Interim Management Statement

 

TIDMBRAL 
 
RNS Number : 6933X 
Bramdean Alternatives Limited 
19 August 2009 
 

Bramdean Alternatives Limited (the "Company") 
19 August 2009 
 
 
 
 
Interim Management Statement 
For the period 1 April 2009 to 30 June 2009 
 
 
This Interim Management Statement relates to the period from 1 April 2009 to 30 
June 2009 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 closed-ended 
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 (the "Investment Manager") as its investment 
manager. The Investment Manager is responsible for the management of the 
Company's assets, subject to the overall supervision of the Company's Board of 
Directors. 
 
 
The Investment Manager has appointed RMF Investment Management, Nassau Branch 
("RMF") to manage the assets of that part of the Company's portfolio which may, 
at the Investment Manager's discretion, be allocated 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 | 31/03/2009      | 30/06/2009      | Comparative       | 
|                      |                 |                 | performance       | 
+----------------------+-----------------+-----------------+-------------------+ 
| Net Asset Value      |  90.10 pence    |  79.28 pence    | - 12.00%          | 
+----------------------+-----------------+-----------------+-------------------+ 
| Share price          |  40.50 pence    |  51.25 pence    | + 26.54%          | 
+----------------------+-----------------+-----------------+-------------------+ 
|                      |                 |                 |                   | 
+----------------------+-----------------+-----------------+-------------------+ 
| US Dollar Share      | 31/03/2009      | 30/06/2009      | Comparative       | 
| class                |                 |                 | performance       | 
+----------------------+-----------------+-----------------+-------------------+ 
| Net Asset Value      | US$0.7503       | US$0.7586       | + 1.10%           | 
+----------------------+-----------------+-----------------+-------------------+ 
| Share price          | US$0.56         | US$0.60         | + 7.14%           | 
+----------------------+-----------------+-----------------+-------------------+ 
|                      |                 |                 |                   | 
+----------------------+-----------------+-----------------+-------------------+ 
| Financial Position   | 31/03/2009      | 30/06/2009      | Comparative       | 
|                      |                 |                 | performance       | 
+----------------------+-----------------+-----------------+-------------------+ 
| Total common net     | US$176,503,855  | US$178,261,959  | + 0.99%           | 
| assets               |                 |                 |                   | 
+----------------------+-----------------+-----------------+-------------------+ 
| Net Asset Value      | US$176,106,303  | US$178,039,131  | + 1.10%           | 
+----------------------+-----------------+-----------------+-------------------+ 
| Undrawn commitments  | 72.83%          | 71.96%          | - 1.19%           | 
| to Private Equity &  |                 |                 |                   | 
| Specialty Funds as % |                 |                 |                   | 
| of NAV               |                 |                 |                   | 
+----------------------+-----------------+-----------------+-------------------+ 
 
 
Share prices shown are official London Stock Exchange closing 
 
 
Sources: 
London Stock Exchange 
Company's Company Secretary and Administrator (RBC Offshore Fund Managers 
Limited) 
Bramdean Asset Management LLP 
 
 
+-----------------+------------+ 
| KEY FACTS                    | 
+------------------------------+ 
| MANAGER         | BRAMDEAN   | 
|                 | ASSET      | 
|                 | MANAGEMENT | 
|                 | LLP        | 
+-----------------+------------+ 
| MARKET          | GBP75.1    | 
| CAPITALISATION  | million    | 
| (30/06/2009)    |            | 
+-----------------+------------+ 
| 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 
 
 
The numbers of participating shares of no par value in the Company ("Shares") in 
issue as at 30 June 2009 were as follows: 
 
 
+----------------------+--------------------------+ 
| Sterling Shares      | 90,715,319               | 
+----------------------+--------------------------+ 
| US$ Shares           | 78,573,876               | 
+----------------------+--------------------------+ 
In the period, the Company did not buy back any of its Shares. 
 
 
On 22 May 2009, certain holders of Sterling Shares in the Company elected to 
switch into US Dollar Shares and certain holders of US Dollar Shares in the 
Company elected to switch into Sterling Shares on the basis of the net asset 
value ("NAV") of the Company's Shares as at 30 April 2009. 
 
 
As a result of the switch, 1,429,183 Sterling Shares were converted into 
2,461,821 new US Dollar Shares and 4,005 US Dollar Shares were converted into 
2,325 new Sterling Shares. Accordingly, the total voting rights in the Company 
changed to 261,764,391 following the conversion. 
 
 
These elections were approved by the Company's Board of Directors on 21 May 2009 
and took effect on 22 May 2009. 
 
 
 
 
MARKET REPORT 
 
 
Equity markets performed strongly during the second quarter of 2009. Markets 
were very strong during April and May and then declined during June. As equities 
rose on hopes of economic recovery, bond prices declined in anticipation of 
interest rate rises in the future. In the currency markets, the US Dollar lost 
some ground and Sterling recovered sharply over the quarter. Hedge funds 
performed significantly better, having struggled after the Lehman Brothers 
collapse and during January and February of this year when markets were 
exceptionally weak. Private equity funds saw further write-downs during the 
second quarter, reflecting weaker market conditions during the fourth quarter of 
2008 and the first quarter of 2009. 
 
 
During April, the FTSE 100 index rose by 8% and the FTSE World Index was up by 
13.5%, its largest monthly gain since January 1987. Emerging markets saw the 
best performance, rising by over 16% during the month, which was the largest 
gain since 1993. These gains seemed premature to some as the global economy 
remained in a deep recession. However, markets tend to look forward and the 
growing optimism was reinforced by a slightly more positive statement from the 
US Federal Reserve on 29 April 2009 accompanying its interest rate decision to 
keep its target rate unchanged. While equities staged a sharp recovery, credit 
spreads tightened and yields rose in the bond markets. 
 
 
The tone in Europe was a little less optimistic than in the US. The European 
Central Bank eased credit conditions by extending longer-term loans to banks. In 
the UK, the Bank of England continued with its policy of quantitative easing, 
expanding the money supply directly by buying government and corporate debt. 
Despite this activity gilt prices came under pressure, as investors showed 
concern about the scale of government debt which was projected to be 12.4% of 
GDP. 
 
 
At the beginning of May, equity markets continued to be strong in the face of 
further weak economic data. As the rise continued, global equities moved into 
positive territory for the year, overcoming the weak returns that had been 
recorded during January and February. By the end of the month, the MSCI World 
Index was up by 10% year to date. Spreads between LIBOR and Treasury yields 
reverted to normal and long-term government bond yields in the advanced 
industrial economies returned to pre-crisis levels. At the same time, GDP 
sharply contracted in the US and European economies. Yield curves in the US, the 
Euro zone and the UK steepened appreciably as government borrowing soared and 
the US Dollar continued to weaken against the Euro and Sterling. 
 
 
The rally continued at the beginning of June, but then equity markets 
retreated, amid doubt about the likely pace and timing of an economic recovery. 
In the UK, the equity market took heart from the fact that the services sector, 
which accounts for 75% of Britain's economic output, grew during May. Across the 
developed world, credit conditions remained tight, putting pressure on small and 
medium-sized companies. There was a fear that, despite some signs of recovery, 
this would be stifled by the lack of credit available to smaller companies. Bank 
of England data showed that lending fell by GBP4.7 billion in April (excluding 
the financial sector), but there was an increase in mortgage lending with 43,201 
home loans approved in the UK. In addition, the Halifax index of house prices 
rose by 2.6% during May, the largest jump since October 2002. A similar pattern 
was discernable in the US, where pending home sales rose by 6.7% in April over 
March, the largest gain since 2001. Another positive sign in the US was a 
slowing of the pace of job losses. 
 
 
Markets weakened in mid-June, partly because of the sharp rise in bond yields. 
The fear was that a strong recovery would lead to inflationary pressures and 
that interest rates would have to rise. The yield on the 10-year Treasury bond 
briefly rose above 4%, which pushed mortgage rates higher. There was also 
concern among bond investors about the need for governments in the developed 
world to issue bonds to finance their rising deficits. In the UK, positive 
comments from Mervyn King, the Governor of the Bank of England, added to the 
view that the recession would soon end. This led to a further strengthening of 
Sterling against the Euro and the US Dollar. 
 
 
 
 
MATERIAL EVENTS 
 
 
Extraordinary General Meeting ("EGM") 
 
 
On 21 May 2009, the Company issued a circular to shareholders convening an EGM, 
pursuant to a shareholder's requisition, which set out the proposed resolutions 
to remove the previous Board and appoint three individuals nominated by the 
shareholder. The EGM was held on 18 June 2009 and, as a result of a shareholder 
vote on the resolutions, the previous Board was removed and three new Board 
members were appointed with immediate effect: Jonathan Carr (Chairman), David 
Copperwaite and Mark Tucker. 
 
 
The new Board appointed new financial advisers, Matrix Corporate Capital LLP, 
and new UK Solicitors to the Company, Herbert Smith LLP. 
Petersfield Asset Management Limited ("Petersfield") discussions with the 
Company 
 
 
On 30 April 2009, the Company's previous Board announced that it had received an 
approach which "may or may not lead to an offer being made for the entire issued 
share capital of the Company". The previous Board also announced that it had 
requested the Company's financial advisers, Cenkos Securities plc, to conduct a 
strategic review of the options available to the Company. 
 
 
On 9 June 2009, the Company posted a letter to shareholders stating that the 
potential bidder was Petersfield, a company beneficially owned by Nicola Horlick 
(who is Chief Executive Officer of Bramdean Asset Management LLP). On 15 June 
2009, the previous Board announced that it had decided to terminate discussions 
with Petersfield regarding any proposed offer. Notwithstanding, Petersfield 
indicated to the Company that it was not withdrawing its approach and therefore 
the Company remained in an offer period under the Takeover Code. On 30 July 2009 
(subsequent to the period reported on), Petersfield terminated offer discussions 
with the Company which was welcomed by the Board. 
 
 
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 3.1% of the Company's 
June 2009 NAV. 
 
 
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. 
 
 
A restructuring proposal was submitted to investors in Deephaven in April 2009, 
providing investors with the option to either transfer a substantial portion of 
their Deephaven interests into Stark funds or remain in the Deephaven fund for a 
gradual liquidation. The restructuring proposal for Deephaven was approved by 
investors in May 2009; the Company elected to remain in the Deephaven fund for 
gradual liquidation. Subsequent to the end of the quarter, the Company received 
the first of the distributions from the liquidation on 31 July 2009, equal to 
15% of the Company's holding. 
 
 
Aarkad Plc ("Aarkad") 
 
 
As previously reported, the Company was informed on 30 January 2009 that Aarkad 
was suspending redemptions and withdrawals with immediate effect. This action 
impacted the Company's previously submitted redemption notice to Aarkad. The 
Company decided, in consultation with its auditors PricewaterhouseCoopers CI 
LLP, to take a provision against its investment in Aarkad based on the latter's 
own 2008 audited accounts. Aarkad now represents 3.1% of the Company's NAV as at 
30 June 2009. 
 
 
A restructuring proposal was submitted to investors in Aarkad on 12 May 2009, 
providing investors with the option to switch into a quick liquidation share 
class or a longer-term gradual liquidation share class. On 18 June 2009, Aarkad 
sent a letter to investors stating that consent from the required number of 
investors in the fund had not been obtained in order to restructure the fund. 
Aarkad is in the process of producing a new proposal to investors. 
 
 
 
 
PERFORMANCE COMMENTARY 
 
 
The share prices of the Company's Sterling and US Dollar Shares were 
significantly affected during the quarter by the corporate activity described 
above. The two share classes continued to show divergent share price 
performance, although the significant disparity in share price to NAV per share 
between the classes has now largely closed. 
 
 
During the quarter, investment companies saw discounts narrow somewhat as equity 
markets recovered. Quoted private equity fund of funds participated in this 
recovery, with the average sector discount moving to 57% at the end of the 
quarter vs 72% at the start of the period. After touching a closing low of 
40.5 pence on 31 March 2009, the Company's Sterling Shares rose to 46.25 pence 
on 29 April 2009, the dealing day prior to the announcement of a possible offer 
for the Company. The US Dollar Shares remained extremely illiquid throughout the 
quarter, and fell from 56 cents to 38 cents between the 1 April 2009 and the 
offer announcement on 30 April 2009. The only recorded trade in the US Dollar 
Shares was 2,000 on 2 April 2009. At the quarter end, the Sterling Shares closed 
with a mid-market price of 51.25 pence and the US Dollar Shares with a 
mid-market price of 60 cents. 
 
 
As at 30 June 2009, the NAV per Share was 79.28 pence for the Sterling Shares 
and US$0.7586 for the US Dollar Shares. This represents a decline of 18.09% and 
24.03% in the respective initial NAVs that were priced as at 31 July 2007. Over 
the course of the second quarter, the NAV per Share of the Sterling and US 
Dollar Share classes decreased by 12.00% and increased by 1.10% respectively. 
At the end of the second quarter 2009, the Sterling Shares traded at a 35.4% 
discount to the June NAV while the US Dollar Shares traded at a 20.9% discount 
to NAV. This disparity in performance during the second quarter is almost 
entirely due to the 15% upward move in Sterling vs the US Dollar which had a 
translational effect on the Sterling class NAV. 
 
 
 
 
+-------------------------------------------------------+-------------------+ 
| PORTFOLIO                                                                 | 
| Top Ten Holdings as at 30 June 2009                                       | 
+---------------------------------------------------------------------------+ 
| Greenpark International Investors III LP              |              6.7% | 
+-------------------------------------------------------+-------------------+ 
| Oaktree OCM Opportunities Fund VIIb LP                |              5.4% | 
+-------------------------------------------------------+-------------------+ 
| D.E. Shaw Oculus International Members Interest       |              5.3% | 
+-------------------------------------------------------+-------------------+ 
| Thomas H. Lee Parallel Fund VI L.P.                   |              3.7% | 
+-------------------------------------------------------+-------------------+ 
| Coller International Partners V LP                    |              3.4% | 
+-------------------------------------------------------+-------------------+ 
| Deephaven Global Multi-Strategy Fund Ltd              |              3.1% | 
+-------------------------------------------------------+-------------------+ 
| Aarkad Plc                                            |              3.1% | 
+-------------------------------------------------------+-------------------+ 
| SVG Strategic Recovery fund II LP                     |              2.8% | 
+-------------------------------------------------------+-------------------+ 
| Lansdowne UK Equity Fund Ltd                          |              2.5% | 
+-------------------------------------------------------+-------------------+ 
| Paulson Advantage Plus Ltd                            |              2.4% | 
+-------------------------------------------------------+-------------------+ 
 
 
 
 
+--------------------------------------+-----------------------------------+ 
| Geographical analysis as at 30 June 2009                                 | 
|                                                                          | 
+--------------------------------------------------------------------------+ 
| North America                        |                            69.22% | 
+--------------------------------------+-----------------------------------+ 
| Europe                               |                            16.20% | 
+--------------------------------------+-----------------------------------+ 
| Global                               |                            11.66% | 
+--------------------------------------+-----------------------------------+ 
| Asia and other                       |                             2.92% | 
+--------------------------------------+-----------------------------------+ 
 
 
+--------------------------------------+-----------------------------------+ 
| Asset Allocation Summary as at 30 June 2009                              | 
+--------------------------------------------------------------------------+ 
| Cash1                                |                            38.43% | 
+--------------------------------------+-----------------------------------+ 
| Private Equity Funds                 |                            24.52% | 
+--------------------------------------+-----------------------------------+ 
| Strategic Hedge Funds²               |                            19.71% | 
+--------------------------------------+-----------------------------------+ 
| Specialty Funds                      |                            14.23% | 
+--------------------------------------+-----------------------------------+ 
| Transitional portfolio3              |                             3.12% | 
+--------------------------------------+-----------------------------------+ 
 
 
1The Company currently has six approved cash deposit accounts with: Bank of 
Scotland International Jersey, BNP Paribas Jersey, Deutsche Bank Guernsey, 
Rothschild Guernsey, RBC (CI) Limited, RBS International Guernsey 
2The part of the Company's portfolio which is managed by RMF. 
3The 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. At present, the Investment 
Manager favours holding cash and so the Transitional portfolio represents a 
small part of the overall portfolio. 
 
 
 
 
PORTFOLIO OVERVIEW 
 
 
The Company was 61.3% invested at the end of the second quarter 2009 and held 
investments in 28 funds. 
 
 
The Company has made commitments to 18 underlying Private Equity & Specialty 
Funds amounting to approximately US$226.8 million. The total amount that has 
been drawn-down on the commitments made is approximately US$99.2 million and as 
at 30 June 2009, the Company's commitments to Private Equity & Specialty Funds 
were approximately 43.7% drawn-down. The undrawn commitments represent 71.9% of 
the total NAV as at 30 June 2009. 
 
 
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 & Specialty Funds, its cash reserves and its ability 
to gear by up to 25% of NAV. As at 30 June 2009, 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$4.0 million as at 30 June 
2009. 
 
 
The Company holds one fund in its Transitional portfolio and nine funds in its 
Strategic Hedge Funds portfolio. The Transitional portfolio reported a small 
negative return in the second quarter 2009 and the Strategic Hedge Funds 
portfolio reported a small positive return on the back of a rally in equity 
markets and the ongoing recovery in credit assets. 
 
 
In the Private Equity & Specialty Funds portfolio, the second quarter was 
characterised by downward revisions in portfolio values due to the downturn in 
global equity markets. 
Private Equity & Specialty Funds Portfolio 
 
 
The Company has now made commitments to 18 Private Equity & Specialty Funds and 
has completed its Private Equity & 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 11, and these account for 
all the Private Equity & Specialty Funds' distributions to the Company as at 30 
June 2009 except one from Goldman Sachs Capital Partners VI L.P. in January 
2009. 
 
 
The credit crisis continues to affect certain of the Company's managers who have 
broadly taken a cautious view and have held back money for investment resulting 
in them generally only investing in deals with light or no leverage. In 
addition, the large fall in equity markets in 2008 had a negative impact on the 
value of the Private Equity & Specialty Funds' underlying portfolio companies. 
This led to write-downs in the value of most of the funds in this portfolio per 
their annual audits and was responsible for a large portion of the decline in 
the Company's NAV during the first and part of the second quarter 2009. 
 
 
The mid-cap private equity market has remained more robust during this period as 
it is less dependent on leverage to generate returns than the large-cap sector. 
Goldman Sachs Capital Partners VI L.P. invests in mid-cap transactions globally, 
while AIG Brazil Special Situations Fund II L.P. invests in mid-cap transactions 
in Latin America. These managers expect to invest at a slower pace this year 
than initially anticipated in order to limit deployment of capital while 
economic conditions are still deteriorating. Similar to the large-cap sector, 
the fall in public equity values will affect the mark-to-market values of 
existing mid-cap investments. 
 
 
MatlinPatterson Global Opportunities Partners III L.P., Oaktree OCM 
Opportunities Fund VIIb L.P., 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 is taking advantage of dislocations in the 
debt market, focusing on the most senior credits, senior secured debt, which are 
now trading at levels which can provide private equity-type returns. Oaktree has 
now substantially invested most of its commitments. 
 
 
Pine Brook Capital Partners L.P. 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. Thoma Bravo Fund IX L.P. was 
selected to provide exposure to buyout opportunities in the lower mid-cap market 
in the US via Thoma Bravo's extensive network and very long track record in the 
buy-and-build space. These managers will continue investing at their current 
pace, with Pine Brook in particular likely to be able to benefit from the drop 
in values of financial services and energy companies. 
 
 
Resonant Music I L.P. provides finance for the music of independently produced 
feature films and TV series. Resonant Music is aiming to provide finance for 
around 200 film and TV projects, predominantly in the UK and the US over the 
next four years. This fund was selected to take advantage of the dislocation in 
financing markets for intellectual property and also of the distressed 
environment to create a valuable music publishing catalogue. 
 
 
Having completed the Company's investment programme for the near-term, the 
Investment Manager will focus on monitoring the existing investments. The 
underlying managers are currently working to ensure that existing portfolio 
holdings are not substantially damaged by the economic crisis; the reopening of 
credit markets allows many of the managers to refinance their portfolio 
companies. However, the large fall in equity markets in 2008 and early 2009 have 
also provided many opportunities to enter investments at attractive prices. 
While there is still a disparity between the prices buyers are willing to pay 
and what sellers want to sell at, the gap is closing and will eventually lead to 
an increase in the number of transactions being completed. The Company expects 
large draw-downs of capital for this purpose if the economy continues its 
present pace of recovery. 
Transitional Portfolio 
 
 
For the period 1 April to 30 June 2009, the Transitional portfolio delivered an 
approximate gross return including cash of -3.81%. At the end of the quarter the 
Transitional portfolio contained one Fund: Aarkad Plc. Kaiser Trading Fund SPC 
was redeemed on 31 May 2009. 
 
 
Through the course of 2008 and early 2009, the Transitional portfolio had 
gradually been liquidated into cash to protect the Company against the effects 
of the global economic crisis and to preserve the Company's ability to meet its 
Private Equity & Specialty Funds commitment obligations. 
 
 
In April 2009, the Transitional portfolio returned -3.95%. The portfolio was 
negatively impacted by the provision taken against Aarkad. In May 2009, the 
portfolio returned 0.13%, with good performance from Kaiser Trading Fund and 
cash holdings contributing as well. In June 2009, the portfolio returned 0.01%, 
with all the returns coming from cash holdings. 
 
 
Strategic Hedge Funds Portfolio 
 
 
For the period 1 April to 30 June 2009, this portfolio delivered an approximate 
net return of 1.92%, bringing year to date performance up to 4.22%. The positive 
return came amid a rally in equity markets and the ongoing recovery in credit 
assets. 
 
 
Equity Hedged 
The European manager posted a gain of 11.54%, riding the equity market rally in 
April and May. The manager had increased exposure going into the quarter, 
producing returns from the long side in US and UK banking and mining sectors. 
Unfortunately some markets reversed in June, leading to a small loss for the 
manager from resources, financials and consumer exposure. 
 
 
The US manager was up 0.43% through June, slowly building up exposure over the 
quarter, yet remaining at the lower end of the spectrum reflecting a continued 
cautious stance. Returns were initially driven by solid fundamental stock 
picking in the industrial space, with gains partially offset in May when short 
exposure in poor quality stocks incurred losses as share values surged. 
 
 
Relative Value 
Following a slow start to the quarter, with performance down due to the 
implementation of a new pricing policy, the multi-strategy manager rebounded to 
finish up 3.55% over the period. Returns in May and June were driven by credit 
and convertible bond exposure. Tightening of credit basis spreads in the US 
distressed investments contributed positively, while the Asia-Pacific region 
drove performance in the convertible bond book. 
 
 
Event Driven 
The distressed manager took advantage of the favourable environment for credit 
related strategies, gaining 4.95% through June. The manager actively adjusted 
exposure over the quarter, adding to core long positions and lightening from 
their short book. Profitable positions were long exposure in financing companies 
of automobile firms, as well as a defaulted financing company. 
 
 
The European special situations manager was redeemed from the portfolio in 
April, although ended on a high note, returning 15.86% during the month. 
Performance was driven by the manager's side pocket holding in a European 
financial exchange, which rallied strongly during April. 
 
 
The US-based special situations manager returned 1.29% over the quarter, as 
losses in April and June were offset by strong May performance. In April the 
manager was hurt from short exposure to the bank sector, as financials rallied 
with the rest of the market. Performance in May was largely attributable to 
positions in gold as the sector rallied significantly, although slightly 
detracted from returns in June when the prices of gold miners slipped back. 
 
 
Global Macro 
The global trader bounced back after a poor start to the year, returning 0.92% 
during the quarter. Gains were mostly generated in May, when the manager 
profited from newly established swap positions across different geographies 
which performed well on the back of general swap spread tightening throughout 
the month. 
 
 
Managed Futures 
The long term trend follower had a difficult quarter, returning -10.90% as 
trends reversed and conditions hardened for long term commodity trading advisors 
(CTAs). The manager suffered from short exposure in equities, particularly in 
April, as well as reversals in commodities and fixed income trends during the 
period. 
 
 
The short term traders had mixed performance, although all contributed 
positively in May, as bullish sentiment drove risk assets higher, proving 
favourable for momentum strategies. Generally, managers benefitted from the 
upward movement in stock market indices, particularly one fund which returned 
over 19% during the quarter, posting strong gains in April and May. 
 
 
Outlook 
Macroeconomic conditions have rebounded from severely depressed levels, but 
current growth rates in the developed world remain weak. The second half of 2009 
may offer improved economic and corporate earnings fundamentals, however 
investors should be cautious extrapolating short-term improvements into 
medium-term recovery given the debt overhang that remains. While huge fiscal 
stimulus and debt guarantees have transferred some liabilities from the private 
to the public sector, consumer, corporate and government de-leveraging will be 
an ongoing theme in the months and years ahead.  The current low demand for, and 
supply of credit is a structural development which will significantly influence 
asset prices going forward. While recognising some credit-based strategies offer 
excellent opportunities and that risky assets can rally further given short-term 
growth spurts, liquid and actively traded strategies are favoured given the 
above risk factors. 
 
 
 
 
Overall Portfolio Strategy and Outlook 
 
 
The shift to a more defensive profile for the Company's portfolio, which was 
carried out in 2008 and Q1 2009, continued during the second quarter 2009. The 
decision was taken in December 2008 to reduce the Company's weighting to the 
Strategic Hedge Funds portfolio and maintain increased cash reserves in the 
short term. 
 
 
The Investment Manager's relatively defensive stance in the Company's Private 
Equity & Specialty Funds portfolio continues. Funds have been chosen which share 
the Investment Manager's bearish stance on markets. There was a conscious 
decision to avoid the highly-leveraged mega buy-out funds and many of these 
funds will have difficulty investing money because of the lack of availability 
of leverage. In addition, the early deals that they did have seen significant 
write-downs. In addition, the Investment Manager chose to take an overweight 
position relative to other managers in distressed debt and venture funds, which 
were considered to have a better chance of doing well in a poor economic 
environment. As a result, the Company has seen a relatively low level of 
draw-downs from the funds that it has invested in since inception and there is 
now the prospect that the funds that it has chosen should be in a position to 
benefit from doing deals at significantly lower prices than were achievable in 
2007. 
 
 
The intention is, in time, to reinvest part of the Transitional portfolio into 
lower risk, lower volatility strategies. The Investment Manager believes that 
increased liquidity from the main central banks and higher spending by 
governments are driving a rapid recovery from the low points of the economic 
crisis. But long-term problems such as banks needing to repair their balance 
sheets, high consumer indebtedness, high government fiscal deficits, and looming 
budget crises in healthcare and retirement schemes may prevent the economy from 
recovering to the levels of growth seen prior to 2007. As a result, the 
Investment Manager has maintained a cautious outlook on the medium-term economic 
environment and is focusing its due diligence on strategies with good liquidity 
and relatively lower volatility. 
 
 
Since the Company's investment programme is largely complete, the Investment 
Manager will be focusing on monitoring the exposures of the underlying managers 
as well as researching low risk, high liquidity strategies to deploy the 
Company's cash. 
 
 
 
 
IMPORTANT NOTE 
This Interim Management Statement has been issued by the Board of Directors 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, to be reliable, but the Investment 
Manager 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 the Investment Manager 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 [phone] 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. 
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 
 
 IMSGUUAARUPBGUB