a arm presentation nov 2010
TRANSCRIPT
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AARM CorporationAlternative Asset Risk Management
www.AARMcorp.com
10/15/2010
“6 Ways to Improve your Private Equity Returns using AARM”
By: Dr. Gitanjali Swamy
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Investors Rely on Alternatives for Alpha
• Lower returns
• Fixed Income = small returns• Stocks = volatile
• Cash = no longer holds value
• Higher risk higher reward products; Alternative Assets
• Problems:• Lack of transparency
• History of malfeasance
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Scandals are eroding investor faith in PE S e gm
en t _1
S e gm
en t _1
Family Office
& HighNetworth
Family Office
& HighNetworth
S e gm
en t _2
S e gm
en t _2
Private
WealthManagement
Private
WealthManagement
S e gm
en t _ 3
S e gm
en t _ 3
Endowments
& PensionsFunds
Endowments
& PensionsFunds
We can’t afford to rely on plausible deniability!
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• AARM is the dashboard, introducing the idea of Insight on Demand ™ for alternative assetinvestors
AARM Provides Unbiased Risk Assessment
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• AARM is the ideal partner to streamline
private equity investment process andmaximize value of a portfolio
Introducing AARM Corporation
• AARM’s revolutionary interactive platformcombines
• Insight of Consulting +
• Transparency of unbiased, data-driven analysis
• All delivered Cost-effectively and On-demand.
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TODAY’S REALITYConsultingCompany
Fund of Funds Internal
Analyst
AARM
Hamilton Lane
CambridgeAssoc.
Grove Street
Flag VenturePartners
The AARM Corp
Product/Service Service Service Product + Service Product + Service
Pricing & Revenue Pay per Management fee
Pay an analyst Pay per
o e
$500,000/yr
- ee, carry
$3,000,000 Mil/year $50,000-$100,000/yr $5000/year
Affordability Low Low Low High
Ability to providecustom solution
Medium Low Medium High
Refresh-ability &Relevance in 3-12months
Low Low High High
Available On-demand
Low Low High High
Value to Family
offices, High Nets
Low Low Medium High
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Functions as multiple analysts.
Manage risk/reward profile.
•Insight on Demand™
•Portfolio Management
AARM Provides Direct Financial Benefits
Prevent poor investments.
Manage CASH better.
Fees justified with betterreturns = more money
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•Better Diligence
•Cash Risk Management
•Identify high performingFoF with justifiable fees
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LP requirements:AARM Corp provides investment tools for Risk Management
Risk Management ToolsData Analytics
Due Diligence Tools
Manager Search
Occasionally
Every Newfund
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Industry Insights
Dry Powder Analysis
AARM-FOIA Benchmarks™
Portfolio Management
My Portfolio Tool
Portfolio Dashboard
Accounting & Control
Cash Risk Management
EveryQtr
EveryMonth
Every
Week
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• Better Portfolio Management: Lower Risk
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1. KNOW YOUR BASELINE1. KNOW YOUR BASELINE
• e er epor ng: ower os s
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1. Know Your Baseline
•Understand your portfolio
•Baseline and track it:
Industry Insights
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• Better portfoliomanagement: lower risk• Better reporting: lowercosts
Dry Powder
AnalysisAARM-FOIA
Benchmarks™
Due DiligenceTools
Manager Search
Comparator
Risk Management
Tools
Data Analytics
PortfolioManagement
My Portfolio Tool
Portfolio
Dashboard
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Portfolio Reporting
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Standard portfolioreports can beautomatically
generatedWithin AARM on-demand
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www.AARMcorp.com:USE AARM MARKET INSIGHT REPORTS
& MODEL PORTFOLIOSLow Risk Model Portfolio
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• Better Portfolio Management: Lower Risk
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1. KNOW YOUR BASELINE2. BENCHMARK AGAINSTMEANINGFUL METRICS
• Better Reporting: Lower Costs
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2. Benchmark Against Meaningful Metrics
• Benchmark musts:
• Transparent• Know the components of the Benchmark
• E.g. SP500, DOWJONES IA, Nasdaq composite etc.
• Frame-able
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• Understandable in performance we are comparing
• E.g. Top largest 500 firms, Largest market cap on the NYSE etc.
• Before AARM Corp
• Benchmarks neither Transparent nor Frame-able
• what’s in it?
• why is it there!?
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Solution:
AARM-FOIA Benchmarks™
Fully Transparent
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completely Frame-able
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• Better Diversification & Portfolio Management:
3. Optimize exposure
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ower s
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3. Optimize Exposure
• Risk Factors:
• Vintage
• Industry
Identify Exposure
Understand Performance
DecisionPeriod
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• Product• Geography
• Peers:
• Similar funds (with same risk factors)
• Portfolio Scenarios:
• Exposure under different allocations
• Warning Indicators:
• portfolio funds underperform peers
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Portfolio Demonstration
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Portfolio Demonstration.
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Aggregated Portfolio Comparison
In this Portfolio
• The best fund isBlackstone IV at 95Percentile.
• The worst isWarburg Pincus X at40 percentile.
• The 1999 & 2000AARM Benchmarkswere both to
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Quartile in this
Comparison (> 75Percentile).
• The Top 3 fundsin this comparisongroup wereClearstone I-B,
Morgan Stanley III,And Endevour III
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• Better Diligence & Selection: Higher Returns
4. Better fund diligence
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4. Better Fund Diligence
Identify Exposures
DecisionPeriod
Understand Performance
• AARM-FOIA Benchmarks™
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, ,
• Peer set Comparison
• Automatic peer generation
• Comparison of • Fund vs. peer Funds
• Fund vs. Fund of Funds
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Assessment Demonstration
AARM can tell you the Qualityand percentile of each fund in
relation to its peers
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Comparison Against Peers: for a fund
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• Active Portfolio & Cash Management: Lower
5. Actively Manage Portfolio
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s an ower os
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5. Actively Manage Portfolio
Understand Performance
Identify exposures
DecisionPeriod
• Identify Gaps• Exposure
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• Decision on what to invest• Secondary position in fund
• Secondary fund
• Primary fund – new manager
• Primary fund – existing manager
• Diligence
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Diligence Demonstration
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AARM enables detailed exploration
and diligence leads for a manager
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• Better Negotiation of Terms and Structures:
6. Negotiate Better Deals
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g er e urns, ower os s
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6. Negotiate Better Deals
• Justify the fee structure in• Fund fees
• Fund of funds extra fee justification
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• Use quantitative analysis to negotiatebetter terms
• Use quantitative analysis to justifyvaluations
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Simple Factor Analysis for Fund Pricing &
Risk Management
Decrease FundFees 0.3% fora 300Mil increaseIn Fund size
AARM allows you to assessthe right fee and risk levels
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AARM Corp
Informed investments
Better Terms
On-demand analysis=
Better Returns, Lower Risks & Lower Costs
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sign-up for a FREE trial at
www.AARMcorp.com