VN Capital

Fund I, L.P.

Fund Investment Objectives

We founded VN Capital Management to provide investors with a powerful investment vehicle to maximize the wealth of their equity portfolio over the long-term while maintaining strong emphasis on capital preservation. This is done through a three step investment process: First, we generate fresh investment ideas by identifying areas of market irrationality where we can take advantage of mispriced assets. This includes areas where (a) an isolated and usually very well publicized problem taints entire industry (`bad apple syndrome'), (b) industries enduring temporary cyclical troughs, not systemic decline, or (c) companies and sectors are simply overlooked or ignored due to their small size (under $500 million in market capitalization), mundane nature of their business or lack of Wall Street research coverage. Our goal is to limit the amount of external risk that a company may be subject to and to provide a positive catalyst to its stock price upon the reversal of the trend. Next, we apply a conservative value philosophy to individual stocks within these targeted areas as we assess both their financial performance and strategic position within their respective industry. We evaluate the true value of company's assets and liabilities versus their reported values, the company's long term `core' earnings power over the economic cycle, its competitive environment, quality of management and sustainability of its business strategy. We do this to limit company specific risks (financial, regulatory, legal, or competitive) and identify well positioned companies within those attractive investment areas we identified earlier. Finally we construct our portfolio with a diversified mix of 8-10 uncorrelated US and Canadian-listed equities that have a 30%+ margin of safety between each stock's market value and its intrinsic value. Our 3-5 year investment time horizon keeps our portfolio turnover low (20-30% annually), thereby limiting wealth drain caused by taxes, commissions, and trading spreads. Thus, in identifying smaller, undervalued, well positioned companies within basic industries that are undergoing temporary declines, we can provide our investors with the potential for long term out-performance while our limitation of external and company specific risk creates a strong bias for capital preservation.