LONGRIVER PARTNERS FUND

1ST QUARTER 2024

19th April, 2024

Dear Partners,

Net returns for the Longriver Partners Fund (“the Fund”) were 13.9% over the quarter, bringing its gains since inception to
26.3%. Over the same time, our benchmark, the MSCI AC World USD Index, returned 8.2% and 32.2%, respectively.

Our strategy is to ride the long-term value created by our companies, so I encourage you to take a similarly long-term view of
your investment in the Fund. Consider it as you would an investment in real estate or a private company – assets for which you
wouldn’t receive a volatile quarterly valuation.

PORTFOLIO REVIEW:

I wrote last quarter that I was happy with the portfolio and felt like I was hitting my stride after our first year of operations. That
was about right, and I made no material changes during the quarter. Performance was broad-based, though again, our
investments in China detracted from our gains.

You must be unconventional to excel in investing. I certainly am trying to live up to this; we own shares in an eclectic collection
of businesses! I cut my teeth investing in Asia, but by 2017 – about five years into my investment career – it became
increasingly clear to me that there were better companies abroad. The first stocks I bought were Meta and Alphabet after I saw
Instagram and YouTube stealing attention from Naver, the South Korean internet giant. Curiosity is the best motivation and I
haven’t looked back since.

Our portfolio is a collection of my best ideas from around the world. It may sound like a broad mandate but I pick my spots,
sticking to business models I can understand and reasonably predict. This allows me to understand risk and opportunity, and to
hold our ideas to the highest bar possible. There is fierce competition to make the team. We own some companies like Amazon
and Meta with which you’re probably familiar. But we also own some companies with which you’re not, like Ashtead, BFF,
Games Workshop, PDD and TSMC, to name a few.

The common denominator is a lesson I learned from my mentors in Asia: there can be both safety and value in profitable growth
(link). A long record of high returns on capital may be the most reliable indicator of future performance because it
demonstrates a competitive advantage and disciplined capital allocation. A clear opportunity for growth makes a company more
predictable too. Management knows what to do, and I know what to expect.

I like it when companies return surplus earnings via dividends and buybacks because cash in the hand reduces our risk. I like it
even more when companies can instead re-invest earnings at a high rate on our behalf. And I like it best when a company is so
profitable that it can do both – grow and return capital – especially when I can buy its stock at a cheap price. No matter
whether it’s a bank in Italy, an American retailer or a British homebuilder, our investments all fit the bill.

UPDATE ON VISTRY:

Speaking of Vistry, our British homebuilder, I want to give an update on the write-up I published last year (link). To re-cap,
Vistry has gone all in on the ‘Partnership Model’, in which it pre-sells large volumes of affordable homes to local housing
authorities and investors in exchange for a bulk discount. The proceeds free up Vistry’s own balance sheet and allow it to earn
high returns on capital. Over the next three years as Vistry sells its legacy landbank into new partnership projects, it plans to

LONGRIVER INVESTMENT PARTNERS LIMITED | LEVEL 15, ADMIRALTY CENTRE TOWER 1, ADMIRALTY, HONG KONG
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return GBP 1 billion surplus capital, equal roughly to a quarter of its current market cap.

On a trip to London in February, I visited Acton Gardens to see a successful Partnership project for myself. Vistry subsidiary
Countryside began this brownfield redevelopment in 2011 in partnership with the housing association L&Q and the Ealing
Council (link). In total, over eleven phases, around 1,600 dilapidated flats will be demolished and replaced with more than
3,300 new ones—some of which are earmarked for private sale but most for affordable housing. One of the remaining old
blocks was featured in the opening credits of the popular 1980s British TV show ‘Only Fools & Horses’ and was derelict even
then (link). While more dense, the new blocks completed so far are modern and attractive, built around leafy parks and
community facilities. Private sales have been strong, even through the post-COVID downturn.

Since we invested, Vistry has announced a series of large, new Partnership agreements and completed its first GBP 50 million
tranche of buybacks. Management has become more excited about the wood frame homes manufacturing facility they obtained
in 2022 when they acquired Countryside. These will expedite development, save building costs and reduce new homes’ carbon
footprint. While I am sad to see American activist investor Jeffrey Ubben depart the board after he closed his fund (link), I
welcome his peer and fellow American Usman Nabi to take his place (link).

Unfortunately for Vistry’s plans to buy back stock, the share price appreciated meaningfully after the company was compared
favourably to American homebuilder NVR on a popular investing podcast (link). NVR is America’s original asset-light home
builder, having begun optioning land from master developers when it emerged from bankruptcy in the early 1990s. Not only did
this transform NVR’s balance sheet, it reduced NVR’s risk by eliminating the need to hold land and homes built on spec. NVR
has delivered a 20% p.a. compound return since listing in 1987 (a 760x total return) and was the only major US homebuilder
not to report losses during the Subprime Mortgage Crisis.

Vistry is trying to emulate NVR and even welcomed former NVR director Paul Whetsell to its board in 2023. However, it’s
important to recognise the differences between the two companies. NVR sells individual homes to individual buyers, whereas
Vistry will sell projects of potentially thousands of homes to institutional buyers. Vistry’s projects are, therefore, more complex
and more at risk of cost inflation and delay. NVR dominates the Washington DC metropolitan market, where it enjoys local
scale advantages and brand recognition. Vistry is spread across Britain, though it is already using its size and pipeline to
negotiate lower costs. Finally, planning is easier to obtain in the US and there is a deeper market for land options, allowing NVR
to easily deploy an ever-larger amount of capital.

This last point is both a challenge and an opportunity for Vistry. Because of an urban planning system based on discretion rather
than transparent rules, Britain’s housing crisis is arguably more severe than America’s (link). NIMBYism reigns supreme. The
most important question, in my opinion, is whether the Partnership Model can unlock supply by enlisting Vistry’s partners to
lobby local planning authorities on its behalf. After all, those responsible for delivering affordable housing are often colleagues
with those responsible for approving it. Management made encouraging remarks to this effect on the 2H23 earnings call and I
am keen to see them press this advantage. In the best case, Vistry will grow by growing the market, delivering for shareholders
and society.

I am more confident in Vistry’s business transformation now that I’ve had seven months to watch management execute and
competitors fail to respond. CEO Greg Alexander is a great operator and a renegade thinker (link). Over the next three years,
the company will transform its balance sheet and business model, becoming a ‘manufacturer’ like NVR, albeit with the
differences I outlined above. Management’s forty per cent return on capital target looks more and more achievable given the
strength of demand, faster asset turnover, standardisation and economies of scale. Even after appreciating materially since our
purchase, Vistry trades at just over book value with the prospect of a very attractive capital return. I am excited for us to be

LONGRIVER INVESTMENT PARTNERS LIMITED | LEVEL 15, ADMIRALTY CENTRE TOWER 1, ADMIRALTY, HONG KONG
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along for the ride.

(PERSONAL) TECH DEBT:

At the risk of getting over my skis, I’d like to make a brief comment on AI (Artificial Intelligence). Let’s leave excitement in the
stock market aside. I think that large language models like ChatGPT, which utilise deep learning techniques, herald a profound
change to come.

Humans begin to struggle when contemplating the relationships between more than three parameters, which is one reason we
use heuristics to make sense of a complex world. The power of deep learning is its ability to find relationships across an almost
infinite number of parameters. This capability can offer insights and understanding unimaginable to us before, and at speed too.

The internet made the marginal cost of distributing information fall to zero, ushering in a world of information abundance. As
analyst Ben Thompson best articulated, many of the largest companies in the world today are built on aggregating that
information for us in a useful (and entertaining) way. AI dramatically lowers the cost of interpreting that information and
creating new information with it. When computers used deterministic models, we could code them to follow rules. With AI, we
can efficiently train them to exercise judgment. Moreover, transformers - the new generation of models behind ChatGPT and
other products (link) - is so good at understanding context and mimicking natural language that we can forget it’s a computer.
This opens the door to automating a vast new range of white-collar knowledge work.

The internet forced businesses to reorganise themselves around a new technology. I can say with virtual certainty that whatever
productivity improvements AI technologies bring, they will require a similar reorganisation. The biggest barrier to embracing
them and remaining competitive is inertia and changing ‘the way we do things around here’.

I recently hosted a roundtable dinner to discuss a friend’s experience working in IT at several of Hong Kong’s largest institutions.
One of the guests made the evening’s most profound observation: “IT used to support the business; now, IT is the business.” It
made me think, how many companies give their Chief Technology Officer the primacy and authority to achieve this?

It hasn’t escaped my attention that my job as a stockpicker is squarely in AI’s crosshairs too.

Wikipedia defines ‘Tech Debt’ as “the implied cost of future reworking required when choosing an easy but limited solution
instead of a better approach that could take more time.” It is the sum cost of fixing a lifetime’s worth of shortcuts and hacks. It
is the time it would take to teach my dad how to type, my mum to use Google Maps or me to write code in Python rather than
inputting spreadsheet data manually. These are perhaps simple skills, but each builds on years of explicit and implicit priors.

Tech Debt goes unpaid because it’s like changing an aeroplane’s engines mid-flight. It’s disruptive and unglamorous. But the
longer you leave it, the worse it gets. If I’m going to ask my companies to pay down theirs, then I better do the same myself.
Believe me when I say that I am devoting time to this challenge.

OTHER UPDATES:

I publish ad hoc write-ups on individual companies on the Longriver website. I share these publicly to invite critical feedback
from sharp-eyed readers, helping test my assumptions.

This quarter, I published a memo on my trip to Stockholm to attend the Redeye Serial Acquirers conference (link). This group

LONGRIVER INVESTMENT PARTNERS LIMITED | LEVEL 15, ADMIRALTY CENTRE TOWER 1, ADMIRALTY, HONG KONG
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of businesses uses the leveraged cashflow from a portfolio of low-growth, asset-light operating companies to acquire more of
the same. Whereas M&A is infrequent for most businesses, the Swedish Serial Acquirers make it their metier.

Unlike most other industrial conglomerates I have studied, however, the Swedish Serial Acquirers a) place enormous emphasis
on capital efficiency; b) promote entrepreneurialism by practicing extreme decentralisation, leaving virtually all decisions except
capital allocation to their subsidiaries; and c) prefer to keep their acquisitions small to manage risk. In aggregate, their record
has been superlative, which is why, I suppose, there was sufficient interest to warrant a dedicated conference. I continue to
study these great businesses and hope to invest one day when valuations offer a greater margin of safety. Sweden is a rich vein
for stock picking.

I also recorded conversations with friends on Games Workshop (link) and Anta Sports (link). In the former, we discussed the
company’s recent margin compression and when it will see a return of operating leverage. In the latter, we discussed Anta’s rise
as a Chinese champion and the success of its multi-brand strategy. You can read the transcripts of these and more at
https://www.longriverinv.com/thought

CLOSING:

Travelling abroad from Hong Kong after more than three years of isolation is refreshing. However, it’s expensive: the
purchasing power of the Hong Kong Dollar has visibly eroded. From January 2019 to today, cumulative CPI inflation was 9.6
per cent in Hong Kong and 24.0 per cent in the US, respectively. Ordinarily, exchange rates would adjust to ensure parity. But
the Hong Kong Dollar is pegged to the US Dollar, so they have not. This is why my money does not go as far anymore.

Let me illustrate for those of you attending the Berkshire Hathaway AGM next month: a Big Mac Combo costs USD 11.99 in
Omaha at the McDonald’s north of Creighton University (link) and USD 6.00 (HKD 47) in Hong Kong at the restaurant in
Admiralty below my office. That’s half the price if you’re an American or twice the price if you're from Hong Kong.

To add salt to the wound, the S&P 500 – the benchmark US equity index – has outperformed the Hang Seng Index – our local
equivalent – over the last five years by a staggering 143 per cent in nominal terms and 111 per cent in real terms (i.e. adjusted for
inflation). Hong Kong people have experienced more than an erosion of purchasing power; we have suffered an erosion in our
relative wealth.

January 2019 to March 2024 United States Hong Kong

Cumulative increase in the Consumer Price Index 24.0% 9.6%
Value today of $1 in January 2019 80.6¢ 91.3¢

Nominal performance of equity index 97.7% (45.6%)

Real performance of equity index 59.4% (51.3%)

Nominal performance of equity index p.a. 14.6% (11.5%)

Real performance of equity index p.a. 9.8% (13.1%)
Inflationary drag p.a. 4.4% 1.8%

The reasons for this divergence are manifold and complex. In the short-term, the US is booming, while China is undergoing a
painful deleveraging. In the long-term, the US economy may simply be a better system for minority shareholders in public
companies to grow their wealth.

LONGRIVER INVESTMENT PARTNERS LIMITED | LEVEL 15, ADMIRALTY CENTRE TOWER 1, ADMIRALTY, HONG KONG
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My journey into global investing was the outcome of my curiosity studying great businesses. There certainly was no crystal ball
forewarning me of the bear market you see in the numbers above. But whether it was by luck or some great investment insight,
diversifying overseas was clearly the right move for Hong Kong people, including many of you, the investors in this fund.

Will the next five years be the same? Who knows? I still don’t have a crystal ball. But my curiosity will continue to lead me on a
search for great investments. As a global fund based in Hong Kong, we are well placed to get the best of home and abroad.

If you have any questions or concerns, I’m always available. The door is open for new investment. I am trying to grow Longriver,
so truly appreciate your support and referrals.

Thank you for your trust.

Best wishes and safe investing,

Graham F. Rhodes
Founder & Portfolio Manager
Longriver Investment Partners Limited

LONGRIVER INVESTMENT PARTNERS LIMITED | LEVEL 15, ADMIRALTY CENTRE TOWER 1, ADMIRALTY, HONG KONG
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ABOUT THE FUND: ABOUT THE MANAGER:

Business Owner's mindset to understand and manage investment risk Boutique Hong Kong-based manager with deep roots in Asia
Investing globally within our few, narrow areas of expertise, drawing on Major investors in the fund, investing for clients as we do for ourselves
insights from our experience in Asia Spirit of partnership with fair fees, expenses and disclosure
Prefer long-term investments in companies with predictable business Employee ownership permits independent judgement
models, ambitious management and good governance, which can re- Focus is always on margin of safety
invest on our behalf at high rates of return Long-term mindset allows for contrarian thinking and accumulation of
Concentrated portfolio of 10-20 securities to make the most of scarce competitive advantage
ideas, diversified across duration, industry and geography

NET RETURNS: TOP HOLDINGS & PORTFOLIO CHARACTERISTICS:

Since Inception Fund Benchmark Delta ASHTEAD | AMAZON | BFF BANK | EVOLUTION | GAMES
Cumulative Return 26.3% 32.2% (5.9%) WORKSHOP | KWEICHOW MOUTAI | META | PDD HOLDINGS |
TSMC | VISTRY GROUP
Per Annum Return 20.5% 25.0% (4.5%)
Portfolio: Duration:
Q1 Q2 Q3 Q4 YTD BMK DELTA Top 10 % 89% Hypergrowth: -%
2024 13.9% - - - 13.9% 8.2% 5.7% 24E PE: 23x Growth: 52%
2023 10.1% 3.1% (10.7%) 9.3% 10.8% 22.2% (11.4%) 24E ROE: 26% Income: 14%
24E EPSg: 16% Cyclical: 14%
24E Yield: 3% Cigar Butt: 12%
LTM D/E: (11%) Fixed Income: -%
Cash: 2%

Industry: Geography:
Digital: 25% Global: 40%
Consumer: 40% Asia: 13%
Financial Services: 18% Europe: 26%
Industrial: 17% Americas: 21%

Notes: Benchmark is the MSCI AC World USD Index. Longriver net performance figures are unaudited. Portfolio characteristics are as at 30 September 2023. Duration, Industry and Geography
characteristics are as defined by the Manager. Duration represents the certainty and timing of returns, with cash at one end of the spectrum and companies which re-invest all or more of their earnings
into hypergrowth at the other. Portfolio, Industry and Geography metrics exclude cash. Portfolio LTM D/E excludes Financial Services.

KEY INVESTMENT TERMS: OPERATIONS:

Manager: Longriver Investment Partners Limited Structure: Hong Kong Open-ended Fund Company
Mandate: Long-only, global, primarily equities Regulator: Hong Kong Securities & Futures Commission
Launch: January 3rd, 2023 Admin.: Sinopac Services & Solutions Limited
Minimum: USD100,000 Custodian: Interactive Brokers Hong Kong Limited
Fees: 1.00% p.a. + 10% over 6% hurdle + High Water Mark Auditor: East Asia Sentinel Limited
Liquidity: Monthly subscriptions; quarterly redemptions with sixty days Legal: Charltons
written notice
Contact: [email protected]

This document is issued by Longriver Investment Partners Limited, a Licensed Corporation (CE Number: BRV905) regulated by the Hong Kong Securities and Futures Commission (“SFC”) to conduct Type 4 (Advising on Securities)
and Type 9 (Asset Management) regulated activities in Hong Kong. The registered address of Longriver Investment Partners Limited is Level 27, World Wide House, 19 Des Voeux Road Central, Central, Hong Kong.

This document is for informational purposes only and does not constitute an offer of any securities or investment advisory services, nor is it an offer to sell or the solicitation of an offer to buy any interest. It is presented on a
confidential basis to only those recipients who have confirmed their own suitability by registering as such through the Longriver Investment Partners Limited website, indicating that they are "Accredited Investors" within the meaning of
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This document has not been reviewed by the SFC, and may not be reproduced or further distributed to any person or entity, whether in whole or in part, for any purpose. Any product or service referred to herein may not be suitable
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LONGRIVER INVESTMENT PARTNERS LIMITED | LEVEL 15, ADMIRALTY CENTRE TOWER 1, ADMIRALTY, HONG KONG