HEADLANDS STRATEGIC
OPPORTUNITIES FUND, LP

Investment Strategy

We launched the Headlands Strategic Opportunities Fund, LP in 2007 with the objective of generating superior absolute returns for our investors using a conviction investing, constructive activist approach to small cap public companies. We focus on the less efficient segment of the small cap sector, with a median market cap of approximately $500 million. The Headlands Strategic Opportunities Fund typically holds 8-12 core positions at any time, diversified across industries. While the Headlands Strategic Opportunities Fund is long-only, we have the ability to hedge the portfolio to preserve capital where appropriate. The Headlands Strategic Opportunities Fund also has the ability to invest in illiquid, privately-held securities.

When investing for the Headlands Strategic Opportunities Fund, we seek to identify well-managed, high quality businesses which we believe are trading at discounts to intrinsic value or growth outlooks. We look for businesses which we believe will deliver strong revenue growth over the next 2-5 years, will generate substantial free cash flow, and possess attractive capital investment opportunities at high incremental Returns on Invested Capital (ROIC). We believe a diversified portfolio of high quality businesses that reflect the above characteristics will help lead to outsized returns for our investors over the intermediate-to-long term.

Constructive Activism

Once we build a core position in a company, we seek to support management to drive future growth and increase shareholder value. Headlands Capital's collaborative initiatives have included capital structure optimization, identification of growth opportunities, advising on acquisitions and divestitures, introduction to outsourcing resources and/or enhancing communications with Wall Street and the investment community. Since our inception in 2007, we believe our engagements with our portfolio companies have had a material impact on the Headlands Strategic Opportunities Fund's performance.

Headlands Capital Investment Process

Headlands Capital seeks to take advantage of inefficiencies in small cap stocks by conducting deep, primary field due diligence and building a differentiated investment thesis through multiple meetings with management, competitors, suppliers and industry participants. Headlands Capital combines qualitative assessments of management ability, competitive positioning and industry growth with a proprietary, quantitative model, developing a picture for the revenue, margin and cash flow outlook for a target business over the next 3-5 years.

Headlands Capital targets businesses where the principals have developed conviction in the investment thesis, in the downside protection in the stock and in management's ability to achieve its vision for the company. Through the due diligence process, Headlands Capital also seeks to develop a relationship with management and a mutual alignment of interests around future initiatives of the portfolio company.