Interim Management Statement

 

TIDMBRAL 
 
RNS Number : 3068N 
Bramdean Alternatives Limited 
13 February 2009 
 

Bramdean Alternatives Limited 
13 February 2009 
 
 
Interim Management Statement 
For the period 1 October 2008 to 31 December 2008 
 
 
 
 
This Interim Management Statement relates to the period from 1 October 2008 to 
31 December 2008 and contains information that covers that period, unless 
otherwise stated. 
 
 
A print format of this RNS announcement will be available shortly on the 
Company's website: www.bramdeanalternatives.com. 
 
 
 
 
COMPANY OVERVIEW 
 
 
Bramdean Alternatives Limited (the "Company") is a Guernsey-based Investment 
Company listed on the London Stock Exchange. The Company's investment objective 
is to generate long-term capital gains. The Company has appointed Bramdean Asset 
Management LLP ("Bramdean" or "the investment manager") as its investment 
manager. Bramdean is responsible for the management of the Company's assets, 
subject to the overall supervision of the Company's Board. 
 
 
Bramdean has appointed RMF Investment Management - Nassau branch ("RMF") to 
manage the assets of that part of the Company's Portfolio which is allocated by 
Bramdean from time to time to RMF for investment in hedge funds. This allocation 
is known as the Strategic Hedge Funds portfolio. 
 
 
The Company invests in a diversified portfolio of Private Equity Funds, Hedge 
Funds and other Specialty Funds and may additionally hold direct holdings in 
unquoted companies and quoted securities. The portfolio of investments is 
intended to be diversified by country, industry sector, investment stage and 
size of investment, as well as by strategy. 
 
 
 
 
 
 
 
 
 
 
 
 
 
+----------------------+----------------+----------------+-------------------+ 
| KEY DATA OVERVIEW                                                          | 
|                                                                            | 
+----------------------------------------------------------------------------+ 
| Sterling Share class | 30/09/08       | 31/12/08       | Comparative       | 
|                      |                |                | performance       | 
+----------------------+----------------+----------------+-------------------+ 
| Net Asset Value      | 97.26 pence    | 99.81 pence    | + 2.6%            | 
+----------------------+----------------+----------------+-------------------+ 
| Share price          | 79.50 pence    | 43.75 pence    | - 45.0%           | 
+----------------------+----------------+----------------+-------------------+ 
|                      |                |                |                   | 
+----------------------+----------------+----------------+-------------------+ 
| U.S. Dollar Share    | 30/09/08       | 31/12/08       | Comparative       | 
| class                |                |                | performance       | 
+----------------------+----------------+----------------+-------------------+ 
| Net Asset Value      | US$ 0.9109     | US$ 0.8188     | - 10.1%           | 
+----------------------+----------------+----------------+-------------------+ 
| Share price          | US$ 0.98       | US$ 0.95       | -  3.1%           | 
+----------------------+----------------+----------------+-------------------+ 
|                      |                |                |                   | 
+----------------------+----------------+----------------+-------------------+ 
| Financial Position   | 30/09/08       | 31/12/08       | Comparative       | 
|                      |                |                | performance       | 
+----------------------+----------------+----------------+-------------------+ 
| Total common net     | US$            | US$            | - 13.7%           | 
| assets               | 229,950,175    | 198,479,949    |                   | 
+----------------------+----------------+----------------+-------------------+ 
| Net Asset Value      | US$            | US$            | - 15.2%           | 
|                      | 229,472,145    | 194,549,715    |                   | 
+----------------------+----------------+----------------+-------------------+ 
| Undrawn commitments  | 65.5%          | 70.8%          | + 8.1%            | 
| to Private Equity    |                |                |                   | 
| and Specialty Funds  |                |                |                   | 
| as % of NAV          |                |                |                   | 
+----------------------+----------------+----------------+-------------------+ 
 
 
Share prices shown are official Stock Exchange closing 
 
 
Sources: 
London Stock Exchange 
Company's Administrator 
Bramdean Asset Management LLP 
 
 
+-----------------+------------+ 
| KEY FACTS                    | 
+------------------------------+ 
| MANAGER         | BRAMDEAN   | 
|                 | ASSET      | 
|                 | MANAGEMENT | 
|                 | LLP        | 
+-----------------+------------+ 
| MARKET          | GBP90.61   | 
| CAPITALISATION  | million    | 
+-----------------+------------+ 
| MANAGEMENT      | 1.5%       | 
| FEE             |            | 
+-----------------+------------+ 
| PERFORMANCE     | 10%        | 
| FEE             | subject    | 
|                 | to an      | 
|                 | 8%         | 
|                 | return     | 
|                 | with a     | 
|                 | high       | 
|                 | watermark* | 
+-----------------+------------+ 
| *Please visit                | 
| Shareholder                  | 
| Information at               | 
| www.bramdeanalternatives.com | 
| for further details.         | 
+-----------------+------------+ 
 
 
 
 
MATERIAL TRANSACTIONS 
Changes to share capital 
 
 
Participating Shares of no par value ("Shares") issued at GBP1.00 and US$1.00, 
the number of Shares in issue as at 31 December 2008: 
 
 
+----------------------+--------------------------+ 
| Sterling Shares      | 92,142,177               | 
+----------------------+--------------------------+ 
| US$ Shares           | 76,116,060               | 
+----------------------+--------------------------+ 
In the period, the Company did not buy back any of its Shares. 
 
 
On 25 November 2008, certain holders of Shares in the Company owning Sterling 
Shares elected to switch into U. S. Dollar Shares and certain holders of Shares 
in the Company owning U.S. Dollar Shares elected to switch into Sterling Shares 
on the basis of the net asset value of the Company's Shares as at 31 October 
2008. 
 
 
As a result of the switch, 5,671,846 Sterling Shares were converted into 
10,332,275 new U.S. Dollar Shares and 204,357 U.S. Dollar Shares were converted 
into 112,181 new Sterling Shares. Accordingly, the total voting rights in the 
Company changed to 262,187,972 following the conversion. 
 
 
These elections were approved by the Board of Directors on 21 November 2008 and 
took effect on 25 November 2008. 
 
 
 
 
MARKET REPORT 
 
 
The fourth quarter saw markets coming to terms with the scale of the global 
economic slowdown. In this environment, government activism has become a major 
factor with further bank rescues and aggressive easing in monetary and fiscal 
policy implemented around the world. Volatility declined from the extreme levels 
seen in October, but remains elevated in many markets, reflecting the impact of 
continuing deleveraging, together with enormous uncertainty as to the shape and 
duration of the global recession. 
 
 
The major themes running through the fourth quarter have been rapidly 
deteriorating economic fundamentals (extending beyond the financial services 
sector), and the scale and variety of government responses to the situation. 
Economic data has been poor and below expectations in all major economies 
globally. 
 
 
Weaker demand growth globally has continued to knock commodity prices. Brent 
crude prices ended the year at US$46, down 53% from the third quarter 2008 and 
down 68% from its July 2008 peak. 
 
 
Commodity price weakness and falling demand are putting downward pressure on 
inflation, and raising the spectre of deflation. This is exacerbated by 
continued tough conditions in credit markets. In the face of these problems, 
central banks have continued unprecedented loosening of monetary policy. On 
occasion (in October) this has been coordinated, and on other occasions not. The 
U.S. Fed Funds target rate range is now 0-0.25%, down from 2% at the end of the 
third quarter 2008 and down from 5.25% as recently as mid-2007. In the EU, the 
European Central Bank has been less aggressive, cutting its policy rate by 175 
basis points to 2.5% during the fourth quarter 2008. In the UK, the Bank of 
England cut base rates three times during the fourth quarter 2008 from 5% to 2% 
(and subsequently to 1.5%). 
 
 
In addition to monetary policy measures, the fourth quarter 2008 saw a growing 
consensus among governments globally that significant fiscal boosts were also 
needed to avoid the recession turning into a depression. Some substantial 
packages were agreed during the fourth quarter 2008, including EUR50bn in Germany, 
US$586bn (over two years and including some previously announced spending) in 
China and GBP20bn in the UK. In the U.S., while the November 2008 elections at 
least clarified the likely direction of U.S. fiscal policy, fiscal policy 
remained uncertain at the year-end. 
 
 
Across most major economies, governments followed the UK's example by providing 
state funds to help recapitalise the banking sector. 
 
 
In the light of the economic and financial climate, equity markets fell sharply 
during the fourth quarter.  In local currency terms, the FTSE All-Share Index 
was down 10.2%, the S&P 500 Index down 22.1%, the Nikkei 225 Index down 19.1% 
and the FTSE Europe ex-UK Index down 20.6%. It is noteworthy that major markets 
bottomed (at least temporarily) in late November and then rallied substantially 
into the year-end. The S&P 500 Index ended the quarter up 22% from its intra-day 
low on 21 November 2008, for example. 
 
 
In the face of an unprecedented wave of issuance coming in the next few years 
(driven by the fiscal packages mentioned above and very weak tax receipts), 
government bond yields continued to decline sharply. 
 
 
Foreign exchange markets were very volatile, reflecting money flows and the 
reappraisal of various economies.  The Yen was the star performer, rising 14% 
versus the U.S. Dollar and 15% versus the Euro. It is now at 15 year highs 
against the major currencies, exacerbating the economic downturn. At the other 
end of the scale, Sterling weakened sharply, down 18% versus the U.S. Dollar and 
17% versus the Euro. 
 
 
Overall the fourth quarter 2008 saw little let-up for investors. Hedge funds 
reported a sharply negative year with the Credit Suisse Tremont Hedge Fund Index 
down 19.1% on the year and 10% on the quarter (despite a very small positive 
return in December). The alleged Madoff fraud (see below) compounded the 
industry's myriad problems. The revelations may exacerbate the problems of 
deleveraging and redemptions that have been triggered by the industry's weak 
performance.  Mainstream private equity deals all but ceased during the quarter, 
while fair market value write-downs continued to be reported. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MATERIAL EVENTS 
 
 
Bernard L. Madoff Investment Securities LLC 
 
 
The Company made two announcements through the London Stock Exchange's 
regulatory information service ("RNS") on 12 and 18 December 2008 regarding its 
exposure to certain hedge funds which, directly or indirectly, had trading 
accounts with Bernard L. Madoff Investment Securities LLC ("BMIS"), a securities 
broker dealer based in New York. 
 
 
The Company holds two investments that, directly or indirectly, have trading 
accounts with BMIS. The first is Rye Select Broad Market XL Portfolio Ltd. ("Rye 
Select"), an investment which represented 4.4% of the Company's net asset value 
as at 31 October 2008. The second is Defender Ltd. ("Defender"), which 
represented 5.1% of the Company's net asset value as at 31 October 2008. 
 
 
On Friday 12 December 2008, the Company received a letter from Defender 
informing the Company that the Federal Bureau of Investigation in the U.S. had 
arrested Mr. Madoff, the founder of BMIS, on charges of alleged securities 
fraud. 
 
 
Further to the announcement on 12 December 2008, the Company decided, in 
consultation with its auditors PwC CI LLP, to take a full provision against its 
investments in Rye Select and Defender in the calculation of the November 2008 
net asset value, which was announced via RNS on 18 December 2008. 
 
 
Prior to the decision to write-down the investments in Rye Select and Defender, 
the November 2008 valuation showed a month-on-month increase of 4.17% in the 
Sterling Share class and a fall of 0.05% in the U.S. Dollar Share class. 
Following the decision to take a full provision against those two investments, 
the November 2008 valuation showed a fall of 6.15% in the Sterling Share class 
and a fall of 9.86% in the U.S. Dollar Share class. 
 
 
The Company will continue to monitor the situation in respect of its investments 
in Rye Select and Defender and will make every appropriate effort to seek 
recovery of the assets. 
 
 
Deephaven Capital Management LLC ("Deephaven") 
 
 
As previously reported, the Company was informed on 30 October 2008 that 
Deephaven was suspending redemptions and withdrawals with immediate effect. This 
action impacted the Company's previously submitted redemption notice to 
Deephaven Global Multi-Strategy Fund Ltd., which represents 2.9% of the 
Company's December 2008 net asset value. 
 
 
Subsequent to the quarter end, on 27 January 2009, Deephaven and Stark 
Investments ("Stark") entered into an Asset Purchase Agreement pursuant to which 
Stark has agreed - subject to the approval of the Deephaven investors - to 
acquire substantially all of the assets of Deephaven and its subsidiaries. 
 
 
Knight Capital Group ("Knight"), the 51% owner of Deephaven, will receive 
US$7.3M for the assets. The Deephaven equity partners, who had bought back a 49% 
stake in Deephaven from Knight last year, will not receive any financial 
compensation for the deal. Investors in the Deephaven Global Multi-Strategy Fund 
LLC and the Deephaven Global Multi-Strategy Fund Ltd. will each first vote on 
whether to wind-down the Fund with Stark acting as sub-advisor to Deephaven with 
respect to the wind-down. A majority in interests will be required in order to 
consummate the transaction. If investors approve the wind-down, then each 
investor in their respective Fund will be provided with the option to elect: (i) 
to become an investor in one of the newly created Stark Feeder Funds which will 
invest in Stark Master Fund Ltd. and a dedicated side-pocket vehicle; or (ii) to 
have Stark reduce to cash and return the investors' capital in the Fund in the 
capacity as sub-advisor to Deephaven. RMF is managing the response to 
Deephaven's proposals. 
 
 
Other events 
 
 
During the period, the Company made one new commitment of US$5.45 million on 31 
October 2008 to Resonant Music I L.P., an innovative music-for-film Fund which 
provides finance for the music of independently produced feature films and TV 
series. 
 
 
PERFORMANCE COMMENTARY 
 
 
Share price 
Shares in the Company have now been trading for eighteen months. This has 
coincided with the downturn in global financial markets and this, compounded by 
the ongoing illiquidity in the Company's Shares, continues to result in share 
price weakness. The price discrepancy between the Sterling and U.S. Dollar Share 
classes remains, although the premium at which the U.S. Dollar Shares traded 
throughout the fourth quarter 2008 results from the lack of trading liquidity in 
that Share class. 
 
 
In the fourth quarter 2008, the share price of the Company's Sterling Shares 
decreased by 45.0% to 43.75p and the U.S. Dollar Shares decreased by 3.1% to 
US$0.95. At the end of the fourth quarter 2008, the Sterling Shares traded at a 
56.2% discount to the December NAV while the U.S. Dollar shares traded at a 
16.0% premium to NAV. This compares with an average discount of 54.4% for 
private equity funds of funds listed on the London Stock Exchange as at 31 
December 2008, as measured by the Alternative Investment Funds team at ABN Amro 
Bank N.V. 
 
 
As at 4 February 2009, the Sterling Shares traded at a 53.2% discount to the 
December 2008 NAV while the U.S. Dollar Shares traded at a 4.2% discount to NAV, 
compared with an average discount of 59.2% for private equity funds of funds 
listed on the London Stock Exchange. 
 
 
 
 
 
 
 
 
 
NAV 
As at 31 December 2008, the net asset value per Share was 99.81 pence for the 
Sterling Share class and US$0.8188 for the U.S Dollar Share class. This 
represents a 3.12% increase and a 17.99% decrease in the respective initial NAVs 
that were priced as at 31 July 2007.  Over the course of the fourth quarter 2008 
the net asset value per Share of the Sterling and U.S. Dollar Share classes 
increased by 2.6% and decreased by 10.1% respectively. 
 
 
The Company's returns in the fourth quarter 2008 were impacted by the sharp 
falls seen in global equity markets and the volatility in credit markets, 
especially during the sharp fall in October in the wake of the collapse of 
Lehman Brothers Holdings Inc. and AIG Inc. This was compounded by the impact on 
the Company's November NAV of the alleged fraud at BMIS (see above), which came 
to light in the middle of December. 
 
 
The Sterling Share class benefited from the sharp rise of the U.S. Dollar versus 
Sterling during the fourth quarter 2008. In July 2008, the Company appointed 
Mesirow Financial Currency Management ("Mesirow"), a currency specialist with 
US$11 billion AUM based in Chicago to manage the Company's major currency 
exposures.  The objective of the currency overlay programme allocated to Mesirow 
is to manage the risk of the Company's main currency exposures by reducing the 
impact of falling currency prices should they occur, while allowing currency 
related gains to pass through to the Company.  Mesirow manages the Company's 
major currency exposures in U.S. Dollars, Euros, and Sterling for both the U.S. 
Dollar and Sterling Share classes using an unfunded overlay programme. Starting 
the programme with an initial 70% hedge as the tactical default rate against the 
Sterling Share class (i.e. the manager will maintain a 70% hedge unless it has 
an active view on a particular currency pair), the tactical default hedge ratio 
was reduced to 35% in October 2008 against the Sterling Share class. In response 
to the continued strength of the U.S. Dollar, the tactical default hedge ratio 
was reduced again to 0% as at 8 December 2008 and applied to both the Sterling 
and U.S. Dollar Share classes. 
 
 
The Company published its maiden set of financial results for the year ended 
31 March 2008 on 11 July 2008 and published its results for the six months to 
30 September 2008 on 24 November 2008. 
 
 
 
 
 
 
 
 
PORTFOLIO COMMENTARY 
 
 
The Company was 80.6% invested at the end of the fourth quarter 2008 and held 
investments in 32 Funds. 
 
 
The Company has made commitments to eighteen underlying Private Equity Funds and 
Specialty Funds amounting to approximately US$224.9 million. The total amount 
that has been drawn-down on the commitments made is approximately US$87.2 
million and as at 31 December 2008, the Company's commitments to Private Equity 
& Specialty Funds were approximately 38.8% drawn-down. The undrawn commitments 
represent 70.8% of the total NAV as at 31 December 2008. 
 
 
The Company's commitments may be financed by a combination of its investments in 
the Transitional and Strategic Hedge Funds portfolio, distributions from 
underlying Private Equity and Specialty Funds, its cash reserves and its ability 
to gear by up to 25% of NAV. As at 31 December 2008 the Company has not employed 
any credit facility and the Company had no debt as at that date. 
 
 
The Company has received total distributions of US$2.4 million as at 
31 December 2008. 
 
 
The Company also holds two Funds in its Transitional portfolio and 12 Funds in 
its Strategic Hedge Funds portfolio. 
 
 
At the end of the fourth quarter 2008, approximately 10.1% of the Company's net 
asset value was invested in the Transitional portfolio, 35.1% in the Strategic 
Hedge Funds portfolio, 35.4% in Private Equity and Specialty Funds, and 19.4% in 
cash. 
 
 
Excluding the full provision taken against the Company's holdings in Defender 
and Rye Select, the main contributors to the loss in the fourth quarter 2008 
were Renaissance Institutional Futures Fund International LLC ("RIFF"), Hard 
Assets 2x Fund Ltd., Deephaven Global Multi-Strategy Fund Ltd., Terra Firma 
Capital Partners III L.P. and SVG Strategic Recovery Fund II L.P. 
 
 
The Company benefited from positive returns from some of its managers during the 
quarter, including Paulson Advantage Plus Ltd., Evergreen MAC Ltd., Kaiser 
Trading Diversified 2X Segregated Portfolio, and Arcas MAC 79 Ltd. 
 
 
Further changes are continuing to be made to the Company's holdings of Hedge 
Funds, a process that began at the start of 2008 in response to the global 
economic and financial markets downturn. Over that time, the percentage of the 
Company's net assets invested in Hedge Funds within the combined Strategic Hedge 
Funds and Transitional portfolios has fallen from 86.3% to 45.2% as at 31 
December 2008, while the cash holding has risen from zero to 19.4% of net 
assets. 
 
 
 
 
+-------------------------------------------------------+--------------------+ 
| PORTFOLIO                                                                  | 
| Top Ten Holdings as at 31 December 2008                                    | 
+----------------------------------------------------------------------------+ 
| Greenpark International Investors III L.P.            | 6.9%               | 
+-------------------------------------------------------+--------------------+ 
| Paulson Advantage Plus Ltd.                           | 5.7%               | 
+-------------------------------------------------------+--------------------+ 
| D.E. Shaw Oculus International Members Interest       | 5.2%               | 
+-------------------------------------------------------+--------------------+ 
| Oaktree OCM Opportunities Fund VIIb L.P.              | 5.1%               | 
+-------------------------------------------------------+--------------------+ 
| Alydar Fund Ltd.                                      | 4.9%               | 
+-------------------------------------------------------+--------------------+ 
| Aarkad plc                                            | 4.3%               | 
+-------------------------------------------------------+--------------------+ 
| Lansdowne UK Equity Fund                              | 4.2%               | 
+-------------------------------------------------------+--------------------+ 
| Hard Assets 2X Fund Ltd.                              | 4.1%               | 
+-------------------------------------------------------+--------------------+ 
| Thomas H. Lee Parallel Fund VI L.P.                   | 4.0%               | 
+-------------------------------------------------------+--------------------+ 
| Renaissance Institutional Futures Fund International  | 3.1%               | 
| LLC                                                   |                    | 
+-------------------------------------------------------+--------------------+ 
 
 
+-------------------------------------+-------------------------------------+ 
| Geographical analysis as at 31 December 2008                              | 
|                                                                           | 
+---------------------------------------------------------------------------+ 
| North America                       | 55.3%                               | 
+-------------------------------------+-------------------------------------+ 
| Global                              | 22.3%                               | 
+-------------------------------------+-------------------------------------+ 
| Europe                              | 18.6%                               | 
+-------------------------------------+-------------------------------------+ 
| Asia and other                      |  3.8%                               | 
+-------------------------------------+-------------------------------------+ 
 
 
+--------------------------------------+-----------------------------------+ 
| Asset Allocation Summary as at 31 December 2008                          | 
+--------------------------------------------------------------------------+ 
| Strategic Hedge Funds portfolio¹     | 35.1%                             | 
+--------------------------------------+-----------------------------------+ 
| Private Equity Funds portfolio       | 24.7%                             | 
+--------------------------------------+-----------------------------------+ 
| Cash                                 | 19.4%                             | 
|                                      |                                   | 
+--------------------------------------+-----------------------------------+ 
| Specialty Funds portfolio            | 10.7%                             | 
+--------------------------------------+-----------------------------------+ 
| Transitional portfolio²              | 10.1%                             | 
+--------------------------------------+-----------------------------------+ 
1The part of the Company's portfolio which is managed by RMF. 
 
 
2The Company seeks to avoid return dilution caused by holding amounts that are 
not committed or are committed, but not yet drawn-down, on both underlying 
Private Equity Funds and underlying Specialty Funds by investing a portion of 
such amounts in a range of transitional investments. 
 
 
 
 
 
 
 
 
 
 
 
 
 
Private Equity and Specialty Funds Portfolio 
 
 
The Company has now made commitments to eighteen Private Equity and Specialty 
Funds. The Company made one further commitment during the period, to Resonant 
Music I L.P. on 31 October 2008, and this completes its Private Equity and 
Specialty Funds investment programme for the near-term. 
 
 
The portfolio has allocations to two secondaries Funds, nine private equity and 
venture capital Funds, and seven specialty Funds. 
In regard to the Company's holdings of two secondaries Funds, Coller 
International Partners V L.P. has so far made three distributions while 
Greenpark International Investors III L.P. has made nine, and these account for 
all the Private Equity and Specialty Funds' distributions to the Company as at 
31 December 2008. Subsequent to the end of the fourth quarter 2008, the Company 
also received a distribution from Goldman Sachs Capital Partners VI L.P. of 
US$1.45 million. 
 
 
The credit crisis has deeply affected the ability of certain of the Company's 
managers to obtain financing at attractive terms leading them to only invest in 
deals with light or no leverage. In addition, the large fall in equity markets 
in September and October 2008 is likely to impact the value of the Private 
Equity and Specialty Funds when they are valued during the Company's annual 
audit which will take place after the financial year end, which is 31 March 
2009. 
 
 
The mid-cap private equity market had remained more robust despite the credit 
crisis, being less dependent on leverage to generate returns than the large-cap 
sector. However, deal-flow is clearly slowing down across all sectors of the 
buy-out industry and we are expecting to see a continued slow-down in the 
investment pace from our managers in this sector. 
 
 
MatlinPatterson Global Opportunities Partners III L.P., Oaktree OCM 
Opportunities Fund VIIb L.P. ("Oaktree"), and HIG Bayside Debt & LBO Fund II 
L.P.'s role in the Company's portfolio is to provide a counterbalance to the 
Private Equity Funds portfolio, since they make their best returns in more 
challenging economic environments by investing in distressed opportunities and 
so are expected to benefit from the current credit crisis. While the other 
managers have slowed their investment programmes, Oaktree has quickened its pace 
to take advantage of dislocations in the debt market, though it has focused on 
the most senior credits, senior secured debt, which are now trading at levels 
which offer the potential to  provide private equity-type returns. 
 
 
Pine Brook Capital Partners L.P. ("Pine Brook"), which focuses on the energy and 
financial services sectors, provides the Company with exposure to energy 
commodities and also has the potential to take advantage of the distressed 
environment in financial services to acquire assets cheaply. 
 
 
LimeTree Emerging Beachfront Land Investment Fund II L.P. was selected because 
of its focus on emerging beaachfront land plots in Southeast Asia. We anticipate 
that rising income levels in the region may lead to more demand for holidays, 
raising the value of prime beachfront properties with scarcity value. 
Having completed the Company's investment programme for the near-term, the 
Investment Manager will focus on monitoring the existing investments. 
Transitional Portfolio 
 
 
For the period 1 October to 31 December 2008, the Transitional portfolio 
delivered an approximate gross return including cash of -15.47%. 
 
 
At the end of the quarter the Transitional portfolio contained two Funds, having 
taken a full provision against the Company's holding in Defender: Aarkad plc 
("Aarkad") and Kaiser Trading Fund SPC ("Kaiser Trading Fund"). RIFF was 
redeemed on 31 December 2008. 
 
 
As previously reported, the Transitional portfolio has been refined throughout 
2008 in response to the deteriorating global economic environment.  Although we 
have been researching a number of uncorrelated, low volatility managers during 
the period and will consider investing some of the Transitional portfolio's cash 
balances in such strategies, it is the investment manager's intention to 
maintain cash reserves in the short term. 
 
 
One such new investment has been made, however, in Kaiser Trading Fund, a 
short-term-focused managed futures Fund, made at the beginning of October 2008. 
Kaiser Trading Fund performed satisfactorily during the quarter. 
 
 
In October, the Transitional portfolio returned -1.21%. The portfolio benefited 
from holding cash, but was negatively impacted by RIFF. 
 
 
In November, the portfolio returned -14.83%. Positive results from the three 
Funds were unfortunately overshadowed by the full provision that was taken 
against Defender, prompted by the alleged fraud at BMIS (see above). 
 
 
The Company also submitted redemption notices in November to Aarkad and RIFF. It 
was felt Aarkad potentially exposed the Company to too much UK housing risk in 
the medium term and the holding in RIFF was redeemed because events in October 
revealed the Fund to be more volatile than intended by the manager and 
consequently the Fund no longer met the volatility criteria required of the 
portfolio. Full proceeds were received from RIFF at the end of December. 
Proceeds from Aarkad are not due until May 2009, although the manager has 
suspended redemptions until further notice. 
 
 
In December, the portfolio returned 0.47%, benefiting from positive returns from 
all three Funds and cash holdings. 
 
 
 
 
 
 
 
 
 
 
 
 
Strategic Hedge Funds portfolio 
 
 
For the period 1 October to 31 December 2008, the portfolio delivered an 
approximate gross return of -12.86%.  The negative return resulted from the 
decision to take a full provision against Rye Select following the allegations 
of fraud against BMIS (see above). 
 
 
The portfolio returns by month were -1.52% in October, -11.73% in November and 
0.25% in December. 
 
 
Equity Hedged 
The European manager posted a loss during a quarter where global equity markets 
experienced unprecedented volatility. Generally, the manager was impacted by 
both the long and short side, as trends see-sawed during the period. Short real 
estate exposure was initially a performance driver, but ended up a negative 
contributor following December's rally in the sector. Overall long exposure 
detracted from performance, with one exception being telecommunications. 
 
 
The U.S. manager posted mixed results over the quarter, posting a negative 
return. Losses were incurred in October and November, when long positions in 
consumer sectors and technology detracted from performance. The manager's most 
successful play has been the net short exposure to industrials, as it believes 
the sector will endure severe earnings pressure in the future, which are not 
fully reflected in valuations. 
 
 
The dedicated short seller was redeemed from the portfolio in October, after 
posting a strong return. The gains were driven by the sharp declines in U.S. 
equities and general volatility in the global equity markets, providing an ideal 
trading environment for the manager. 
 
 
Relative Value 
The multi-strategy manager finished the quarter down. Following October's 
disastrous credit conditions, the manager struggled with its convertible bond 
and credit strategies. October saw the relationship between bonds and credit 
derivates all but break-down, dragging prices down by double-digits. The losses 
were further exacerbated by mark-downs on distressed bank debt in December. 
 
 
Event Driven 
It was an excellent quarter for the distressed manager, which posted a positive 
return during a period that will go down in history as one of the most difficult 
for credit markets. Key strengths for the manager were in various short 
positions in European sovereign bonds, while overall short credit exposure was 
also profitable. There were some contributions on the long side, in particular 
from positions in two auto-finance companies that rose after the U.S. government 
confirmed its support for them. 
 
 
The European special situations manager posted a loss during the quarter. The 
manager entered October with low exposure and continued to reduce risk during 
the period, preferring to be largely in cash until a clearer picture of the 
markets emerges. 
 
 
The U.S. based special situations manager returned a strong positive return over 
the quarter, posting strong gains every month. In addition to the manager's 
successful short financials exposure in both credit and equity, profits were 
realised from the closing of the Anheuser Busch/Inbev deal in November. 
 
 
Global Macro 
On the heels of the third quarter 2008's severe reversals in commodities, the 
manager posted a loss during the fourth quarter 2008. Falling commodity prices 
and the strengthening of the U.S. Dollar further intensified the difficult 
environment. Widespread liquidation of commodity positions pushed the precious 
metals sector to new lows, causing losses for the manager. December finally shed 
some positive light on the natural resources sector, with a gradual improvement 
signalling that perhaps investor sentiment would also rise. 
 
 
The global trader reported a negative return over the quarter. Events during the 
quarter prompted significant global market intervention on many levels, 
resulting in increased volatility across all asset classes without exception. 
Foreign exchange and interest rates continued to adjust, which created some 
difficulties for the manager. The high volatility did benefit the manager's 
equity book, contributing to performance in October and November. 
 
 
Managed Futures 
The strongest performer in the whole portfolio was our long-term trend follower, 
which posted a very strong gain. Profitable trends came from commodities and 
interest rates as well as falling equity markets. Currencies were also strong 
performers, in particular the strengthening of the U.S. Dollar over the quarter. 
 
 
Both short-term traders posted gains during all three months and finished the 
quarter with positive returns. The heightened volatility throughout the quarter 
was favourable, as the managers were able to take advantage of the environment, 
adjusting positions depending on the changing market dynamics. 
 
 
 
 
Overall Portfolio Strategy and Outlook 
 
 
The Company's Portfolio has been refined throughout calendar year 2008 in 
response to the deteriorating economic climate. This process began at the 
beginning of 2008 with the elimination of long-only equities from the 
Transitional portfolio and has continued with the redemption from the remaining 
Funds with equity bias and a decision to maintain increased cash reserves in the 
short term. 
 
 
The investment manager adopted a relatively defensive stance in the Company's 
Private Equity and Specialty Funds portfolios since inception. The investment 
manager selected managers which invested on a relatively limited basis in 2007, 
when valuations were at their highest, and invested reasonably heavily into 
distressed debt managers, which may benefit from the current depressed economic 
environment. 
 
 
The investment manager has substantially completed the Company's Private Equity 
and Specialty Funds investment programme. The investment manager has tilted the 
Company's investment in 2008 vintage funds towards distressed and uncorrelated 
investments, as the investment manager anticipates these investments may perform 
well in the current environment. 
 
 
RMF maintains a significant long-volatility bias in the Strategic Hedge Funds 
portfolio, and remains confident this will provide strong diversification 
irrespective of market directionality. RMF will continue to monitor Funds that 
have struggled in the financial markets' downturn and will, if necessary, redeem 
from those Funds it feels may continue to find it difficult to deliver returns 
in the challenging market conditions. 
 
 
The intention is, in time, to reinvest part of the Transitional portfolio into 
lower risk, lower volatility strategies. The investment manager has focused its 
due diligence on short-duration managed futures strategies and funds which 
provide stable monthly returns. We intend to maintain cash reserves in order to 
meet capital calls from the Private Equity and Specialty Funds and in the 
immediate future the investment manager is not expecting to make any new 
investments in the Transitional portfolio. 
 
 
Since the Company's investment programme is largely completed, the investment 
manager will be focusing on monitoring the exposures of the managers. 
 
 
 
 
IMPORTANT NOTE 
This Interim Management Statement has been issued by order of RBC Offshore Fund 
Managers Ltd, Secretary, for and on behalf of Bramdean Alternatives Limited (the 
"Company"). 
The material relating to the Company included in this report is provided for 
information purposes only and does not constitute an invitation or offer to 
subscribe for or purchase shares in the Company. This material is not intended 
to provide a sufficient basis on which to make an investment decision. 
Information and opinions presented in this material relating to the Company have 
been obtained or derived from sources believed by the Company's investment 
manager, Bramdean Asset Management LLP ("Bramdean") to be reliable, but Bramdean 
makes no representation as to their accuracy or completeness. Estimated results, 
performance or achievements may materially differ from any actual results, 
performance or achievements. Except as required by applicable law, the Company 
and Bramdean expressly disclaim any obligations to update or revise such 
estimates to reflect any change in expectations, new information, subsequent 
events or otherwise. All investments are subject to risk. Prospective investors 
are advised to seek expert legal, financial, tax and other professional advice 
before making any investment decisions. 
You should note that, if you invest in the Company, your capital will be at risk 
and you may therefore lose some or all of any amount that you choose to invest. 
This material is not intended to constitute, and should not be construed as, 
investment advice. 
PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE RESULTS 
Contact: Investor Relations on 020 7052 9272 or [e-mail] 
Registered Office: Canada Court, Upland Road, St.Peter Port, Guernsey, GY1 3QE, 
Channel Islands. 
Please note that up-to-date information on the Company, including its monthly 
NAV and share prices, factsheets, Annual Report and Financial Statements, 
Prospectus and portfolio information can be found at 
www.bramdeanalternatives.com or via a link from www.bramdean.com. 
This Interim Management Statement has been prepared solely to provide 
information to meet the requirements of the UK Listing Authority's Disclosure 
and Transparency Rules. This statement has not been audited. 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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