Troy Marchand’s Foundry Value Master Fund commentary for the month ended December 31, 2015.

Investment Objectives

The goal of the Foundry Value Master Fund, LTD. (“FVMF” or the “Fund”) is to generate portfolio alpha over market cycles, while minimizing market risk. We focus on companies trading at a deep discount to intrinsic value with a catalyst on the horizon. We invest where valuations are irrational and catalysts misunderstood to achieve superior performance over time. The Fund will only hold our “best ideas”, resulting from deep, fundamental analysis and engagement with a wide network of industry contacts. While we intend to hold positions for a 1-3 year time horizon, we occasionally will invest to exploit shorter term opportunities. In certain situations, the Fund will utilize public activism strategies in to unlock value for all shareholders.

Foundry Value Master Fund

Troy Marchand’s Foundry Value Master Fund December 2015 Commentary

The Foundry Value Master Fund was down 4.72% for the month of December. Since inception, June 2, 2015, this brings our year-to-date return to -11.14%, slightly underperforming the broader markets. While not the start we had anticipated, we have confidence in our current portfolio. Going into January the Fund is holding roughly 36% in cash & cash equivalents (cash + SPAC’s + delisted German security). We look to put money to work opportunistically, either adding to existing positions we would like to own more of, or finding new companies in which we can start to build a position.

Foundry Value Master Fund

New positions for December are as follows:

Associated Capital Group (AC) – Spin-off from Gabelli (GBL), trading below cash.

CST Brands (CST) – Gas station convenience store spin-off, activists involved, and potential buyers very interested.

Kansas City Life Insurance (KCLI) – selling at 50% of tangible book value, no debt, recently delisted shares from major exchange after doing a reverse stock split to get shareholders under 250, at $52.50. (Stock currently trading at $37).

QLT Inc (QLTI) – Selling for less than net cash on the balance sheet. Proven management team. Invested $45 million in newly formed Canadian pharmaceutical company (Alarez).

Tribute Pharmaceuticals Canada, Inc (TBUFF) – Small Canadian pharmaceutical company, combining with Pozen (POZN) to form newly created pharmaceutical company (Alarez).

Through our ownership of QLTI and TBUFF, the Fund will own a piece of Alarez once it officially goes public.

Increased Position:

MRV Communications (MRVC) – Activist investor, Raging Capital, owns 30% of the outstanding shares. MRVC recently sold off non-core business segment, which creates a pure play optical  networking company that should be sold to a much larger buyer at a price 100% above current price. An even better scenario would be if MRVC sells the assets of the business and keeps the shell company with over $140 million in cash, along with nearly $300 million in Net Operating Losses (NOL’s), then takes the cash and buys a profitable business in order to reap the benefits of the NOL’s.

The Fund had no notable winners for the month, while several positions fell in price, although nothing significantly so. INAP, VISI, MRVC, WYY, and RST all had a rough December. There was no worthwhile news out of any of the portfolios holdings for the month.