Once one of our largest long positions Today, we discuss a short - - PowerPoint PPT Presentation

CONFIDENTIAL INVESTOR PRESENTATION

April 2014

Kerrisdale Capital Management, LLC 1212 Avenue of the Americas, 3rd Floor New York, NY 10036 Tel: 212.792.7999 Fax: 212.531.6153 Email: info@kerrisdalecap.com

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Once one of our largest long positions…

 Today, we discuss a short idea on a company that was once one of our favorite long positions

− What originally attracted us to the opportunity years ago  Small business with negligible market share with good management  We acquired the business at a low P/EPS, P/TBV, PEG, etc.  No sellside coverage (compared to 7 coverage analysts today) − We were investors in the business for several years, and are now short  Company’s shares have appreciated by 1200% in the past 5 years!  Numerous competitors are copying the company’s low-cost model and entering the market with the same products  We believe the company’s margins are significantly inflated due to several factors that will reverse in the coming years  By all valuation metrics, company now trades at a significant premium to its competitors, and to our estimate of reasonable profit potential

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BofI Holding Inc. (Nasdaq: BOFI)

 BOFI is a branchless online bank that operates a variety of online bank brands, including Bank of Internet, NetBank, Bank X and others  Loans are made via branded websites such as apartmentbank.com, via relationships with affinity groups, call centers, as well as through wholesale and correspondent channels  $3.6bn total assets, $312m TBV, $47m LTM Net Income

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Capitalization

 We hold a short position in BofI Holding Inc. (“BOFI” or the “Company”), one of the most expensive banks in the US  BOFI has earned investors nearly 1200% in the past 5 years, and now trades at ~3.5x TBV and 20x EPS, far higher than its banking sector peers

− Investors expect rapid earnings growth; we believe future earnings are likely to materially disappoint as interest rates rise

We believe BOFI’s investors are extrapolating results that will be difficult to achieve going forward as interest rates rise

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Strategy in a nutshell

 BOFI has no branches and attracts depositors by offering high interest rates

− BOFI can afford high cost of funding due to its low operating costs: no branches and low employees / assets ratio (only 312 full time employees at 6/30/13)

Source: BOFI March 2014 investor presentation

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Online banks typically have a higher liability cost

 Internet banks, like BOFI, attain their deposits at a higher cost than their brick-and-mortar peers

− Forward curve indicates that funding costs for banks will rise significantly in coming few years

 Internet banks also tend to attract a more price-sensitive, and less “sticky” depositor base

− Depositors choose the bank based on price, not service or convenience

Online banks have a higher funding cost than conventional banks, and this funding cost is expected to go up

Source: FDIC statistics on depository institutions , Bloomberg

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Online banks typically earn weaker asset yields

 Typically, internet banks tend to earn asset yields that are at or slightly below their banking industry peers

− No brick-and-mortar branches − Few customer relationships − Little-to-no cross-selling opportunity or services revenue − Forced to acquire wholesale assets (competition tends to be more fierce)

Online banks are at a disadvantage in sourcing or originating loans; as asset base grows, allocating capital becomes far more difficult

Source: FDIC statistics on depository institutions , Bloomberg

BOFI asset yields now exceed banking industry peers for non-recurring factors that will be outlined in this presentation

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Online banks typically have lower NIMs

 Online banks tend to have significantly lower NIMs than their banking industry peers, yet BOFI’s recent NIMs are above? How?

− Typical online banks have higher funding costs, and lower asset yields, than their conventional brick-and-mortar peers − While BOFI’s funding costs are higher than peers, their asset yields are significantly higher, creating NIMs that match the banking industry

Source: FDIC statistics on depository institutions , Bloomberg

BOFI NIMs now exceed banking industry peers; as the bank’s asset base grows, their NIMs will likely fall back below the banking industry, typical for an online bank

BOFI NIMs are an anomaly in the industry; this is not due to a sustainable advantage, but rather, temporary factors that will reverse

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We think BOFI is over-earning

 BOFI’s Net Interest Margin (“NIM”) is unlikely to be sustainable − Liabilities: BOFI has one of the largest negative interest gaps amongst public banks; when rates rise, its deposit costs will rise significantly

 New competition: numerous players are replicating BOFI’s online business model, which will either slow deposit growth or increase funding costs

− Assets: BOFI is temporarily earning far higher returns on its assets than its peers because it made a large, timely bet in high-yield distressed MBS; these assets are rolling off and will be difficult to replicate  Valuation: BOFI is one of the most expensive publicly traded banks in the US − ~3.5x TBV and 20x PE − Investors have mistakenly assumed current profitability and growth is sustainable despite the forward yield curve indicating otherwise

This presentation will illustrate why we believe BOFI’s current earnings are unsustainable given the forward rate curve

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BOFI’s asset yields are likely not sustainable

 BOFI management made some astute investment decisions during the financial crisis, allowing the company to sustain very attractive interest income despite a falling rate environment BOFI lacks a competitive advantage on the asset side of its balance sheet; management will find it difficult to sustain yields with a growing balance sheet

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Why is asset yield high? Nonrecurring bets on MBS!

 BOFI’s asset yields are far higher than peers due to opportunistic bets on distressed MBS during the financial crisis

 BOFI’s loan yield and other asset yields are largely in line

− As the securities portfolio matures and rolls over, BOFI’s asset yield should decline to a level on par with its peers

During the financial crisis, management made some astute once-in-a-lifetime investments in distressed MBS, which greatly enhanced asset yields

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BOFI’s asset yield compared to peers

 As outlined earlier, BOFI and other internet banks are at a disadvantage from a capital deployment perspective  As its balance sheet grows, and as its high-return securities portfolio rolls

• ver, BOFI’s profits may fall significantly

− Asset yield in line with peers (as defined by BOFI proxy) would imply ~20% downside to LTM EPS

As BOFI’s balance sheet grows, and its opportunistic securities portfolio rolls

• ver, BOFI’s asset yields will fall closer to peer average

BOFI WFC USB FITB Peer Avg. Average Securities Yield 4.74% 3.65% 2.29% 3.32% 2.19% Incremental BOFI yield 1.09% 2.45% 1.42% 2.55% Average Securities Balance ($mm) 478 Excess BOFI Net Income ($mm) 3.1 7.0 4.0 7.3 Excess BOFI EPS $0.22 $0.49 $0.28 $0.51 % Downside to LTM EPS (7%) (17%) (9%) (18%)

Source: company filings, FDIC Statistics on Depository Institutions, Kerrisdale analysis

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Comparison of BOFI to Everbank Confirms View

 Everbank is a similar online-only bank  Comparing the two firms, BOFI’s NIMs are significantly enhanced by the yield on its securities portfolio

BOFI EVER Diff.

Loans 5.25% 4.75% 0.50% Securities & other assets 4.07% 2.74% 1.34% <--- BOFI's main advantage is securities Total earnings assets 5.03% 4.35% 0.68% Cost of funding 1.02% 0.98% 0.04% <--- Both firms pay similar funding cost NIM 4.01% 3.37% 0.64% Average balances Loans $2,664 $12,735 Other earning assets $613 $3,154 Total earnings assets $3,276 $15,889

Excess earnings appear to be driven by a maturing securities portfolio and longer duration, riskier, loan book

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BOFI’s loan portfolio is going to roll into lower yield

 BOFI’s historical loan yields are supported by focus on jumbo loans, which today have far lower excess yield

Source: BOFI investor presentation March 2014 Source: Financial Times

Jumbo loans, which form the largest segment of BOFI’s loan pipeline, are facing increased competition and declining yields

BOFI Loan Pipeline

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Multifamily mortgages getting more competitive

 31% of BOFI’s loan portfolio is “multifamily real estate secured” (apartment buildings)  This sector has recently become intensely competitive:

− January: “There’s no question that the marketplace is highly competitive” (New York Community Bancorp) − February: “We know the year is going to be challenging…We are prepared for elevated competition” (Freddie Mac) − February: “With all the supply of capital, 2014 will be a challenging year for

• lenders. There is robust competition for origination talent, as well as access to

clients.” (Walker & Dunlop, February) − “The multifamily market has always been competitive, but it has become much more competitive in the last two years as more lenders enter the business” (Dime Savings Bank, March)

BOFI’s lending niches have become crowded, which will depress yields

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Asset yields supported by extending duration

 BOFI has benefitted from a huge bet on declining rates; it has held assets with a longer duration and higher yield than most of its peers BOFI’s loan portfolio maturity is an outlier; BOFI’s liabilities will re-price relatively quickly, but its assets will take longer to roll over than its competitors

BOFI WFC USB FITB Peer Avg. % of Loans with Remaining Maturity or Next Repricing Date of: ≤ 3 Months 8% 52% 46% 57% 21% > 3 Months, ≤ 1 Year 7% 3% 5% 3% 11% >1 Year, ≤ 3 Years 15% 8% 9% 6% 19% >3 Years, ≤ 5 Years 50% 8% 12% 11% 24% >5 Year, ≤ 15 Years 15% 11% 14% 14% 19% >15 Years 5% 18% 15% 9% 6% Total 100% 100% 100% 100% 100% Total >3 Years 70% 37% 40% 33% 49%

Source: FFIEC call reports as of 12/31/13, Kerrisdale analysis Note: BOFI's peer group comes from its latest proxy statement, adjusted for subsequent

• acquisitions. It includes BNCN, TBBK, EGBN, FMBC, IBCA, EBSB, NBBC, and OCFC.

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BOFI made a large bet on declining rates

 BOFI has one of the largest negative interest funding gaps among publicly traded banks and is particularly vulnerable to rate shocks

− Deposits will re-price quickly if rates rise, but assets are longer duration; this will create a significant headwind for NIMs in the near term

Even among branch-light banks, BOFI’s loan book is particularly poorly positioned for a rising rate environment

Source: Sterne Agee report, March 2014

Online Bank One Year Rate Gap

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BOFI’s depositors are less “sticky”

 BOFI has a relatively price-sensitive and less-“sticky” deposit base  Deposit inflows exploded after recession (note ~50% increase in year ending June 2010)

− As more internet-banking competitors arise, and as rates increase, BOFI’s relative attractiveness weakens considerably

BOFI has targeted a more price-sensitive depositor base; this has been beneficial during once-in-generation rate environment

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New competition is weakening BOFI’s position

 BOFI’s offering is undifferentiated and facing considerable competition:

− Large lenders: GE Capital, Ally Financial, CIT, Barclays − US online banks: Everbank, First Internet Bank of Indiana − Online divisions of US banks: IncredibleBank (River Valley Bank), Doral Direct − Online subsidiaries of foreign banks: Virtual Bank (Banco de Sabadell), BAC Florida (Grupo Pellas)

1-Year Certificate of Deposits Bank Rate 1 GE Capital Bank 1.05% 2 My e-BAnC by BAC Florida Bank 1.01% 3 VirtualBank 1.01% 4 AloStar Bank of Commerce 1.01% 5 Colorado Federal Savings Bank 1.00% 6 The Palladian PrivateBank 1.00% 7 California First National Bank 1.00% 8 Ally Bank 0.99% 9 Home Savings Bank 0.98% 10 Discover Bank 0.98% 11 Doral Direct 0.95% 12 E-LOAN 0.94% 13 Barclays 0.91% 14 Pentagon Federal Credit Union 0.80% 15 USAA 0.80% 16 ableBanking, a division of Northeast Bank 0.71% 17 First Internet Bank of Indiana 0.65% 18 Pacific Mercantile Bank 0.65% 19 TAB Bank 0.65% 20 Lone Star Bank 0.60% 21 Bank of Internet USA 0.55% MMA and Savings Accounts Bank Type Rate 1 CIT Savings 0.95% 2 GE Capital Bank Savings 0.90% 3 Ally Bank Savings 0.87% 4 EverBank MMA 0.86% 5 Ally Bank MMA 0.85% 6 GE Capital Bank MMA 0.85% 7 American Express Savings 0.80% 8 Capital One Savings 0.75% 9 Barclays Savings 0.90% 10 Sallie Mae MMA 0.90% 11 Palladian PrivateBank Savings 0.90% 12 Union Federal Savings Bank MMA 0.90% 13 Colorado Federal Savings Bank Savings 0.85% 14 Discover Bank Savings 0.85% 15 FNBO Direct Savings 0.85% 16 Mutual of Omaha Bank MMA 0.85% 17 ableBanking, a division of Northeast Bank MMA 0.80% 18 First Internet Bank of Indiana MMA 0.80% 19 Bank of Internet USA MMA 0.75%

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More internet bank competition today

 When we made our initial investment in BOFI in 2009, it had amongst the highest rates for CDs and savings accounts according to www.bankrate.com

− Today, numerous competitors have become more aggressive in the internet-

• nly market, with BOFI ranking far lower than many competing firms

Competition from other online banks will pressure NIMs and / or growth

BOFI Product Ranking Top 5 Banks (highest to lowest APY on 3/31/14) 3-Month CD 13th AloStar, VirtualBank, Barclays, Discover, EverBank 6-Month CD 24th Zions Direct, Doral Direct, AloStar, GE Capital Bank, My e-BAnC 1-Year CD 25th GE Capital Bank, My e-BAnC, Virtual Bank, AloStar, Colorado Federal Savings Bank 5-Year CD 22nd EverBank, Barclays, iGObanking.com, GE Capital Bank, State Farm Bank 1-Year Jumbo CD 17th My E-BAnC, GE Capital Bank, VirtualBank, AloStar, Home Savings Bank MMA/Savings 20th GE Capital Bank, CIT Bank, Barclays, GE Capital Bank, Sallie Mae MMA/10K Savings 13th GE Capital Bank, Sallie Mae, Palladian PrviateBank, EverBank, Colorado Federal Savings Bank MMA/Jumbo Savings not listed GE Capital Bank, Sallie Mae, Colorado Federal Savings, Discover Bank, FNBO Direct

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Organic account growth has stalled

 BOFI made a small acquisition in 2013 which increased number of accounts

− Adjusting for this acquisition, number of accounts has recently declined

Adjusting for a recent acquisition, BOFI has not grown net customers over the past year

Accounts at Beginning 27,746 32,898 32,833 32,272 33,312 35,196 35,414 34,670 40,943 Acquisitions 8,400 Net Additions 5,152 (65) (561) 1,040 1,884 218 (744) (2,127) (1,852) Accounts at End 27,746 32,898 32,833 32,272 33,312 35,196 35,414 34,670 40,943 39,091 Quarter Ending 6/30/10 6/30/11 3/31/12 6/30/12 9/30/12 12/31/12 3/30/13 6/30/13 9/30/13 12/31/13

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Rapid deposit growth triggered by declining rates

 BOFI deposit growth has been driven by low-interest environment

− their ~1% deposit rate is attractive when competitors offer ~0%

− ~50% deposit growth in fiscal 2010 coinciding with 150bps drop in deposit costs

BOFI’s relative value proposition improved significantly when competing brick- and-mortar banks lowered rates to near-zero

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Forward curve is not looking good for BOFI

 Based on today’s forward yield curve, BOFI’s NIMs will likely revert back to long-term “normalized” profitability in coming years

BOFI 1 Change '17 Curve2 Asset Yield 5.03% 1.12% 6.15% <--- Based on forward 10-year curve, asset yields will rise Funding Cost 1.02% 2.88% 3.90% <--- Based on forward 1-year rates, BOFI's funding cost will rise more Net Interest Margin 4.01% (1.76%) 2.25% Earning Assets $3,276 $0 $3,276 Net Interest Income $131 ($58) $74 % Change (44%) Net Income 3 $52 ($35) $18 % Change (66%) <--- Illusrtrative net income impact from forward rate curve

• 1. Based on quarter ending December 31, 2013
• 2. Based on forward yield curve for 2017
• 3. Adjusted for 40% tax rate

The forward yield curve is flattening; for a bank with a large negative rate gap and long duration assets like BOFI, this implies a reduction in profitability

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Putting it all together: BOFI NIM going to fall

 BOFI’s NIMs and growth are not evidence of a superior business model, but factors related to today’s low interest rate environment

− Internet banks generally have lower NIMs than their brick-and-mortar peers because they pay more for deposits and earn less on assets − BOFI has benefited from a negative rate gap and timely bets on MBS

On average, internet banks have higher funding costs, and more price sensitive depositors… … and earn lower yields on assets… … resulting in lower NIMs than their peers

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Regulators are concerned about banks like BOFI

 Bank watchdogs sounding the alarm about hot deposits, higher rates

− FDIC: “The FDIC is increasingly concerned that certain institutions may not be sufficiently prepared or positioned for sustained increases in, or volatility of, interest rates. For example, institutions with a decidedly liability-sensitive position could experience declines in net interest income and potential deposit run-off in a rising rate environment.” − OCC: “Bankers need to analyze core deposits carefully because they are potentially more sensitive to rising interest rates than historical relationships would suggest. These deposits flowed quickly into the U.S. banking system and are at risk of rising more rapidly in cost or moving out of the banking system.”

 Liability-sensitive banks like BOFI are under the microscope

− CFO of $5B regional bank: “There are a number of thrifts that are still liability- sensitive, and they're getting pressure from regulators to get themselves balanced”  “The regulators themselves are very, very suspicious of internet banks.”

BOFI’s risk profile is out of step with regulatory concerns

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Non-interest income from mortgage refinancing

 Vast majority of BOFI’s non-interest income has been from the gain-on-sale

• f mortgage securities

− Slowing refinancing activity will depress mortgage sales going forward

Unlike marquee brick-and-mortar banks, BOFI earns little in the way of high- margin and high-value service or fee income

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Mortgage refinancing activity collapsing

 Mortgage refinancing activity is expected to decline by ~40%

− Refinancing activity had accelerated during recession when interest rates fell − Mortgage refinancing spreads were also inflated during past years

BOFI’s non-interest income is driven by mortgage refinancing activity, which is declining in both volume and spread

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Loss of mortgage fees is significant hit to income

 Mortgage fees and gains will certainly decline, very materially, in coming years, creating drag on future earnings growth

− There is no perfect way to illustrate the impact on income given multiple moving parts: revenue, spreads and potential corporate costs (BOFI may pay lower commission, hire fewer people, etc.)

BOFI will suffer from earnings drag from an almost certain decline in mortgage gains in the near term

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BOFI may be under-reserving NPLs

 BOFI provisions are priced for perfection BOFI’s NPLs leave investors with very asymmetric risk to the downside

High growth banks Internet banks Marquee banks

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Relative P/TBV

 BOFI has among the highest P/TBV multiples in the entire U.S. banking sector

Source: CapitalIQ

High-Growth Banks P/TBV Internet Banks P/TBV Marquee Banks P/TBV

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Relative P/EPS

 BOFI also has amongst the highest valuations on a P/EPS basis

Source: CapitalIQ

High-Growth Banks P/EPS Internet Banks P/EPS Marquee Banks P/EPS

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BOFI P/TBV vs. ROTCE

In order to justify valuation, market participants are pricing BOFI to grow multiples in size while maintaining its industry-leading profitability

Source: Sterne Agee report, March 2014

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 Current loan book is estimated to be worth $410 million vs. market cap of ~$1.3 billion

− Thus, 2/3rds of current market value attributable to the NPV of future loans, a surprisingly high number

 BOFI asset base is asymmetrically positioned to the downside

− 200 basis point increase in rates is a 20% decline in NPV of current loan book

Value overwhelmingly attributed to growth

(Dollars in thousands, as at December 31, 2013) Net Present Value Percentage Change from Base NPV as a Percentage

• f Assets

Up 300 basis points $ 267,278 (34.8%) 7.83% Up 200 basis points 331,284 (19.2%) 9.39% Up 100 basis points 388,060 (5.4%) 10.69% Base 410,248 — 11.05% Down 100 basis points 445,133 8.5% 11.81% Down 200 basis points 446,566 8.9% 11.75%

By BOFI’s own admission, the NPV of its current loan book is only $410 million; 2/3rds of current market cap is attributable to NPV of future loans!

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Backing into BOFI valuation

 To justify BOFI’s valuation, investors have to make some bold assumptions  An illustrative scenario:

− ~3x deposit base − 3.5% NIM forever − 17% ROE forever − 35% efficiency

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Analyst community over-optimistic on NIMs

 Analyst community is valuing BOFI on the assumption of superior profitability into perpetuity

− It is our view that the BOFI’s profitability is not sustainable, and that their business structure will result in long-term NIMs below conventional banks

Analysts are valuing BOFI as a bank with a superior business model with superior profitability, into perpetuity… we believe they are wrong

NIM Estimates FY 2014 FY 2015 FY 2016 Price-target basis KBW 4.0% 4.1% 4.1% DCF Sidoti 4.0% 4.1% CY2015 EPS Sandler O'Neill 1,2 4.0% 4.0% 4.0% CY2014 EPS Maxim 1,2 3.9% 4.0% 4.0% CY2015 EPS Sterne Agee 3.9% 3.8% 3.7% CY2015 EPS Average 3.9% 4.0% 4.0% Bank Sector 3 3.3% BOFI 4.0%

• 1. Calendar-year estimates converted to fiscal-year basis.
• 2. FY 2016 set to average of available quarterly estimates.
• 3. Source: FDIC, based on calendar Q4 2013

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Recent management commentary

 At recent analyst meetings, management has attempted to address questions regarding interest rate sensitivity:

− Management has stated that, based on their internal models, a gradual parallel and sustained shift in interest rates could result in a modest increase in net interest margins going forward (assuming a positive slope) − Management has also stated that the quality of the deposit base is improved markedly, given deposits from business customers (reducing reliance on CD’s)

 We believe management’s counterarguments have fundamental flaws:

− The forward rate curve indicates that the yield curve is flattening, a rise in interest rates will not be parallel − What happens to net interest margins beyond two years? Why would an

• nline bank, which has systematically lower NIMs than conventional

banks, be able to maintain higher NIMs? − Business deposits are arguably just as price sensitive as CDs

Recent management commentary does not address the fact that BOFI is

• verearning, and the forward curve clearly indicates a flattening yield curve

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Conclusion

 BOFI’s valuation requires continued deposit growth despite offering no differentiation, and being able to deploy this growing capital base at industry-leading yields, despite having no loan sourcing advantage  BOFI is one of the highest valued publicly traded banks in the US

− P/TBV of 3.4x vs. industry peers at half that value, because investors have mistakenly assumed BOFI’s NIMs and deposit growth are sustainable

 Liabilities will face higher costs

− BOFI has one of the largest negative funding gaps in US − Deposits may face slower growth, or higher costs, due to competition − BOFI’s deposits are less “sticky”, funding cost bias is to the upside

 Assets are over-earning

− Asset yields supported by opportunistic bets on small asset base; as asset base grows, and high yield securities roll over, BOFI asset returns will face pressure

BOFI profitability is likely to revert closer to industry-peer levels as interest rates revert, and well-financed competitors replicate BOFI’s offerings

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Disclaimer

As of the publication date of this report, Kerrisdale Capital Management LLC and its affiliates (collectively "Kerrisdale"), others that contributed research to this report and others that we have shared our research with (collectively, the “Authors”) have short positions in and may own options on the stock of the company covered herein (BofI Holding Inc.) and stand to realize gains in the event that the price of the stock decreases. Following publication of the report, the Authors may transact in the securities of the company covered herein. All content in this report represent the opinions of

• Kerrisdale. The Authors have obtained all information herein from sources they believe to be accurate and reliable. However, such information is

presented “as is”, without warranty of any kind – whether express or implied. The Authors make no representation, express or implied, as to the accuracy, timeliness, or completeness of any such information or with regard to the results obtained from its use. All expressions of opinion are subject to change without notice, and the Authors do not undertake to update or supplement this report or any information contained herein. This document is for informational purposes only and it is not intended as an official confirmation of any transaction. All market prices, data and other information are not warranted as to completeness or accuracy and are subject to change without notice. The information included in this document is based upon selected public market data and reflects prevailing conditions and the Authors’ views as of this date, all of which are accordingly subject to

• change. The Authors’ opinions and estimates constitute a best efforts judgment and should be regarded as indicative, preliminary and for illustrative

purposes only. Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal. This report’s estimated fundamental value only represents a best efforts estimate of the potential fundamental valuation of a specific security, and is not expressed as, or implied as, assessments of the quality of a security, a summary of past performance, or an actionable investment strategy for an investor. This document does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein

• r of any of the affiliates of the Authors. Also, this document does not in any way constitute an offer or solicitation of an offer to buy or sell any security

in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction. To the best of the Authors’ abilities and beliefs, all information contained herein is accurate and reliable. The Authors reserve the rights for their affiliates, officers, and employees to hold cash

• r derivative positions in any company discussed in this document at any time. As of the original publication date of this document, investors should

assume that the Authors have positions in financial derivatives that reference this security and stand to potentially realize gains in the event that the market valuation of the company’s common equity is lower than prior to the original publication date. These affiliates, officers, and individuals shall have no obligation to inform any investor about their historical, current, and future trading activities. In addition, the Authors may benefit from any change in the valuation of any other companies, securities, or commodities discussed in this document. Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of the Authors’ operations and their affiliates. The compensation structure for the Authors’ analysts is generally a derivative of their effectiveness in generating and communicating new investment ideas and the performance of recommended strategies for the Authors. This could represent a potential conflict of interest in the statements and opinions in the Authors’ documents. The information contained in this document may include, or incorporate by reference, forward-looking statements, which would include any statements that are not statements of historical fact. Any or all of the Authors’ forward-looking assumptions, expectations, projections, intentions or beliefs about future events may turn out to be wrong. These forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and other factors, most of which are beyond the Authors’ control. Investors should conduct independent due diligence, with assistance from professional financial, legal and tax experts, on all securities, companies, and commodities discussed in this document and develop a stand-alone judgment of the relevant markets prior to making any investment decision.