SAGA PARTNERS LLC

FIRST QUARTER LETTER

APRIL 3, 2017

WWW.FOREVERINVESTING.COM
6155 HEISLEY RD.
MENTOR, OH 44060
 OPERATIONAL UPDATES

In 2016, we made some significant changes to our operations. One was the development of the “forever investment” strategy
itself, explained in the section below and detailed in our book, Forever Investing: The Investment Strategy of History’s
Greatest Investors. Let us know if you have not already received a copy and we would be happy to send one.

Another change announced previously is the addition of Joe Frankenfield to the team. He is a full partner and has already
contributed substantially since joining last year. Our ability to find outstanding investment opportunities, analyze businesses,
conduct due diligence and manage risk has increased substantially.

We also built a new website; www.foreverinvesting.com, where occasional updates, blogs and articles will be posted.
Hopefully you will get a chance to visit the site for updates periodically.

In May, we are moving offices from our old location in Mentor, Ohio to Beachwood, Ohio. The new office shares space
with Arch Eagle Group and with Strategic Bank Value Partners, a local hedge fund that invests in the financial sector.
Through this office-sharing arrangement, we will have greater access to investment research platforms as well as a strong
network of other smart and knowledgeable investment professionals. We are very excited about our new address and
welcome you to stop by anytime.

The sections below touch on our investment philosophy (which you are already familiar with), the current Forever Portfolio
and finally general thoughts on the market and investments.

INVESTMENT PROCESS & PHILOSOPHY

“If the job has been correctly done when a common stock is purchased, the time to sell it is – almost never.” – Phil Fisher

We view purchasing common stocks similarly to buying an entire business, interested in the underlying company’s intrinsic
value – i.e. the discounted value of expected future cash flows. Somewhat different from other value-strategies, we begin
our research with qualitative analysis, seeking high-quality businesses, run by exceptional managers, with the expectation
of owning them forever. Only after a company passes our internal qualitative filters do we engage in quantitative analysis.
Our disciplined and highly selective process narrows our focus to companies that will grow intrinsic value at above average
rates and selling at a fair price.

Essentially, we ask four fundamental questions:

1. Do we understand the business?
2. Does it have a durable competitive advantage?
3. Is management exceptional?
4. Is the company selling at a fair price?
There are tremendous psychological advantages of investing into common stocks with the mindset that you are buying a
business with the intention of owning it forever. Much like a private business owner who does not get daily quotes on the
price of their business, the forever investor tries to be unemotional about stock prices, measuring business performance
through financial statements, not the movement of its stock price. Over the long run, a stock’s price will increase in-line
with the growth in the intrinsic value of the business. In the short run, stocks swing wildly based on several unpredictable
variables such as the overall stock market movement, quarterly expectations, interest rate expectations, potential government
legislation, etc.

A severe drop in the price of a stock is not necessarily evidence that you made an investment mistake and it can be a blessing
if one has available funds to invest. It is interesting to observe the emotional reaction between a holder of a stock that has
declined and the non-holder. Often the holder of the stock believes the price drop is feedback on their investment decision—
i.e. that they made a mistake—potentially leading them to sell the stock at a loss or holding it just long enough to break
even. A stock does not know or care what price you paid for it, the only thing that matters is the company’s intrinsic value.

The non-holder of the stock often behaves more rationally. If a stock declines because of the many potential issues
businesses experience in normal day-to-day operations, such as a loss of a customer or unexpected expenses, the non-holder
may believe the company’s intrinsic value declined modestly but the larger decline in share price makes the price-to-value
ratio even more favorable. The non-holder invests with less emotion and therefore can make more rational observations and
analysis.

If an investor pays a fair price for a high-quality company with the intention of owning it long-term, it matters little what
the stock price does during the interim period if the company continues to grow intrinsic value. Daily stock market
fluctuations are a distraction to successful investing because they create innate feelings of enthusiasm or fear which inhibit
rational thinking and analysis. It is best to pretend the stock market is closed all year long, receive periodic snapshots of
performance over a multi-year period and then evaluate results.

While one year of results is far too short a period to assess investment performance, one quarter is an even more arbitrary
and unreliable data point of a portfolio’s overall results. Weighing quarterly results too heavily can mislead to short-term
thinking, however we believe our current investors share our longer-term approach. We think at least a five-year period of
performance compared to the general market performance is a reasonable time to begin to assess an investment strategy,
preferably with tests of relative results in both strong and weak markets.

FOREVER INVESTING PORTFOLIO

Our target was to put all assets to work by the end of 2016, positioning the portfolio well for when Forever Investing was
officially launched in 2017.

During the first quarter of 2017, the overall gain of the S&P 500 was +6.1%, including dividends. The average return, net
of fees, for separately managed accounts fully invested at the beginning of the year was also +6.1%. For the most part, all
accounts in the Forever Portfolio are invested in the same securities and in approximately the same percentages, however
timing of certain contributions or distributions throughout the quarter in any account may modestly impact specific
allocations resulting in a slightly different return from the average.

Below lists the portfolio performance, certain characteristics and top 10 holdings. We are very excited about the quality of
the businesses, management teams and value of the current portfolio.
 Growth of $1 Million Performance (net of fees)*
2017 Forever S&P 500 Ru ssel l 2 0 0 0
$1,250,000 Jan 3.3% 1.9% 0.4%
Feb 3.9% 4.0% 1.9%
$1,200,000
Mar -1.2% 0.1% 0.1%
$1,150,000 Apr
May
$1,100,000 Jun
Jul
$1,050,000 Aug
Sep
$1,000,000
Oct

Au
May

Sept
Mar

Dec
Oct
Jan

Feb

July

Nov
Apr

Jun

Nov
Forever S&P 500 Russell 2000 Dec
Year-t o -Dat e 6.1% 6.1% 2.4%
*Forever performance calculated net of fees, using Modified-Dietz method. S&P 500 and Russell 2000 returns inclusive of dividends
Source: S&P Dow Jones Indices LLC, FTSE Russell

Top 10 Holdings Portfolio Characteristics

Under Armour, Inc. (UA) Turnover (first quarter): 14.4%
Platform Specialty Products Corporation (PAH) Market Cap. (wtd. avg.): $4.2 billion
Paypal Holdings, Inc. (PYPL) Market Cap. (median): $5.4 billion
Zimmer Biomet Holdings, Inc. (ZBH)
AmerisourceBergen Corporation (ABC)
Stericycle, Inc. (SRCL)
Nomad Foods Limited (NOMD)
LiLAC Group (LILAK)
Allied Motion Technologies Inc. (AMOT)
Steel Partners Holding LP (SPLP)
Note: Top 10 holdings based on a representative account. Representative account is a separately managed portfolio representative of
firm's strategy.

Sector Allocation Geographic Exposure Economic Market Exposure

Cash, Consumer Africa/Middle East Cash
Telecom, 9% Discr., 14% 4% Cash Frontier
9%
5% 9% 3%
Asia/Pacific
Consumer
Materials & 8%
Staples, 6%
Processing, Emerging
18% 13%
Financial,
11% Europe
Industrials, Developed
18% Americas
10% 75%
Health Care, 26% 61%

Source: Company filings, Factset Research Systems Inc.

 GENERAL MARKET COMMENTARY
“Buy stocks as if you knew all markets would be closed for the next ten years.” – Thomas W. Phelps

We make no attempt to forecast either business or stock market cycles, but prefer to spend our time and energy searching
for individual undervalued securities. That said, the higher the price of the market the more difficult it is to find undervalued
securities and one may consider current market levels as expensive with the S&P 500 trading at a price-to- earnings ratio of
22x, or 38% above the historic average of 16x.

There are three things that primarily impact equity returns: earnings per share growth, dividends and interest rates. If you
invested in the S&P 500 on December 31, 1986 and still owned it on December 31, 2016, you would have received 10%
annual compounded returns, including dividends. S&P 500 earnings during that 30-year period grew at a compounded rate
of 7% and dividends contributed ~2% annually for a combined annual return of ~9%. The extra 1% came from a higher
valuation placed on equities by investors. The price-to-earnings multiple increased from 15x in 1986 to 21x in 2016 (+40%
over the 30-year period), contributing 1% to the annual returns and resulting in the total 10% annual compounded returns.

Maximizing investment returns is all about opportunity cost, i.e. what is the best alternative investment; whether it is cash,
bonds, stocks, real estate, etc. U.S. government debt serves as the starting point for what investors expect all assets to earn
because the interest rates, or yield, promised today on U.S. government debt is largely considered risk-free. All else being
equal, as interest rates decline, asset values increase. Or said another way, as yields on government debt decline, required
yields on all other assets decline as well, which occurs through an increase in asset prices. Just remember, whatever interest
rates do, asset prices typically do the opposite.

Over the last 30 years, interest rates have continued to decline, providing a boost to asset valuations, as reflected in the
higher price-to-earnings multiple today versus 1986. The 10-year U.S. treasury rate fell from 8.4% in 1987 to 2.5% today.
If you invert the current 2.5% bond yield, it provides a price-to-earnings ratio of 40x (1/.025) for that asset. Would you
prefer to invest in an asset trading at 40x earnings, on earnings guaranteed not to grow, or the S&P 500 trading at 22x
earnings, on earnings that will likely grow in the mid-to-high single digits over the long run?

The chart below compares the 10-year U.S. treasury yield vs. the S&P 500 earnings yield over the last 20 years. During the
late 1990’s tech bubble, the S&P 500 earnings yield was below the 10-year U.S. treasury yield, reflecting the elevated
bubble valuations placed on equities. In the late 1990’s, a time of "irrational exuberance", investors accepted only a 4%
earnings yield on stocks when they could earn a guaranteed 6% yield in bonds. Alternatively, investors today accept only a
2.5% fixed yield in bonds when they could earn a 5%-6% earnings yield in stocks. One might say the risk-free return offered
today is more like return-free risk, especially if one considers potential inflation.
U.S. Treasury Yield vs. S&P 500 Earnings Yield
8%
Equities yield
7% more than bonds
6%

5%

4%

3%

2% Equities yield less

than bonds
1%
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017E

10 Yr. U.S. Treasury Yield S&P 500 Earnings Yield

Source: S&P Dow Jones Indices LLC, Federal Reserve of St. Louis
We are not suggesting the S&P 500 is currently undervalued, just that everything is relative and equities continue to appear
much more attractive than long-term U.S. bonds. That said, current market levels would look overvalued if there was a
significant increase in interest rates (higher interest rates = lower asset values). For example, if the 10-year U.S. treasury
yield jumped closer to its historic average of ~5%, i.e. a price-to-earnings ratio of 20x (1/.05), all other asset prices would
likely decline as well. The only reason for paying 22x earnings for the S&P 500 when a risk-free alternative sells for a lower
price of 20x earnings, is if the S&P 500 earnings are expected to grow at a significantly higher rate than they have
historically.

So what will equities return over the next 10 years? One thing is certain about the future, and that is nothing is certain.
However, to establish expectations one needs to make a judgement on the three primary variables that impact investing
returns mentioned earlier: growth in earnings power, dividends and what interest rates will be in 10 years. One scenario
may be that earnings grow at the historical long-term average rate of 6%-7%, dividends contribute 2% annually, providing
8%-9% annual returns. However, if long-term interest rates return closer to their historic average of ~5%, market valuations
will likely fall.

If interest rates increase to ~5%, it is reasonable to expect the S&P 500 price-to-earnings ratio to fall closer to its historic
average of ~16x (an earnings yield of ~6%). A decline in the price-to-earnings multiple from the current 22x to the expected
16x would be an ~30% drag over the next 10-years, or 3% annually. Take the 8%-9% you expect to receive from underlying
earnings and dividends, less the 3% from a lower price-to-earnings valuation, provides total annual compounded returns of
5%-6%, much lower than the 10% earned annually over the last 30 years. While 5%-6% returns in this potential scenario
may not seem very good, the fact of the matter is that stocks are still the best option currently available to long-term investors
when comparing other available alternatives.

There is no law set in stone that growth in corporate earnings, interest rates or price-to-earnings multiples must revert to
their historic means. Though as the saying goes, “history doesn’t repeat itself, but it often rhymes.” We do not know what
will happen over the next year or two in the stock market, however over the next 10-20 years we are fairly confident there
will be a few very positive years, a few very negative years, and a majority that are in between. We have no idea the sequence
in which they will occur and think it is of little importance to long-term oriented investors. We are reluctant to believe that
anyone can consistently time the market, trying to jump in and out of stocks based on changing macro-economic forecasts
and sentiment. We prefer to stay invested in outstanding businesses with exceptional management that continue to increase
the intrinsic value of the business over time.

STOCKS VS. BONDS

On the following page is a table comparing stock and bond returns over the past 30 years. As a proxy for stock performance
we reference the S&P 500 Index which comprises ~80% of the total market value of U.S. traded equities. For bonds, we
reference Bloomberg Barclays U.S. Aggregate Bond Index which represents investment grade bonds traded in the U.S.
As the chart below demonstrates, stock returns are more volatile than bonds, ranging between a low of -37% in 2008 to a
high of +38% in 1995. Bond returns are less volatile, only ranging between -3% in 1994 to +19% in 1995. Both have largely
been positive with equities having five negative years and bonds having only three.

An n u al Retu r n s
S& P 5 0 0 Bo n d s
1987 5.1% 2.8%
1988 16.6% 7.9%
1989 31.7% 14.5%
1990 -3.1% 9.0%
1991 30.5% 16.0%
1992 7.6% 7.4%
1993 10.1% 9.8%
1994 1.3% -2.9%
1995 37.6% 18.5%
1996 23.0% 3.6%
1997 33.4% 9.6%
1998 28.6% 8.7%
1999 21.0% -0.8%
2000 -9.1% 11.6%
2001 -11.9% 8.4%
2002 -22.1% 10.3%
2003 28.7% 4.1%
2004 10.9% 4.3%
2005 4.9% 2.4%
2006 15.8% 4.3%
2007 5.5% 7.0%
2008 -37.0% 5.2%
2009 26.5% 5.9%
2010 15.1% 6.5%
2011 2.1% 7.8%
2012 16.0% 4.2%
2013 32.4% -2.0%
2014 13.7% 6.0%
2015 1.4% 0.6%
2016 12.0% 2.7%
10-Yr. Compounded Growth - 2006 - 2016 6.9% 4.3%
20-Yr. Compounded Growth - 1996 - 2016 7.7% 5.3%
30-Yr. Compounded Growth - 1986 - 2016 10.2% 6.3%
Overal Gain - 1986 - 2016 1820.0% 631.7%

Source: S&P Dow Jones Indices LLC, Bloomberg. Note S&P 500 returns inclusive of dividends

Bonds are a good source of more guaranteed, stable income which can act as defensive assets during market downturns.
Every year the S&P 500 was down, bonds had a positive year. While owning bonds is a great way to lower short-term price
risk and volatility, it comes at a steep cost to long-term investors. Over the past 30 years, the compounded annual return for
the S&P 500 was 10% compared to only 6% for bonds. $1,000 invested in stocks at the end of 1986 would grow to $18,200
at the end of 2016 but only $6,300 if invested in bonds, providing nearly three times overall gain in stocks vs. bonds. While
4% greater annual returns in equities may appear modest, over several decades it adds up to serious money.

Cumulative Return - Stocks vs. Bonds

$19,000
$17,000
$15,000
$13,000 Nearly 3x higher gain in
$11,000 stocks over last 30 years
$9,000
$7,000
$5,000
$3,000
$1,000
1987

1989
1990

1992
1993

1995
1996

1998
1999

2001
2002
2003

2005
2006

2008
2009

2011
2012

2014
2015
1988

1991

1994

1997

2000

2004

2007

2010

2013

2016

S&P 500 Investment Grade Bonds

Source: S&P Dow Jones Indices LLC, Bloomberg

The only 10-year periods when stocks provided negative returns since 1987, were if you invested near the height of the tech
bubble in 1998 and 1999 and sold at the bottom of the financial crisis in 2008 and 2009. This tells us over long periods of
time (10+ years), there is a low probability an investor will lose money investing in the overall stock market. That said, if
your investment horizon is less than 10 years, we suggest allocating a portion of your assets to less volatile investments than
stocks because anything can happen in the short run.

Ro llin g 1 0 - Ye a r An n u a l Re tu r n s
S& P 5 0 0 Bo n d s
1987 15.1% 10.4%
1988 16.2% 11.1%
1989 17.4% 12.4%
1990 13.8% 13.1%
1991 17.5% 14.1%
1992 16.1% 11.7%
1993 14.9% 11.9%
1994 14.3% 10.0%
1995 14.9% 9.6%
1996 15.3% 8.5%
1997 18.1% 9.2%
1998 19.2% 9.3%
1999 18.2% 7.7%
2000 17.5% 8.0%
2001 12.9% 7.2%
2002 9.3% 7.5%
2003 11.1% 6.9%
2004 12.1% 7.7%
2005 9.1% 6.2%
2006 8.4% 6.2%
2007 5.9% 6.0%
2008 -1.4% 5.6%
2009 -0.9% 6.3%
2010 1.4% 5.8%
2011 2.9% 5.8%
2012 7.1% 5.2%
2013 7.4% 4.5%
2014 7.7% 4.7%
2015 7.3% 4.5%
2016 6.9% 4.3%

Source: S&P Dow Jones Indices LLC, Bloomberg. Note S&P 500 returns inclusive of dividends

Congratulations to all who made it to the end of the letter. I’m sure everyone shares our same passion for stock and bond
analysis. Nevertheless, we tried to discuss points we feel are relevant to investors. If you have any questions, comments or
concerns please feel free to reach out. We are always available and happy to hear from you.

Regards,
Saga Partners
 DISCLOSURES & DISCLAIMERS
Not an offer and confidential: This communication is provided for your internal use only. The information contained herein is proprietary and
confidential to Saga Partners LLC (The “Adviser”) and may not be disclosed to third parties or duplicated or used for any purpose other than the
purpose for which it has been provided. Although the information provided herein has been obtained from sources which the Adviser believes to be
reliable, we do not guarantee its accuracy, and such information may be incomplete or condensed. The information is subject to change without notice.
This communication is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security
or for the services of the Adviser. We furnish all information as part of a general information service and without regard to your particular circumstances.
The Adviser shall not be liable for any damages arising out of any inaccuracy in the information.

This document should not be the basis of an investment decision. An Investment decision should be based on your customary and thorough due
diligence procedures, which should include, but not be limited to, a thorough review of all relevant offering documents as well as consolation with
legal, tax and regulatory experts. Any person subscribing for an investment must be able to bear the risks involved and must meet the particular fund’s
or account’s (each a “Fund” and, collectively, “Funds”) suitability requirements. Some or all alternative investment programs may not be suitable for
certain investors. No assurance can be given that any Fund will meet its investment objectives or avoid losses. A discussion of some, but not all, of the
risks associated with investing in the Funds can be found in the Funds’ private placement memoranda, subscription agreement, limited partnership
agreement, articles of association, investment management agreement or other offering documents as applicable (collectively the “Offering
Documents”), among those risks, which we wish to call to your attention, are the following:

Future looking statements, Performance Date: The information in this report is NOT intended to contain or express exposure or concentration
recommendations, guidelines or limits applicable to any Fund. The information in this report does not disclose or contemplate the hedging or exit
strategies of the Funds. All information presented herein is subject to change without notice. While investors should understand and consider risks
associated with position concentrations when making an investment decision, this report is not intended to aid an investor in evaluating such risk. The
terms set forth in the Offering Documents are controlling in all respects should they conflict with any other term set forth in other marketing materials,
and therefore, the Offering Documents must be reviewed carefully before making an investment and periodically while an investment is maintained.
Statements made in this release include forward-looking statements. These statements, including those relating to future financial expectations, involve
certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Unless otherwise
indicated, Performance Data is presented unaudited, net of actual fees and other fund expenses (i.e. legal and accounting and other expenses as disclosed
in the relevant Fund’s Offering Documents”), and with dividends re invested. Since actual fees and expenses have been deducted, specific performance
of any particular capital account may be different than as reported herein. Due to the format of data available for the time periods indicated, both gross
and net returns are difficult to calculate precisely and the actual performance of any particular investor in a Fund may be different than as reported
herein. Accordingly, the calculations have been made based on a number of assumptions. Because of these limitations, the performance information
should not be relied upon as a precise reporting of gross or net performance, but rather merely a general indication of past performance. The performance
information presented herein may have been generated during a period of extraordinary market volatility or relative stability in the particular sector.
Accordingly, the performance is not necessarily indicative of results that the Funds may achieve in the future. In addition, the foregoing results may be
based or shown on an annual basis, but results for individual months or quarters within each year may have been more favorable or less favorable than
the results for the entire period, as the case may be. Index information is merely to show the general trend in the markets in the periods indicated and
is not intended to imply that the portfolio of any Fund was similar to the indices in either composition or element of risk. This report may indicate that
it contains hypothetical or actual performance of specific strategies employed by The Adviser, such strategies may comprise only a portion of any
specific Fund’s portfolio, and, therefore, the reported strategy level performance may not correspond to the performance of any Fund for the reported
time period.

Investment Risks: The Funds are speculative and involve varying degrees of risk, including substantial degrees of risk in some cases, which may result
in investment losses. The Funds’ performance may be volatile. The use of a single advisor could mean lack of diversification and, consequently, higher
risk. The Funds may have varying liquidity provisions and limitations. There is no secondary market for investors’ interests in any of the Funds and
none is expected to develop.

Not Legal, Accounting or Regulatory Advice: This material is not intended to represent the rendering of accounting, tax, legal or regulatory advice. A
change in the facts or circumstances of any transaction could materially affect the accounting, tax, legal or regulatory treatment for that transaction.
The ultimate responsibility for the decision on the appropriate application of accounting, tax, legal and regulatory treatment rests with the investor and
his or her accountants, tax and regulatory counsel. Potential investors should consult, and must rely on their own professional tax, legal and investment
advisors as to matters concerning the Fund and their investments in the Fund. Prospective investors should inform themselves as to: (1) the legal
requirements within their own jurisdictions for the purchase, holding or disposal of investments; (2) applicable foreign exchange restrictions; and (3)
any income and other taxes which may apply to their purchase, holding and disposal of investments or payments in respect of the investments of a
Fund.

The S&P 500 Index is an unmanaged index of 500 widely held common stocks. The S&P Index is not available for investment, and the returns do not
reflect deductions for management fees or other expenses.
 FOREVER INVESTING

Forever Investing, a subsidiary of Saga Partners LLC, was founded

January 2017 with the purpose of managing investments for
individuals and institutions that seek returns above that of the broad
stock market.

Saga Partners LLC is an independent, fee-only, registered investment

advisory firm, providing customized portfolio management to
individuals, retirement plans and institutional investors.

Contact Information:

Michael Nowacki
michael@sagapartners.com
440.488.6936

Joe Frankenfield
joe.frankenfield@sagapartners.com
480.678.2950