2016 Memo from Eric M. Teal Chief Investment Officer

To Our Clients and Prospective Clients,

In the midst of a topsy-turvy election year, Chinese economic slowdown, and oil price collapse, I thought I would share a piece of exciting personal news with you. As most of you may have learned from the press coverage and media release that can be found on our website (www.queens-oak.com), I am delighted to join Queens Oak Advisors as Managing Partner and Chief Investment Officer. Queens Oak is a full-service boutique asset management firm headquartered in Charlotte, NC and includes an experienced and talented team of client focused professionals, many of whom I have known and respected for years.

Queens Oak is an established firm with professionals that understand and support the nuances of investment management and financial planning. More importantly, we are fortunate to have a high caliber list of clients, worldclass network of investors, and renowned business industry leaders who we can proudly call our partners. I am honored to help oversee such a team of professionals during these challenging market times. Personally, for me
Queens Oak is the culmination of a dream – a dream to lead a firm dedicated to delivering superior investment performance and service to our clients. I would like to share with you the perspective I have gained over the years that has informed and shaped this dream.

After successfully managing money for larger banks and mutual fund companies for twenty plus years, including the prolonged bear markets following the technology collapse and the ensuing banking and financial crisis, I fully appreciate that over time successful investors need a non-institutional environment to produce exceptional results for their clients. As many dissatisfied clients have unfortunately come to learn, an institutional environment tends to produce more conventional results and a diffusion of accountability.

Not surprisingly, this is due to the fact that larger firms have a need to conform and offer clients the “latest piece of investment advice.” Unfortunately, by the time this “Wall Street advice” reaches Main Street, it is an overcrowded trade that often results in disappointment. As Warren Buffett put it, as only he can, in one of his annual letters to shareholders, “As they say in poker, if you have been in the game 30 minutes and don’t know who the patsy is, you’re the patsy.” Hence, to generate and sustain superior results for clients one needs an unconstrained and non-institutional approach to managing money. Although, not all idiosyncratic approaches are successful over time, most high performing investors have chosen a less institutional path.

Legendary investors like Ben Graham, Warren Buffett, or John Templeton plied their investment practices far
outside of Wall Street or even large multi-product financial service firms. Talented investment professionals seek
an environment where independence and creativity are most valued, and an environment where performance
always takes precedence over gathering more assets. Over the past twenty years, many of the top performing
managers fled the banks and insurance companies to launch hedge funds, investment companies and the like for
crisper decision making and greater flexibility to deal with the ever changing market environment. Numerous
studies have demonstrated the outperformance of smaller boutique firms compared to larger firms, not surprising
given the talent flight to smaller firms.

Moreover, an increasing number of clients also recognize the importance of investing with individuals, not
institutions, if they hope to achieve superior results. As an employee-owner of Queens Oak, I hold a long-term
view of the firm. Boutiques tend to have less employee turnover, principally because many of them like Queens
Oak are at least partially employee-owned. The longer tenure of key professionals ultimately leads to better
performance and service due in large part to a greater alignment of interest with the long term goals of their
clients. It is understandable that everyone wants to invest with talented managers, but to find superior long-term
performance, it requires betting on individuals — their investment approach, discipline and philosophy.

From value investors like Graham and Buffett to famed hedge-fund investors Jim Rogers and Paul Tudor Jones, it
has always been about individuals rather than organizations. That is because investing is really like art– the art of
selection, the art of implementation, and the art of execution. Which is precisely why so many of the most
talented investment professionals seek the long-term outlook and independence that is often found in smaller
firms that value creativity and provide a canvas for their art to flourish.

When it comes to managing money, investing with a boutique firm has several distinct advantages that are
supported by empirical research and studies. First, boutiques tend to produce better investment returns. Second,
they are objective and independent. Third, employee ownership aligns them with the long term goals of their
clients. And finally, for quality value-minded investors, they have a culture that allows creativity to flourish. I will
elaborate on all of these principles in a series of pieces that you can elect to receive over the coming year.

I will also be writing about our investment viewpoint. I will explain why I believe that last year was the end of an
investment era, and why a new asset allocation approach is needed to maintain a competitive edge during a period
of global economic stagnation and negative interest rate policies by central banks. At Queens Oak we will apply
our value-oriented approach to those areas of the marketplace that are most inefficient. We also have a rigorous
and dynamic global asset allocation process that has served investors well during the bear market stretches and
bull market recoveries, and we anticipate will continue to be effective going forward. We will continue to manage
and even enhance our strategies that have an exceptional history of results. We firmly believe that clients
searching for superior performance potential, defensive portfolio attributes, and quality value investing are more
likely to find them at a firm like Queens Oak than anywhere else.

If you are interested in learning more about our firm and philosophy and want to receive our future economic
and market commentaries and firm articles, please feel free to contact us by email at info@queens-oak.com. We
look forward to working with many of you in the near future and thank you for your ongoing interest and support
of Queens Oak.

Eric M. Teal
Managing Partner
Chief Investment Officer