
entities or other financial services companies that pose material conflicts of interest with clients.
Any persons acting on behalf of Mangrove Capital and Mangrove Capital II, Inc. are subject to the
supervision and control of Mangrove in connection with any investment advisory activities. In
accordance with SEC guidance, Mangrove Capital and Mangrove Capital II, Inc. is registered as an
investment adviser in reliance on the Form ADV filed by Mangrove.
Item 11: Code of Ethics, Participation or Interest in Client
Transactions and Personal Trading
Code of Ethics; Personal Trading Mangrove has a written Code of Ethics (the “Code”) describing its high standards of business
integrity and fiduciary duty to clients. The Code sets out basic principles to guide the officers and
employees of Mangrove in discharging their duties for Mangrove. The objective of the Code is to
deter wrongdoing and to promote, among other things: (1) honest and ethical conduct, including
the ethical handling of actual or apparent conflicts of interest between personal and professional
relationships, (2) full, fair, accurate, timely and understandable disclosure in all public
communications made by Mangrove, (3) compliance with applicable laws, rules and regulations,
(4) prompt internal reporting of violations of the Code, and (5) accountability for adherence to
the Code. The Code includes policies and procedures related to personal securities transactions
by officers and employees considered to be “access persons.” The officers and employees of
Mangrove or its affiliates and their household members may invest in securities for their own
accounts, or the accounts of foundations or trusts for which they are fiduciaries, subject to
restrictions and reporting requirements as may be required by law or otherwise determined by
the Code. Additionally, individual representatives of Mangrove or its affiliates may serve on the
board of directors of one or more entities in which a Fund invests, subject to restrictions and
reporting requirements as may be required by law or otherwise determined by the Code.
Mangrove will provide a copy of the Code to any client or prospective client upon request. A copy
of the Code of Ethics may be obtained by sending an email to
[email protected]
or by phoning us at (212) 897-9535.
Principal and Cross Transactions
A principal transaction occurs when an investment adviser, acting for its own account (or the
account of an affiliate) buys a security from, or sells a security to, a client’s account. Except in rare
circumstances and only when acting in the best interests of the Funds, it is Mangrove’s policy not
to engage in any principal transactions for the Funds. Moreover, Mangrove will conduct all
principal transactions, if any, according to the disclosure and client consent requirements of
Section 206(3) of the Advisers Act. The precise application of these disclosure and consent
requirements may depend on the transaction.
Mangrove may determine that it is in the best interests of the Funds to transfer a security from
one Fund to the other for tax purposes, liquidity purposes or to reduce transaction costs that may
arise in an open market transaction (a “Cross Trade”). Cross Trades, which may or may not
constitute principal trades, will be conducted in accordance with Mangrove’s fiduciary
responsibility to each Fund, must be in the best interest of each Fund and must be consistent with
Mangrove’s duty to seek best execution. Mangrove will rely on its valuation procedures to
determine the appropriate price to effect the transaction. Mangrove will monitor the percentage
of ownership in each of the Funds held directly or indirectly by Mangrove and its affiliates in order
to identify any potential principal trading issues.
Best Execution In general, securities transactions for the Funds are executed through brokers that in all cases are
selected by Mangrove in its sole discretion and without the consent of the Funds. In placing
securities transactions, Mangrove will seek to obtain the best execution for the Funds, taking into
account the following factors: the ability to effect prompt and reliable executions at favorable
prices (including the applicable dealer spread or commission, if any); the operational efficiency
with which transactions are effected and the efficiency of error resolution, taking into account
the size of order and difficulty of execution; the financial strength, integrity and stability of the
broker; special execution capabilities; clearance; settlement; reputation; on-line pricing; block
trading and block positioning capabilities; willingness to execute related or unrelated difficult
transactions in the future; order of call; on-line access to computerized data regarding clients’
accounts; performance measurement data; the quality, comprehensiveness and frequency of
available research and related services considered to be of value; the availability of stocks to
borrow for short trades; and the competitiveness of commission rates in comparison with other
brokers satisfying Mangrove’s other selection criteria.
Soft Dollar Benefits The Funds may bear, via soft dollar payments, the costs of certain benefits or services received by
the Funds or by Mangrove and its affiliates. In the event Mangrove elects to use soft dollars for
payment of all or a portion of the Funds’, Mangrove’s, Mangrove Capital’s, or Mangrove Capital
II, Inc.’s administrative costs and expenses of operation, such uses of soft dollars may not be
within the safe harbor afforded by Section 28(e) of the Securities Exchange Act of 1934 (the
“Exchange Act”). However, Mangrove considers its choice of execution brokers and use of “soft
dollars” in the context of best execution.
To the extent Mangrove engages in any “soft dollar” arrangements, research and/or other
services or products obtained with soft dollars generated by one Fund’s transactional activity may
be used by Mangrove to service another Fund. Mangrove also may have an incentive to select a
broker-dealer based on its interest in receiving the research or other products or services, rather
than on the Funds’ interest in receiving most favorable execution. Mangrove also may use broker-
dealers with which it does not have soft dollar arrangements. Mangrove may receive and use
research provided by these broker-dealers.
Referral of Investors and Sales Charges Mangrove may also direct brokerage business to brokers who refer prospective investors to the
Funds. Because such referrals, if any, are likely to benefit Mangrove, Mangrove Capital and/or
their respective affiliates but will provide an insignificant (if any) benefit to the Investors,
Mangrove will have a conflict of interest with the Funds when allocating brokerage business to a
broker who has referred investors to the Funds. To prevent brokerage commissions from being
used to pay investor referral fees, Mangrove will not allocate brokerage business to a referring
broker unless Mangrove determines in good faith that the commissions payable to such broker
are reasonable in relation to those available from non-referring brokers offering services of
substantially equal value to the Funds.
Allocation of Investment Opportunities In general, investments are allocated initially to the Cayman Master, which is owned by the US
Feeder, the Cayman Feeder, the Drawdown Feeder, the iFeeder and the Cayman Partnership. As
a result, the US Feeder, the Cayman Feeder, the iFeeder, the Drawdown Feeder and the Cayman
Partnership, realize an allocation of investments relative to their ownership of the Cayman
Master. However, in order to achieve certain tax, regulatory and administrative efficiencies, each
of the US Feeder, the Cayman Feeder, the Drawdown Feeder, the iFeeder or the Cayman
Partnership may acquire investments directly or through direct interests in acquisition vehicles.
Aggregation of Orders Mangrove may, but is not required to, aggregate sales and purchase orders of securities being
made simultaneously for more than one Fund, if, in Mangrove’s reasonable judgment, such
aggregation will result in an overall economic benefit to each of the Funds.
Trade Errors Mangrove on occasion may experience errors with respect to trades made on behalf of the Funds.
Mangrove attempts to minimize trade errors by promptly reconciling trade confirmations, trade
tickets and other pertinent documents. If trade errors do occur, they are for the account of the
Fund unless they are the result of Mangrove’s or its personnel’s willful misconduct, bad faith or
gross negligence or as otherwise provided in the governing documents of the Fund.
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