Intrinsica Capital Partners LP

Charles W. Bossart

3002 N Sheffield Ave. Chicago, IL

July 11, 2014

Second Quarter 2014 Letter to Limited Partners

“Investment is most intelligent when it is most businesslike” – Benjamin Graham

Results in Q2 2014

During the second quarter, Intrinsica Capital Partners LP (the “Fund”) returned -7.2%, with an average of

77.4% of Fund assets invested in the market over the time period. At June 30, 2014, 89.7% of fund assets

were invested in undervalued equities and 10.3% were held in cash. During the second quarter, the S&P

500 produced a total return of 5.8%, with reinvested dividends.

Last quarter I began this section with the following:

“Although a single quarter is far too short of a time period to evaluate performance, we are pleased we

were able to achieve strong first quarter returns with an average of only 56.7% of our assets exposed to the

market.”

This quarter we underperformed relative to our long term expectations and were more fully invested. This

underperformance was mainly because the same portfolio of stocks that outperformed last quarter

underperformed this quarter. The good news is the stocks we own are now even more undervalued than

they were three months ago—or said differently, their expected returns are now higher. In the short run,

price movements are random. Cheap stocks can get cheaper and the spread between value and price can

get larger. As value investors, this is a good thing in the long run. We are arbitragers of short term price

and long term value. We hope our performance is better next quarter, but there is no guarantee it will be.

What we can say with confidence, however, is that by focusing on purchasing stocks at prices that represent

a significant discount to intrinsic business value we should outperform market averages over the long term.

As I have said in the past, my performance as manager of the Fund should be judged over a three to five

year period. Monthly and quarterly results will result in a noisy picture.

Fund / Index Q2 Net ReturnAvg Net Long

Exposure Q2

YTD 2014 Net

Return

Avg Net Long

Exposure YTD

Net Return Since

Inception (1)

Avg Net Long

Exposure Since

Inception

Intrinsica Capital Partners LP -7.2% 77.4% -2.7% 67.2% -0.4% 55.7%

S&P 500 (2) 5.8% 100.0% 7.1% 100.0% 16.3% 100.0%

(1) Period beginning 10/15/2013, date of fund inception

(2) Total return, with reinvested dividends

Systematic Value

Investing for Individuals

and Institutions

I am pleased to say that as of June 30th, we have deployed approximately 90% of our cash in undervalued

securities. It has taken approximately 8 ½ months to deploy 90% of what was originally all cash, slightly

longer than I originally anticipated. A rapidly rising market is not an easy environment in which to invest for

a value oriented investor. Since launching the fund in mid-October, the S&P 500 has risen 16.3%, or an

annualized rate of about 23%. More than half of this gain occurred in the 2 ½ months ended December 31,

2013, a time period in which we were most heavily in cash. Our exposure going forward should be more in

line with the market—which could be good if the market continues to rise or bad if it declines. We will

continue to focus on putting our money to work in individual issues only when they are available for

purchase at a 40% or greater discount to our estimate of intrinsic value. We will make no attempt to time

the overall market.

It is also worth noting that while the S&P 500 has returned 7.1% YTD, the HFRX Fundamental Value Index, a

broad index of value funds, has returned -0.4% YTD. The market so far this year has been bifurcated and

value strategies have generally found the current market environment challenging.

Businesslike Investing

Benjamin Graham, considered the father of value investing, is responsible for the quote at the beginning of

this letter. His point was straightforward: when purchasing a stock, which represents a fractional ownership

of an underlying business, one should value it in the same way a private buyer would value the entire

business and not be swayed by what other people tell him it is worth. An owner of a stock is an owner of a

business. The market price should be interpreted as an option but not an obligation to buy or sell a business

at a given price. Most of the time market price falls within the rational range of value for which a private

purchaser would buy the business. Sometimes, however, market price diverges from true value to a point

where it is significantly below the range of values at which a rational private buyer would pay for the

enterprise. This significant value gap is what Graham refers to as the margin of safety—a necessary

requirement for a prudent investment. Investors, i.e. those focused on value, not price, are able to take

advantage irrational prices when it suits them. Graham describes this in a famous parable in The Intelligent

Investor:

Imagine that in some private business you own a small share that cost you $1,000. One of

your partners, named Mr. Market, is very obliging indeed. Every day he tells you what he

thinks your business is worth and furthermore offers either to buy you out or to sell you an

additional interest on that basis. Sometimes his idea of value appears plausible and justified

by business developments and prospects as you know them. Often, on the other hand, Mr.

Market lets his enthusiasm or his fears run away with him, and the value he proposes seems

to you a little short of silly.

If you are a prudent investor or a sensible businessman, will you let Mr. Market’s daily

communication determine your view of the value of a $1,000 interest in the enterprise?

Only in case you agree with him, or in case you want to trade with him. You may be happy

to sell out to him when he quotes you a ridiculously high price, and equally happy to buy

from him when his price is low. But the rest of the time you will be wiser to form your own

ideas of the value of your holdings, based on full reports from the company about its

operations and financial position.

I interpret the quote as having a second meaning as well: one should approach investment in a way

similar to how a businessperson approaches the operation of their business. This means developing

a viable strategy—preferably a repeatable strategy—to achieve profits and executing on that

strategy. For value investors, this means systematically purchasing investments when, and only

when, they are available at significant discounts to underlying value—the proverbial act of “buying a

dollar for fifty cents”. Each individual adherent to this philosophy, however, may go about the

process of implementation in a different way and select a vastly different set of investments. As an

appendix to the letter, I have included an article written by Warren Buffett in 1984 entitled “The

Superinvestors of Graham-and-Doddsville” where he famously describes this phenomenon.

Full Portfolio at 6/30/2014

Administrative Items

Reminder: you can find this letter as well as all previous letters at:

www.IntrinsicaCapital.com

The website has a place to sign up for our email distribution list, so if you know anyone that you think might

be interested in learning more about Intrinsica, now you have a place to send them to sign up for our

distribution list.

We are also on Twitter! @IntrinsicaCap

As usual, if you have any question, please ask.

Charles W. Bossart 7-11-2014

Appendix A: The Superinvestors of Graham-and-Doddsville, by Warren Buffett

Enjoy!

Stock Company

Position

Initiated

Avg Cost /

Share Price at 6/30 Unrealized G/L

ESI ITT Educational Services, Inc. October '13 37.41$ 16.69 -55%

EBIX Ebix, Inc. November '13 12.20$ 14.31 17%

SWHC Smith & Wesson Holding Corp. November '13 11.34$ 14.54 28%

USNA USANA Health Sciences, Inc. December '13 69.26$ 78.14 13%

APOL Apollo Education Group, Inc. January '14 26.85$ 31.25 16%

PFMT Performant Financial Corp. February '14 7.25$ 10.10 39%

NSR NeuStar, Inc. April '14 27.55$ 26.01 -6%

COH Coach, Inc. May '14 41.93$ 34.19 -18%

LQDT Liquidity Services, Inc. May '14 14.46$ 15.76 9%